The government has been accused of protecting energy companies and their profits at the cost of Irish families and businesses.
It follows pre-legislative scrutiny of the General Scheme of the Energy (Windfall Gains in the Energy Sector) Bill 2023 at the Environment and Climate Action Committee yesterday (TUES).
The proposed energy windfall tax has two parts - a ‘temporary solidarity contribution’ from gas producers and refineries on 2022-23 profits and ‘a cap on market revenues’ from non-gas generation between December 2022 and June 2023.
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Sinn Féin’s Environment and Climate Action spokesperson Darren O’Rourke says EU constraints have seen potential revenues revised down “from €280m-€1.4bn to €80m-€150m” for the cap and “from €60m-€480m to €200m-€450m” for the contribution.
He says the cap on market revenue is “especially important” given the amount of wind and solar power on Ireland’s grid.
But added “the estimated proceeds from the cap on market revenues, has been revised down by almost a factor of ten”.
The Meath East TD branded the plan “wholly inadequate” as it “will leave the vast majority of [producers’] eye-watering and obscene profits untouched” and urged the government to “re examine their plans and urgently change tack”.
“The public will be outraged to learn this proposed windfall tax is so weak,” added Teachta O’Rourke. “They will be outraged to learn the obscene profits of renewable energy generators for 2022 will go untouched, save for the month of December.
“We must remember wholesale gas prices were at their highest ever between April and August last year. At that time, as now, renewable energy companies were getting paid the price of gas for their wind and solar energy.
“Other EU member states have recognised the weakness of the EU regulation and moved to tackle energy company profits prior to December 2022. Austria, France and Belgium, for example, will do this by way of new tax measures.
“As confirmed by the European Commission’s representative [Director for the Green Transition and Energy Systems intervention, Catharina Sikow-Magny) at [the] Oireachtas Climate Committee meeting, this option is open to the government here.
“It is essential the government act urgently to identify suitable policy measures to tackle the obscene profits of energy companies prior to December 2022. The efforts of European counterparts may provide a template.”
A Department for Environment, Climate and Communications spokesperson said: "The Government signalled a 75% rate for the temporary solidarity contribution which will form part of the new Levy – well above the minimum rate allowable at EU level of 33%. Current estimates are that the proceeds collected will be in a range from €280m to €600m. This is at the lower end of the range signalled by Government in November of last year with the primary reason being the significant (-70%) reduction in wholesale gas prices.
"Most EU Member States – including Ireland – are adopting an Energy Windfall Levy that aligns with the approach and timing of that in the EU Proposal. The proceeds from the Levy are intended to be used to further supplement financial supports available to households affected by high energy prices.”
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