ESG Newsletter: Why Ireland is unique in its massive climate spending plans
The ESG newsletter at the Business Post is your source for the news that matters in environmental, social and governance, all told from an Irish perspective
With climate change requiring governments to step in with new spending plans to support the energy transition, many European member states are wondering where they are going to be able to find the extra cash.
At a recent meeting of energy ministers at the International Energy Agency in Paris, Bruno Le Maire, the French economy minister, told delegates that government’s were facing “huge fiscal difficulties” due to large public debt following the Covid and energy inflation crises, and therefore Europe “could not count on more public funding” for the energy transition and fight against climate change.
“There is no possibility for us to put much more money on the table,” Le Maire said, instead advocating for significant increases in private investment.
In Ireland, we are having a slightly different conversation.
Buoyed by our bumper corporate tax receipts, capital and current spending by the government on climate initiatives remains high here, and plans are afoot to futureproof that high level of climate spending, even long after this government has left office.
As I reported at the weekend, a new €14 billion infrastructure fund will be utilised only for environmental projects this decade, unless there is an economic downturn, according to newly published legislation.
The new Infrastructure, Climate and Nature Fund will act exclusively as a reserve for environmental spending, and will only be opened up for other infrastructure projects if there is a “deterioration in the economic or fiscal position of the state”.
It is one of two new funds being established to house some of the excess corporate tax receipts flowing into state coffers, along with the other €100 billion Future Ireland Fund.
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That will not be deployed until 2041 at the earliest and is intended to help manage the costs to the state of an ageing population, as well as other issues
But the smaller €14 billion infrastructure fund will be open to ministers for additional spending from 2026..
Those environmental projects are defined as including projects that contribute directly or indirectly to the “reduction of greenhouse emissions”, actions under the National Biodiversity Action Plan, marine strategy objectives, and water initiatives.
The fund will only be further opened up to non-environmental projects in the event that the minister for public expenditure has determined that the “deterioration… in the economic or fiscal position of the state is of such significance that it would be appropriate to make a payment” and following a Dáil vote.
It is a significant public fiscal innovation that seeks to futureproof climate and nature spending. And it is one that is happening only because of Ireland’s unique position as the taxable jurisdiction for some of the highest earning multinationals in the world.
Thanks for reading,
Daniel Murray
Around the world
Oil giant Shell has launched an appeal against a landmark climate ruling in a Dutch court which ordered it to drastically cut greenhouse gas emissions.
Reuters has an explainer on the 2021 ruling on Shell to cut absolute carbon emissions by 45 per cent by 2030 compared to 2019 levels.
It looks at how the extensive ruling would affect Shell’s global operations and not just those in the Netherlands.
