Should we put a carbon tax on meat and milk in Ireland? Paul Deane ESRI-UCC Workshop 17th May 2018

89% of the Members recommended that there should be a tax on greenhouse gas (GHG) emissions from agriculture. There should be rewards for the farmer for land management that sequesters carbon. Any resulting revenue should be reinvested to support climate friendly agricultural practices Taxes discourage and subsidies encourage activities.

Emissions Context Policy Context Market Context Talking Points

Greenhouse Gas Emissions In Ireland National Policy Position on climate policy: an aggregate reduction in carbon dioxide (CO2) emissions of at least 80% (compared to 1990 levels) and in parallel, an approach to carbon neutrality in the agriculture and land-use sector, including forestry, which does not compromise capacity for sustainable food production. Livestock contribute 14.5% of human-made GHG emissions

Renewable Energy Target Industrial Processes Manufacturing Combustion Enteric Fermentation GHG Reduction Target Electricity Production Energy Agriculture Soils Liming Urea Combustion Public Services Landfills Commercial Combustion F-Gases Ireland is unusual! 30% of GHG Emissions are ETS while 70% are non ETS (EU Average is 55%) Ireland is unusual again!-45% of Emissions in the Non-ETS are agriculture (EU Average is 10%) Ireland is unique because the milk we produce is on of the Lowest GHG footprints in Europe Recent Teagasc data showed that the carbon footprint of Irish produce has been reduced by c. 15% since 1990 National Policy Position on climate policy: an aggregate reduction in carbon dioxide (CO2) emissions of at least 80% (compared to 1990 levels) and in parallel, an approach to carbon neutrality in the agriculture and land-use sector, including forestry, which does not compromise capacity for sustainable food production. Livestock contribute 14.5% of human-made GHG emissions Transport Homes Homes Road Transport

Elec/Ind Agriculture Transport Homes Enteric Fermentation Industrial Processes Manufacturing Combustion Enteric Fermentation Elec/Ind Electricity Production Agriculture Soils 0% 10% 20% Liming Urea Combustion Ireland is unusual! 25% of Non-ETS Emissions are Enteric Fermentation Ireland, fertiliser and animal feed are currently subject to a concessionary ‘zero rate’ of VAT In the 5-year period 2012-2016, dairy cow numbers have increased by 22% and corresponding milk production by 27%. Transport Waste Public Services Commercial Services Manufacturing Combustion F-Gases Homes Homes Road Transport

Agriculture Energy Transport Homes Enteric Fermentation Industrial Processes Manufacturing Combustion Enteric Fermentation Electricity Production Energy Agriculture Soils 0% 10% 20% Liming Urea Combustion Ireland is unusual! 25% of Non-ETS Emissions are Enteric Fermentation Ireland, fertiliser and animal feed are currently subject to a concessionary ‘zero rate’ of VAT In the 5-year period 2012-2016, dairy cow numbers have increased by 22% and corresponding milk production by 27%. Transport Waste Public Services Commercial Services Manufacturing Combustion F-Gases Homes Homes Road Transport

Environmental taxes/levies in Ireland

In 2017 environmental taxes are projected to yield €3 In 2017 environmental taxes are projected to yield €3.45bn in 2017 (8% of overall taxation)

What does the current carbon tax of €20 look like?

20kg bag of coal you pay €1.05 in carbon tax.

1 litre of petrol you pay just under €0.05 in carbon tax

add €0.02 to a litre of milk produced in Ireland

add €0.40 to a kg of red meat produced in Ireland

…€0.08 to the price of a Big Mac

….€0.02 to a breakfast roll

What does the current carbon tax of €20 look like?

If applied to all Agricultural production in Ireland ~ 400m€

Talking points Complex logistical challenges (import of products/border adjustment tax, etc) Risk of carbon leakage? Carbon tax sends signal to all that activities lead to GHG emissions. If a sector is given special treatment, other sectors must do more

Political feasible and socially acceptable? Talking points Political feasible and socially acceptable? Behavioural Change/eating habits? A vision for Rural Ireland IFA farm income survey shows most farmers worries about product prices.

Should we put a carbon tax on meat and milk in Ireland?