The most welcome element of the draft National Allocation Plan for carbon dioxide emissions published yesterday by the Environmental Protection Agency is that, at last, a price is being put on the environmental cost of burning fossil fuels.
It may not be a particularly high price - the current estimate is in the region of €10 to €12 per tonne - but it is probably enough to persuade big emitters of CO2 that they must begin changing their ways. Whether or not Russia finally agrees to ratify the Kyoto Protocol on Climate Change, the EU is pushing ahead unilaterally with its own emissions trading regime from January 1st next.
However, it was always likely that the Government would look after the interests of industry and power generation. The Tánaiste, Ms Harney, may have established her political reputation for moving decisively in 1990 to get rid of coal smog in Dublin but she has fought industry's corner on this occasion in the cause of protecting Irish competitiveness. So it was no surprise then that the traded sector got what it wanted from the Government - free allowances covering virtually the total amount of its current level of CO2 emissions.
The ESB might not be quite so pleased. Its biggest power station, the coal-fired plant at Moneypoint, is being allocated 4.4 million tonnes, which falls short of the 5.9 million tonnes of CO2 it has been belching out in recent years. If its output of 900 megawatts is not cut back, to be replaced by more renewable energy or by the highly-efficient combined heat and power (CHP) plants favoured by the EPA, the ESB will have to purchase allowances under the EU carbon trading regime at a cost of €15 million to €18 million a year to keep the Shannon estuary plant in full production. And that extra cost will undoubtedly be passed on to consumers.
None of the large installations covered by the EPA's draft plan will have to pay a cent in carbon tax when the regime is introduced in the next Budget; only the transport sector, smaller industry and households will be hit by that measure. But the bigger boys won't have a free ride, as the price they will pay for exceeding their allocations is likely to be equivalent to the level of carbon tax imposed on the rest of us. It is also important to remember that the draft plan, which is now open for public consultation, covers only the three-year pilot phase of carbon trading, from 2005 to 2007. Much more substantial reductions in emissions will be required when the Kyoto Protocol finally kicks in, from 2008.
The EPA will not in itself save the planet. But yesterday's step was a move in the right direction.