Doubts were cast upon the ability of the Irish State to successfully transition to a promised one million electric vehicles by 2030, with a new report by the Parliamentary Budget Office warning of a potential dip of 8% in state revenue as a consequence should targets be met.
Committed by the Programme for Government to ban any new fossil-fueled cars arriving onto the market by 2030, little consideration until now has been given to the manner in which this would impact the state coffers.
Deriving €4.5-5 billion in car-related revenue per annum, such a transition would impact the bottom line when it comes to motor, fuel and carbon tax as well as money raised off VAT.
Warning of a ‘substantial risk to the stability and sustainability of the public finances’ the report highlighted the additional cost to the taxpayer when it came to the generous subsidies being given to prospective electric car owners.
With grants of up to €10,000 and reduced tolls for electric vehicles, the incentives offered to enable electrification of this scale would also add further weight to the exchequer to an as of yet unknown amount.
Alongside the aforementioned sweeteners, those purchasing an electric vehicle may avail of VAT Relief and lower motor tax, as well as being free from fuel tax typically levied on fossil fuels.
Not the first time the State has over-extended itself on electrification, previous goals to meet 230,000 electric vehicles by 2020 set in 2008 only amounted to 26,000 electrified vehicles as of last year.
Envisioning a ‘net zero’ state of affairs by 2050, Ireland is tied to a commitment of a 51% slashing of carbon emissions by 2030 under the 2016 Paris Agreement.
With serious questions as to whether the proper infrastructure will be laid down to facilitate electrification, never mind the viability of a power grid on its last legs, such figures in a normal society would get the ball rolling on questioning the green agenda.
Presently, the construction of charging infrastructure is covered almost entirely by the State through grants as well as semi-state bodies such as the ESB. With the lights flickering already amid a brewing energy crisis and failure of a private sector partner to develop the market, it would appear the electrification scheme is doomed to fail on current trends, benefiting those clever enough to play the system when it comes to grants.
For the time being it is well worth milking any and all green subsidies available before the State finally goes off the fiscal cliff. Even before the self-inflicted covid-mania, these goals were far beyond the financial reach of the struggling Irish State.
Electrification of this scale and on this timeframe is predestined to fail considering the economics at work. However, whatever way our leaders seek to make up the inevitable shortfall, expect the final bill to fall at the feet of you and I as taxpayers.