There is some evidence of the need to decouple economic activity and growth from environmental impact. In recent years, Ireland has moved from a position of being one of the most resource-inefficient economies in the EU (our rate of material consumption was growing faster than the population) to greatly improve its efficiency in terms of raw material consumption per capita.
The reduction in personal consumption and building programmes over this period largely contributed to this trend. This reduction in building has induced social challenges (e.g. housing availability), suggesting that the scale of reduction was too severe and poorly managed. Better integration and coherence between environmental, economic and social policy needs could act to mitigate these shock swings.
It is now recognised that environmentally harmful subsidies can lead to lock-in of unsustainable technologies and infrastructure, as well as poor decision making. It is estimated that the scale of subsidies with potential negative impacts on the environment, notably in the areas of fossil fuels, transport and water, are worth €1 trillion per year. Environmentally harmful subsidies lead to higher levels of waste, polluting emissions (including climate change gases), inefficient resource extraction and negative impacts on biodiversity. They can lock in inefficient practices and hinder businesses from investing in green (more sustainable) technologies.
The EU Commission sees environmental taxation as an essential market mechanism to address any pricing market failures. The State will need to undertake a review of environmentally harmful subsidies that may be operating and set about eliminating them; examples include subsided peat extraction, low CO2 vehicle tax (causing rise in diesel use and particulate air emissions) and green diesel VAT relief. Ireland has achieved considerable behavioural change success in relation to employing taxation based measures to address certain environmental harms, e.g. the plastic bag tax, the landfill levy, and the carbon tax.