At the Irish Institute of Purchasing and Materials Management Annual Conference, "Business and the Environment", on 4 December 2002, I said:

The particular business I run is not in what you could call the front-line of the environmental debate, but I have enough experience of what works and what doesn't to know that confrontation is not the best way forward for Ireland. There are no doubt environmental villains in the business world, but to paint all those in business in such a light is more than unfair. Doing that is also counter-productive, since it drives many in business to automatic criticism of environmental initiatives.

What is needed is more mutual understanding between the two sides, rather than the mutual recrimination which seems all too often to be the order of the day.

For instance, the issue of costs is often presented in black-and-white terms.

Environmentalists will often put forward proposals without having clearly worked out just how they are going to be paid for, or without sufficient appreciation of the impact of such proposals in the international competitiveness of Ireland as a whole or that of individual firms.

In response, the reaction from business all too often is simply to oppose any proposal that has any cost implication whatever, and so creating the impression that it always has to be dragged unwillingly into taking the environment into account.

Of course these are caricatures, but are they really so far from the truth? We tend to mask such caricatures in public debate by ritual hand-washing and genuflection to high-sounding principles. But in private debate I suggest the real lines are not drawn so very differently to what I outline.

My feeling is: what a waste of effort! Instead of spending all these resources pulling each other apart, how much we could achieve if we worked together on this problem.

Let me give two examples of how co-operation can work. One is in the future, and maybe offers a signpost for the direction we should take. The other is in the past - a small but shining example of what we as a country can do for the environment when we work together rather than against each other.

I'll deal with the future first. As a nation, we have entered into a solemn and binding agreement to reduce our carbon emissions by a significant amount within a frighteningly short period of time. I say "frighteningly short" because we have, I believe, already used up all the slack we negotiated at Kyoto - and we now face the task of cutting back on our carbon emissions over the rest of this decade, during a period when we hope to go on expanding our economy.

Failure to meet these treaty commitments would involve the country in costs so massive that they would undermine our economic progress very significantly indeed. So we have the best of all possible incentives to get our house in order; we will pay heavily for it if we don't.

Now I don't want to go into all the details of our obligations under Kyoto, so I'll fast forward to the bottom line. The bottom line is that in order to bring about the massive behavioural changes we need to make happen we must bring in carbon taxes. We must rejig our taxation system so that we penalise behaviour that results in carbon emissions.

Where we get to controversy is just how to do this, and this is where I believe we have to work together as a nation to find an acceptable way forward.

Our challenge, as I see it, is to find a way of recasting our tax system so that carbon emissions are discouraged and penalised, without at the same time reducing our international competitiveness.

Because, at the risk of stating the obvious, there is precious little point in cleaning up our act on emissions if the price of doing so is to strike a fatal blow to our future economic prosperity.

The way out is in the concept of rejigging our tax system. Rather than simply to add to the burden of taxation, we must redistribute that burden. What we must take away in one area we must put back in another, so that the end result is exactly the same.

Just as with the plastic bags tax, which I will come to in a few minutes, the object of carbon taxes should not be to raise money but to change behaviour. Our obsession with raising money from taxes, especially on a day like today when the Minister for Finance is poised to do his thing, masks from us the other benefits that can flow from taxes if we handle them right.

We need to think more often of taxes not as revenue-raisers, but as revenue-balancers.

Let me quote, as I so often do, the example of Singapore. Singapore has successfully introduced the concept of charging for road use. When you go into the centre of the city at certain times of the day, you are automatically charged for that privilege - more according to the time it is. This has been proved to be technologically feasible, it has also proved itself as a way of reducing and controlling congestion in one of the world's busiest cities.

But that's not my point today.

The point is what Singapore has done with the money these road charges have raised. The revenue, incidentally, was much higher than they originally estimated. What they have done with the money is give it back to the motorist, by reducing the other taxes that users of vehicles pay. So the result is that they have achieved a massive behavioural change through taxation, but in a way that was revenue-neutral.

At the end of the day, the same amount of tax gets paid - but the way it is paid creates an incentive towards the kind of behaviour they want to encourage.

That approach, I suggest, offers us a way forward here in this country. We must bring in carbon taxes, if we are to change behaviour in line with our international treaty commitments. But we must also do it in a revenue-neutral way - a way that avoids under-cutting our international competitiveness.

I have no doubt at all that it is possible to square this circle - in fact, I understand that those nimble minds in the ESRI are already giving some thought to the task. Some of their thinking will be unveiled at a seminar in Dublin next week.

But unless we are careful, their findings are likely to be neglected, or treated as of purely academic interest.

They are not: they offer us a real, practical way out of the environmental dilemma that we face. We should receive them enthusiastically, and do our best to get together and run with them.

Part of the difficulty here is in getting people to believe that you can use taxes to change behaviour. It's not that anyone doubts what we do is affected by taxes. It's just that we are slow to accept that taxation can actually be used deliberately as a tool to change behaviour, rather than to raise revenue.

In the Department of Finance, perhaps understandably, they just don't want to know about anything else apart from revenue-raising.

But to find the proof that you can take a wider view, you don't have to look as far as Singapore. You have only to look at your nearest shop, and recall the lesson of the plastic bags tax.

For me, there are two lessons to be learned from the plastic bag experience.

The first is that a tax aimed at changing behaviour can work. It has worked, it is working - here and now.

The second - and this is perhaps the real lesson for business - is that by embracing initiatives like this, and applying commercial ingenuity to them, you can actually turn them into a business opportunity. That is precisely what my company did in relation to the plastic bags tax.