The Carbon Windfall Levy, introduced in the Electricity Regulation (Amendment) (Carbon Revenue Levy) Act 2010, has been signed into law. The levy will apply to electricity generators and recover a substantial portion of the unearned carbon windfall gains that they currently receive through the Single Electricity Market.
Under the Kyoto Carbon Trading provisions, electricity generators have been provided free carbon credits in preparation for full carbon-trading post-2012. Generators have been able to earn a monetary return on these credits, earning excess ‘windfall’ profits at the expense of consumers. It is these gains that the levy seeks to recover.
Energy Minister Eamon Ryan, TD intends to use funds raised by the levy to help protect the competitiveness of Irish enterprise. Electricity costs are a key factor in maintaining competitiveness for Irish businesses, particularly energy-intensive exporters. The Government is of the view that it is imperative to support employment by focusing efforts on reducing costs, where feasible, for large energy users who are typically significant employers with both indigenous and multinational bases.
“This levy is crucial in ensuring that Ireland continues to remain an attractive base for investment,” says the Minister. Statistics show that Irish electricity consumers benefitted from some of the largest falls in electricity prices across the EU over the past year, delivering real and measureable savings to consumers.
He continues: “Seeking that generators account for these gains and using this funding toward the reduction of electricity costs, will assist in maintaining Ireland’s competitiveness. Since the levy is emissions based and emissions from renewable generators are zero, it will also serve to provide a boost for competitiveness of the renewable energy sector.”