The Green Party has warned that the Government's reneging on plans to introduce a carbon tax will ultimately cost the Irish taxpayer.
Green Party finance spokesman Mr Dan Boyle said the decision will result in a multi-million euro fine being imposed on the Irish Government and, in turn, onto the Irish taxpayer due to the government's inability to keep its commitments on greenhouse emissions.
He said the government is also deliberately ignoring the recommendations of a recent ESRI report that concluded a carbon tax could have a positive effect on the economy.
The Labour Spokesperson on Finance, Ms Joan Burton, said the government's change of plan effectively leaves Ireland without any strategy for dealing with CO 2emissions.
"After seven years of discussion and endless footdragging, the Government has today run away from the consequences of climate change.
This leaves the Minister for the Environment, Martin Cullen, with a lot of egg on his face - not for the first time -given that his Department has been an enthusiastic champion of climate change strategies," Ms Burton said.
Fine Gael environment spokesman Mr Bernard Allen challenged the Minister for the Environment to explain how the Government can meet Ireland's commitments under the Kyoto.
He said the carbon tax proposal was a cornerstone of its Climate Change Strategy.
"Failure to meet our obligations on emissions will mean that the Irish taxpayer will be liable for very hefty penalties. If agreed commitments on emissions are not met, Ireland will have to pay fines of up to €1.45 billion by 2008 and up to €4.3 billion by 2012.
The Minister for Finance, Mr Charlie McCreevy, earlier today said the carbon tax was "not an appropriate policy option" particularly for households, given recent international developments including price increases in the oil market.
Ireland's overall reduction target under Kyoto was around nine million tonnes per year. Mr McCreevy claims some half a million tonnes a year in emissions only would have been achievable.
Greenhouse Ireland Action Network (GRIAN) has accused the Irish Government of aligning itself with the United States in deciding not to go ahead with the tax on fossil fuels.
The environmental lobby group described the decision as "cowardly and shameful" and said it risked turning Ireland into the "dirty dog of Europe in terms of action on climate change".
Mr Pat Finnegan of GRIAN, said that by abandoning the carbon tax plans, the government has taken away the main lever of the National Climate Change Strategy.
"Global scientists are effectively unanimous that there is a direct relationship between fossil fuels and climate change. We have a responsibility to act against the causes of climate change." said Mr Finnegan.
The Government has said it will now intensify action on the non-tax measures under the National Climate Change Strategy and that "Ireland will meet its greenhouse gas emissions reduction target under the Protocol."
The Irish Road Haulage Association (IRHA) has welcomed the government's U-turn on the carbon tax plan, however.
The road freight industry had lobbied intensely for exemption because of the amount of fuel purchased by road haulage operators.
"It's a triumph of common sense over ideology and has saved hauliers from further financial burden which they can well do without given the current disastrously high cost of energy." said Mr Jimmy Quinn, IRHA director of communications.