The Irish cement industry is getting tens of millions of euro annually in windfall profits due to anomalies in the EU Emissions Trading Systems (ETS), according to the chief of an Irish producer.
Donal O’Riain, CEO and founder of Ecocem, told the Irish Times that the the anomaly occurred because the domestic cement sector had lost 75 per cent of its demand since the peak years, yet the allocation of ETS credits to the sector was based on its historical sales levels.
The anomalies could cost the exchequer more than €250m over the coming seven years and has already cost in the region €120m since 2005, according to Mr O’Riain.
He said the effect was that a system designed to encourage cement producers to reduce their CO2 emissions was instead incentivising them to produce CO2 – at the public’s expense. This is because installations lose their allocations if they are operating at less than 50 per cent capacity. “The net impact is an increase in global CO2 emissions subsidised by the Irish taxpayer.”
The Department of Finance has increased the tax being paid on profits from the sale of the credits, from 12.5 to 30 per cent, by ruling that they have to be taxed as a capital gain rather than at the corporation tax rate, but Mr O’Riain said they should be taxed at up to 80 per cent.