Each year, the Department of Finance produces a pre-budget report from the Tax Strategy Group, a panel of officials drawn mainly from the Department itself, with inputs from elsewhere.

The latest report has just been released and notes that Government revenue from taxes on road users has weakened since the purchase tax on cars was restructured, favouring cars with lower fuel consumption ratings.

There has also been a steady increase in sales of electric vehicles, which hits fuel tax revenue. The Government’s target is to have 845,000 electric cars on the road by 2030 – about one-third of the national fleet.

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Sales of petrol and diesel cars will cease entirely by 2035 and it is likely that they will decline quite quickly well before then.

Even if the current subsidies on purchase of electric cars are phased out entirely, a process which has already commenced, manufacturers’ prices are expected to fall further, and they will become price-competitive without subsidy.

Since electricity will be far cheaper than petrol or diesel, and maintenance costs could also be lower, the trend to electric could accelerate.

Electrification ‘limited’

There is a further factor: electrification has been held back by the limited coverage, especially in rural areas, of fast charging points, a deficiency which is slowly being rectified.

By 2030, this situation could look very different and could be replaced with a new headache. As sales of petrol and diesel decline, the 1,600 forecourts in Ireland could gradually close or withdraw from stocking these fuels.

Service centres could also find that the market for repairing petrol and diesel cars is no longer here. Once upon a time, there were places where you could get typewriters fixed.

3% already electric

Around 3% of the car fleet is already electric and their share in new registrations is approaching 20%. The Government’s 2030 target (one-third of the fleet) looked very ambitious a few years back, but may be less so now.

Moreover, sales of new petrol and diesel models could decline quickly thereafter.

Of course, a new car should have a life expectancy of 10 years minimum and there will be plenty in the fleet in 2040 and later, but the strong tax revenues from filling the tank will decline sharply, as will the yield from purchase taxes.

The Tax Strategy Group reckons the hit could be €1.5bn per annum and this revenue will have to be replaced.

Even with an electrified fleet, road congestion is highly inefficient and wasteful – road users are not incentivised to avoid busy roads at busy times

Road construction, road maintenance and traffic policing cost over €4bn a year and are met, approximately, from purchase taxes, annual license fees, fuel tax and road tolls.

Heavy trucks and buses use diesel predominantly and will take longer to migrate to low-carbon means of propulsion, so diesel tax revenue will hold up longer than petrol.

But electric buses and light vans are already on the market, and new forms of revenue-raising from road users are inevitable.

Transport

Transport minister Eamon Ryan unveiled a new plan for rail investment last week and defended the enormous costs involved by reference to his desire to cut reliance on the private car.

But if the car fleet is likely to become de-carbonised within the delivery timescale of his elaborate rail plans, there is no climate-change reason to get people out of their cars.

In large parts of rural Ireland, there will never be a practical alternative to car transport, and if the cars go mostly electric over the next couple of decades, there will be no emissions problem to solve.

In the United Kingdom, the government’s advisory body on infrastructure investment has just called for cancellation of the HS2 high-speed rail project north of the London to Birmingham section already under construction. They think it will simply cost too much and cannot find enough benefits to justify the expense.

If the car fleet is likely to become de-carbonised within the delivery timescale of Minister Eamonn Ryan’s elaborate rail plans, there is no climate-change reason to get people out of their cars

It is surprising that the minister’s advisers, the UK-based engineers Ove Arup, are apparently optimistic about the prospects for new railways in Ireland, where potential passenger and freight volumes are far less promising than in Britain.

But even with an electrified fleet, road congestion is highly inefficient and wasteful – road users are not incentivised to avoid busy roads at busy times.

The wrong focus

Minister Ryan is seeking to delay several important road investment projects, including the M20 from Cork to Limerick, the Republic’s second and third largest cities and the completion of the M4 Dublin to Sligo.

But why not let road transport take its de-carbonising course and focus on measures to address congestion rather than climate change, where proven technologies are beginning to do the job?

In rural areas, bus transport is the more appealing public transport option, and far more affordable since the road network is in place anyway.

In cities, the problem is peak-time congestion, while the minister fixates on discouraging round-the-clock car usage everywhere, including traffic on empty rural roads by vehicles whose carbon emissions are already dwindling.