Gabhaim buíochas leis an Aire Stáit as ucht teacht isteach chun an cheist seo a fhreagairt. HVO is hydrotreated vegetable oil. Essentially, it is a substitute for diesel. The interesting thing about HVO is that it does not require engine modifications or new infrastructure. People who wish to use it as a substitute for diesel do not need to spend money on changing their engines or modifying systems in order to use it. What is even more interesting is that it can achieve a 90% reduction in carbon emissions when it is utilised and it emits far less carbon monoxide, nitrous oxides and soot generally compared to diesel. As a fuel it is incredibly advantageous to us at a time when we are trying to cut emissions. We know that transport is particularly targeted for emissions cuts. Although it has decreased emissions in the past year by 1.8%, the sector is about 8% behind where it is supposed to be.
As we talk about climate emissions and climate targets, and we talk about trying to put in place systems to help us meet these targets, this is a key tool. It will not do it on its own but it is a key way in which we can do it. The difficulty is that we have no incentive for people to use HVO instead of diesel. There is not nearly enough information out there for people using diesel cars to allow them to understand that HVO is there as an alternative. I know Government policy relates to EVs and the infrastructure that goes with them, and I support the proliferation of electric vehicles as they are a hugely important part of our climate solution, this will take time. We have seen a ramp up in the purchase of electric vehicles and this is very welcome but this is the here and now.
This issue goes across a number of Departments, including transport, energy and finance. In the week that is in it, next week there will be a real opportunity for us to incentivise HVO as a fuel for all cars. What can be done? HVO is subject to VAT and the same mineral oil tax as diesel and other fuels. VAT is obviously something that cannot be modified or changed in relation to one product or another subject to the VAT directive of the European Union, so I understand it is not something the Government can tinker with. However, the mineral oil tax is something that can be changed. We can change the liability in relation to HVO in mineral oil tax and the extent to which it is liable. This is something we are permitted to do under European law and it is not restricted by the VAT directive.
There is a key tool at the Government's disposal now. We can incentivise the use of HVO. We can incentivise for people a fuel that does not require them to change their engines or require new infrastructure, and which would reduce carbon emissions by 19% and reduce harmful emissions from carbon monoxide and the soot that comes out of diesel engines. To my mind this is an obvious thing to do and I do not understand why we have never done it. This is not the first time I have raised it here. There is an incentive to do it from the point of view of the State because we want to reduce emissions. There is also a situation whereby very few people are using HVO. There would not be a massive revenue impact from it if we were to incentivise it.
We are now in the context of a fuel crisis. We are aware we cannot control the wholesale price of fuel in this country because of wars in Iran, in the Middle East and in Ukraine. We understand the crisis is there. We came back at the end of August to vote to ensure the reduction in the excise on fuel continued because we know we have to safeguard it. We are talking about doing this and reducing the carbon tax but here is an intensively positive carbon measure that we can incentivise through the budget next week to reduce the liability for people using HVO, and to do so in tandem with a campaign to show people who are driving diesel cars. We recognise the reality that diesel cars are necessary but that there is an alternative there for them that is better for all of us.
