Small size of climate fund misunderstands scale of net zero investment challenge

12 October 2023

Labour’s Finance spokesperson Ged Nash has said that the €3billion climate component of the government’s proposed €14billion Infrastructure, Climate & Nature Fund needs to be markedly increased if we are to have any chance of meeting our climate targets.

Speaking after publication of the government’s outline proposal for the Fund, Deputy Nash said;

“In truth, Ireland’s emissions reduction performance has been poor. We know from the Climate Change Advisory Council that ambitions have not been matched by actions. As it stands, we have already reached 50% of our emissions ceiling out to 2030.

“The climate crisis is the existential threat of our time and the time for modest steps and incrementalism has long passed.

“In Labour’s policy document on a national wealth fund published in August, we set out how our wealth should be used to fund the ‘transition’ phase, how that phase should be time limited and how this form of State investment – allied with upgrading the national grid, the potential for direct State investment in solar and offshore wind and a continued focus on advanced construction methods and climate change adaptation measures – should form the cornerstone of any government initiative on how we deploy our windfall corporation tax gains.”

“We welcome further clarity on the plans announced in the Budget.

“However, there are real questions for government to answer on the design of this Fund;

  • Why have they set a maximum drawdown of €3.15billion for climate and nature up to the year 2030, from a €14billion fund?
  • Where is the evidence to back up this decision, and why was this figure decided before we know what the review of the outdated 2018 Adaptation Plan has to say?
  • Why has government decided that the Fund cannot not be tapped until 2026, when the urgent demand for additional investment in mitigation measures is now?

“Funds could easily be transferred now from the National Reserve Fund to get a move on. Ireland and the world cannot wait until 2026.

“The need to up investment and do it urgently is all the more acute given the fact that existing National Development Fund projects across all areas are, as the Irish Fiscal Advisory Council has warned, underfunded to the tune of 24%.

“The maximum of €3.15 billion set aside doesn’t come close to meeting the extra expenditure of between €1.6 to €3billion a year IFAC, in a separate report two weeks ago, said is needed to assist farmers with the transition, and for retrofitting and other critical supports.

“Labour has consistently argued that the focus of spending for our excess corporation tax revenue should prioritise the transition steps we need to get to our legally binding targets and a carbon-free Ireland.

“We were never under any illusions that this would demand unprecedented levels of State investment which. We set that principle out last summer when we outlined our priorities as to how we would deploy windfall business tax resources.

“While it is welcome that this principal has been conceded, the relatively small amount of money made available to climate compared to the overall scale of both the infrastructure fund and the Future Ireland Fund exposes a worrying misunderstanding of the scale of action needed from the State.”

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