Let’s talk about…Budget 2023 and the climate crisis

Budget 2023: Are the new measures enough?

Budget 2023 was announced this Tuesday on September 27th, setting out an overall package of over €10 billion. By necessity, given the ongoing cost of living crisis and simultaneous climate crisis, this year’s Budget was one tasked with navigating the balancing act between keeping energy costs down while imposing measures that often inflate them, such as a carbon tax increase.

  Per Tuesday’s announcements, carbon tax will be increased, with the tax on fossil fuels set to be pushed up by €7.50 to €48.50 per tonne of carbon dioxide. However, although the new rate will apply to diesel and petrol from October 12th, it shouldn’t make a difference at the pump. This is because the Government has proposed to offset this increase by abolishing the NORA levy, which is a contribution to the National Oil Reserves Agency; an action no doubt taken in recognition of the ongoing cost of living crisis, and recent high energy and fuel prices.

  Indeed, amid the ongoing crises, Budget 2023 could not afford to underprioritise the environment by failing to increase the carbon tax, nor could it afford to underprioritise the public by introducing more measures that would exacerbate an already dire cost of living situation. The compromise the Budget reached with abolishing the NORA levy is reflective of this.

  However, though the recently-announced measures are welcome, it seems that much more could be done to reduce the damage of fossil fuels and prioritise the move to sustainable alternatives by introducing measures to aid their uptake (for example, a reduction or removal of the VAT charged on solar equipment) and other long-term solutions. Indeed, while the money raised from carbon taxes is to go toward things like energy efficiency upgrades, social protection schemes to protect the most vulnerable and measures to incentivise environmentally-friendly farming, beyond this, the Budget seems to lack the long-term climate action measures needed to tackle the crisis at the rate we need, and the failure to put such measures in place will have two knock-on effects.

  The first is the obvious: the environment will continue to suffer. By failing to invest in sustainable energy and overhauling Ireland’s energy market, and failing to do things like make public transport more accessible to reduce pollution form traffic, or reduce VAT on things like solar equipment, insulating materials, etc., we will simply not able to reach the climate targets we need to, and environmental damage will be the result.

  But the second impact that the failure to implement long-term solutions for climate action will have is an economic one. Beyond measures like tax increases where we see a direct financial impact on the everyday person, the lack of long-term climate action investment is a further disservice in that, if done correctly, it could work in tandem with reducing the cost of living. If we committed to investing in overhauling our energy market and switching to sustainable alternatives, it would be less expensive for consumers in the long run. After all, there won’t always be a NORA levy to remove so that ordinary people aren’t the ones paying out of pocket for the climate crisis; what happens next May when the increase is applied to home heating fuels?

  Budget 2023’s attempt to navigate the cost of living crisis and climate crisis simultaneously by increasing carbon tax while offsetting the increase for consumers is commendable, but ultimately, it is a short-term solution. We could do more to both address the cost of living and the environment by concentrating on long-term measures, because ‘band-aid’ climate action doesn’t deliver for us any better in the end, either environmentally or economically.