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The Carbon Windfall Levy, introduced in the Electricity Regulation (Amendment) (Carbon Revenue Levy) Act 2010, has been signed into law by President Mary McAleese.

 

Under the Irish implementation of Directive 2003/87/EC, electricity generators receive an annual allocation of carbon allowances for free in phase two of the Emissions Trading Scheme (ETS) which runs from 2008-2012. Generators have been able to earn a monetary return on these credits because the full cost of carbon has been incorporated into the wholesale price of electricity.

 

Minister Ryan has signalled his intent to use funds raised by the levy to help protect the competitiveness of Irish enterprise stating that “This levy is crucial in ensuring that Ireland continues to remain an attractive base for investment.”

 

The levy is emissions based: each generator will have to pay a sum equal to their emissions on a quarterly basis, multiplied by the average price of carbon over that period, further modified by a percentage rate of 65 per cent. The amount raised by the levy will depend on the emissions by each generator and the price of carbon, which may rise or fall.

 

Since emissions from renewable generators are zero, the levy should serve to provide a boost for competitiveness in the renewable energy sector.