"I move: That the Bill be now read a Second Time."
It is timely that we are discussing the Fossil Fuel Divestment Bill 2016 a day before the most famous climate change denier is sworn in as President of the United States, bringing with him former Exxon Mobil chief executive officer, Rex Tillerson, as Secretary of State. We should not associate ourselves with Trump-era politics. His Administration and its public display of affection for big oil is representative of the industry’s fading legacy and its last attempt to hold onto power. For over a century, it has enjoyed the privilege of buying political influence and deliberately concealing and manipulating the science of climate change in their favour. These corporations have been allowed to skirt around democratic institutions while the most disadvantaged are left to bear the brunt of climate change effects. As a developed nation, we have also stood idly by, allowing big energy corporations to run the show, most recently with their push to open up Irish markets to fracking. Ireland continues to lag behind in its commitments to mitigating climate change effects. Ireland is currently the eighth highest producer of emissions per person in the OECD and only one of two countries in the EU that will not reach its 2020 targets for emissions reductions. Our non-compliance will cost, with estimates of up to €6 billion for breaching emission levels. Today offers an opportunity for us not only to catch up with the pace of climate change, but also lead on mitigating its effects.
In 2009, financial analysts demonstrated that up to 80% of the fossil fuel reserves held by fossil fuel companies cannot be burned if we are to remain below an average global temperature rise of 2°C, as committed to by all Governments in the Paris Climate Agreement. In the Global Green Economy Index 2016, Ireland fell significantly in the global rankings owing to a perceived lack of political leadership. If Ireland wants to benefit from the significant growth and job opportunities presented by the global decarbonisation agenda and energy transition, divesting the Ireland Strategic Investment Fund, ISIF, would send a strong signal that it is committed to the Paris Climate Agreement and will be a seriously player in the transition to a fossil free global economy.
I will like now to focus on the contents of the Bill and the wider debate on fossil fuel divestment. The Bill seeks to amend the National Treasury Management Agency (Amendment) Act 2014, providing that the Ireland Strategic Investment Fund, previously the National Pensions Reserve Fund, be divested of its assets in fossil fuel companies within five years of its enactment. This is to facilitate a timely decarbonisation process in line with Ireland’s climate change commitments under Article 2 of the Paris Agreement which was passed last year. The Ireland Strategic Investment Fund, ISIF, is an €8 billion sovereign development fund with a statutory mandate to invest on a commercial basis to support economic activity and employment in Ireland.
Section 1 of the Bill amends the section 37 of the principal Act by inserting a new definition of "fossil fuel company" to incorporate the term "geological deposits" to enable a distinction to be made with biofuels and other alternative hydrocarbon energy sources. It is to be noted that biofuels can be considered renewable only when they meet strict sustainability criteria.
Section 2 amends section 39 of the principal Act by adding subsections after subsection (6). Subsection (7) is added to accommodate future amendments or laws that may apply to the agency now or into the future and to ensure that any future changes do not compromise the integrity of the agency’s divestment process from fossil fuel companies. Subsection (8) provides that the agency will endeavour to ensure that the assets of the fund are not invested, directly or indirectly, in fossil fuel companies. It also provides scope for the agency to manage its divestment process within the defined timeframe, while not being illegal in the meantime. Subsection (9) obliges the agency to divest its assets of the fund from current investments, direct or indirect, within five years of the commencement of this subsection. Again, the Ireland Strategic Investment Fund will have a lengthy timeframe for the process of divestment and I want to clarify that the Bill does not make it current fossil fuel investments illegal but rather sets out a five-year timeline for the fund to rid itself of these assets.
The global fossil fuel divestment movement originated on university campuses in the US in 2011 and has seen explosive growth to become the fastest growing divestment movement in history. By December 2016, at least 689 institutions, with an asset base of $5.44 trillion and at least 58,000 individuals with a value of $5.2 billion had committed to divest fossil fuel investments. In Ireland, Trinity College Dublin announced in December 2016 that it is joining the movement and divesting its endowment fund of all investments in fossil fuel companies. The President of NUIG has expressed support for NUIG to follow suit in early 2017. NUIM has already committed to a fossil free investment policy and numerous other universities are expressing fossil free intentions. In the past few months, almost 11,000 people in Ireland have signed a petition calling on the Government to stop investing in fossil fuels. Some 25 groups and networks from across the country sent a submission to the Minister for Finance, the Minister for Public Expenditure and Reform and the Minister for Communications, Climate Action and Environment to make the case for divestment of the ISIF. Divestment is not new. Ireland has done this before with the Cluster Munitions Bill and Fianna Fáil recently introduced a Bill seeking that public money be divested from tobacco companies. We cannot forget about the success of the 1980s of South Africa divestment campaign, which put pressure on the South African Government to end apartheid. It is all part of ethical financing, with which we already have a history.
Most of these projects started with civil society groups and moved to larger institutions such as universities until they reached the Government's ear and were legislated for. While we do not have Fine Gael's support today, I am happy that there is cross-party support for the Bill as it would further validate the growth of the movement. Divestment is not just climate-smart; it makes financial sense. ISIF invests €133 million in fossil fuel companies but because fossil fuel commodities are increasingly volatile, it lost €22 million on these investments in 2015 and €100 million in total in the past three years. Imagine what could have been done with this money if it had been invested in renewable energy solutions such as biomass or solar energy projects. Owing to rising oil prices, some believe it would be financially unwise to divest from these companies. We need to recognise, however, the increased volatility of oil as a commodity. What are often overlooked are the unsustainable business practices these large oil corporations undertake and which are leading to the phenomenon of "stranded assets". Some 80% of fossil fuel reserves need to stay in the ground to keep below Paris Agreement limits. The value of fossil fuel companies' is based on these reserves, but if they cannot be used, they become stranded assets. Between 60% and 80% of coal, oil and gas reserves of publicly listed companies are unburnable if we are to have a chance of not exceeding the global warming target of 2° Celsius.
There are concerns about the impact the Bill might have on semi-State companies such as Bord Gáis, Bord na Móna and the ESB. The Fossil Fuel Divestment Bill would prohibit future investments in fossil fuel companies - that is true - and semi-State companies would not be eligible to receive investment from ISIF in the future. I reassure Members of the House that if the Bill progresses to Committee Stage, I will be absolutely open to it being amended to allow for investment in such companies if the investment is specifically to enable them to transition to 100% renewable energy sources by 2050 and, where the investment case to do so has been scrutinised against alternative investment opportunities, to advance the transition away from fossil fuels. Providing for fossil fuel divestment in legislation would send an important signal that Ireland will uphold its commitments under the Paris Agreement and contribute to and benefit from the growth of the global green economy. It would send a message to businesses of all sizes and kinds in Ireland that it is in their interests and the Government's obligation to plan for and begin working towards a fossil fuel-free economy.
Energy companies in Ireland that are committed to action on climate change and supporting Ireland's delivery on its commitments would have nothing to fear from fossil fuel divestment. This is an opportunity to ensure State investment policy will enable a transition process aligned with our commitments under the Paris Agreement. I would be happy to work with colleagues on the Bill to this end on Committee Stage. Enacting the Fossil Fuel Divestment Bill would not dictate how the Government and the Oireachtas pursue implementation of the recommendations in the White Paper on energy and the forthcoming national mitigation plan. Importantly, however, it would signal political support for more urgency in forging a fossil fuel-free society and economy for Ireland.
I again reassure the House that the Bill was purposely written to allow enough scope to facilitate a wide-ranging debate on fossil fuel divestment. I would be more than happy to consider amendments or suggestions on Committee and Remaining Stages. It is our duty, as legislators, to legislate effectively and educate ourselves on the full implications of what we bring forward in the Dáil. The Government is opposing the Bill which I believe is a lost opportunity on its part. I want to address some of its justifications for opposing it.
ISIF operates a sustainable and responsible investment policy which was published in July 2016 and which specifically focuses on climate change, but the claim that ISIF has limited exposure to fossil fuels within its portfolio is misleading. An independent study by "Corporate Knights" shows that while the amount invested in fossil fuels by ISIF is a small proportion of its overall portfolio, the carbon footprint of these investments is significant. The "Corporate Knights" study found that divesting current fossil fuel assets would reduce the fund's carbon footprint by 48%. To continue to invest in these companies by any amount is to invest knowingly in their future climate impacts.
Second, the fund does have an €800 million allocation for energy projects, the vast majority of which will be invested in renewables. If, however, the "vast majority" of the energy investment is to be in renewables, it means that there is the option to invest in fossil fuels. It is morally problematic to invest in the continuation or expansion of activities that are clearly working against the public interest. ISIF's focus on sustainability and supporting the decarbonisation process is welcome and really important, but responsible use of public money means that scarce public resources should not be invested in infrastructure and business models that we know will have to become redundant in the next few decades. We should be investing in a just transition for workers and communities currently dependent on an industry in its twilight years and to ensure Ireland becomes a desirable location for investment in the industries and technologies of the future. A study conducted for the Irish Corporate Leaders Group on Climate Change in 2014 found that there was the potential to create 90,000 jobs in Ireland in an ambitious climate action scenario.
One should remember that climate change affects us all, but not equally, and we must apply the principles of climate justice. Everyone here will have a statistic at hand, but one, in particular, stands out for me: 10 million people in Ethiopia are in need of food aid. Can one imagine that? Ten million is twice the population of Ireland. Some 185 million people have been displaced by disaster and climate change. The impacts are solely attributable to climate change. The statistic indicates that one person is displaced every second around the world. I reiterate that a failure to meet the commitments made in the Paris Agreement would have a catastrophic impact on the global economy and financial system and also result in human tragedy of epic proportions. Our denial will be their downfall. Today offers one way to fight climate change, through ethical financing. It is a commitment to which we signed up under Article 2 of the Paris Agreement. We have both a moral and a practical imperative to embark on the process of divesting public money from fossil fuel companies.
I thank the House for giving me the opportunity to speak to the Bill on Second Stage. I am grateful for the cross-party support I have already received. I thank Trócaire for all its hard work on the project and, in particular, all those members of the public who have campaigned on the issue in recent days and weeks. It is the dedication of the public on this issue that can truly effect change and stir up the necessary political will to bring Ireland into climate action.