National Oil Reserves Agency (Amendment) and Provision of Central Treasury Services Bill 2020: From the Seanad

The Dáil went into Committee to consider amendments from the Seanad.
Seanad amendment No. 1:
Section 15: In page 13, to delete lines 1 to 3 and substitute the following:
“(10) (a)Without prejudice to the generality of subsection (9), the Minister, or such other person as he or she may nominate, may invite proposals to avail of moneys from the Climate Action Fund for any or all of the purposes set out in paragraphs (a) to (f) of subsection (9).”.

I am grateful for the opportunity to address the amendment and, I hope, to have the Bill passed by the House. The amendment relates to section 15 and was tabled following discussions between my Department and the Office of the Attorney General. It was determined that it would be appropriate to table an amendment to section 15 on Committee Stage in order to clarify the basis on which the Minister may support climate action projects.

The aim of the amendment is to provide legal clarity beyond any doubt in support of the intention in the Bill that it would be possible for the Minister to provide funding for climate action projects by way of either a competitive process or a non-competitive allocation. Acceptance of the amendment would mean that it would not be mandatory for the Minister to conduct a competitive project selection process prior to supporting a climate project through the climate action fund. The Minister would be permitted to invite an application for support under the fund from a specific climate action project, subject to the project being of a type which may be supported by the fund as provided for in the Bill. Clarification of this matter in the legislation is important because there may be climate-related projects or investments that are not economic or commercial by nature and, as such, may not be eligible for consideration or successful under a competitive selection process. The amendment will provide the necessary certainty that the fund may support such non-commercial projects as applicable.

As Deputies may recall, the amendment was tabled in the Seanad with a view to being able to pass the Bill today. That, in turn, would allow us to get it to the President for signature such that it could be enacted before the end of July or on 1 August. That would allow us to start drawing down funds at that stage for use in the fund. It is hoped that this would be quickly followed by another call for projects. That would provide a significant stimulus and economic lift right across the country as well as helping us to meet our climate targets. On that basis, I hope the House will agree to the amendment.

The Minister stated on Committee Stage last week that the purpose of the amendment is to facilitate investment in Bord na Móna projects.

I understand that is the basis for this amendment. On that basis, I will be supporting the amendment. I want to address the purpose of the amendment, which is to facilitate the employment of Bord na Móna staff to work on the cutaway bogs across the midland counties. I commend that provision, which I asked this time last year to be included in the climate action fund. I thank the Minister, his predecessor, Deputy Bruton, and the officials in the Department for taking that specific proposal on board. The decision not to have a harvest this year is having a significant detrimental impact on many of the seasonal and permanent staff in Bord na Móna across east Galway, Roscommon, Longford, Westmeath, Laois and Offaly. Many of them are very dependent on that seasonal work and many businesses across the midlands are dependent on that. I would like if the Minister could respond to me and provide some clarity to the employees in Bord na Móna who are in limbo and have been for the last number of months. Some of them are drawing the pandemic unemployment payment, some are drawing the wage subsidy scheme through Bord na Móna and some are seasonal staff who were not called back this year and do not know whether they will get any work. They are getting no financial support whatsoever even though their jobs are in limbo. What is most frustrating for the employees in Bord na Móna is that they have been given no information from Government or Bord na Móna as to what is happening in the short to medium term in respect of employment. I hope when the Minister responds that he will provide some clarity on that.

I would also be grateful if the Minister could look into a specific issue for me. I refer to the perverse situation where we the taxpayers are borrowing money to fund the pandemic unemployment payment and wage subsidy scheme within Bord na Móna for staff who have applied for the voluntary early retirement scheme. They are looking for redundancy but Bord na Móna will not let them out to retire, yet they are receiving a subsidy from the State where there is no employment for them at present. Surely it makes sense to let those staff who want to retire out the door and to try to secure as much employment as possible for the staff who are left within the company. I think it is a public scandal that this is happening and I plead with the Minister to intervene.

On the specific provision of the amendment, as the Minister said, its purpose is to look at projects where there may not be an economic dividend or it may not win purely based on the climate impact. As the Minister knows, the purpose of that is to put money into Bord na Móna to provide employment for its staff. I am led to believe that the plans that are currently being drafted by Bord na Móna to access this climate action fund are very heavy on capital and not so heavy in terms of employment. That is completely unacceptable. It was never my purpose when I was looking for this provision to be put in the legislation. It was never the purpose of the climate action fund to look purely at capital investment. I am told that the plans being drawn up are over-engineered and insufficiently labour intensive, when the Minister and I know very well that it must be the other way around. While the Minister is not going to look for the same provisions in terms of the criteria regarding the funding he would give to Bord na Móna, I urge him to ensure that he gets independent advice to ensure that whatever work is carried out is as labour intensive as possible and ensures as much employment for the seasonal staff as is possible.

The focus needs to be on rehabilitation of the bogs in the first instance and, second, providing public access through those bogs. Last Sunday I had the opportunity to cycle from Ballinasloe to Shannonbridge through the bog just south of the town of Ballinasloe, along the existing railway works line. It would be great if we had a proper walkway and cycleway through that bog from Ballinasloe right through to Shannonbridge. The same is true in many of the other bogs across the midlands. There are very detailed proposals coming forward about opening up the Mount Dillon bog complex in Roscommon and Longford for public access. We should be getting Bord na Móna staff to do that work. It is imperative that the funding that is made available through the climate action fund is for labour intensive work for that specific purpose and I hope the Minister will ensure that happens.

We need to take the milled peat off these bogs urgently. In the last fortnight I was on the road between Ballydangan and Cloonfad going past the bogs at Clonbern. There was a brown cloud in the sky of milled peat which is on those bogs at the moment. It is causing environmental problems across communities in that area. That peat cannot be left on those bogs. It must be removed. I do not want the situation repeated that happened in Littleton, where milled peat was bulldozed into the drains. If that were to happen across the midland bogs, it would cause an environmental catastrophe. The milled peat would run from the drains into the River Suck and the River Shannon, compounding an already difficult environmental situation in those rivers as well as compounding the flooding problems we have within their catchments. I want an assurance from the Minister that some mechanism will be found to ensure that the peat is taken off those bogs and burned in Lanesborough and Shannonbridge for power generation before the ground conditions deteriorate later in the year.

I gave a little bit of leeway there. The subject matter is the amendment that is before the House. I ask the next speakers to stick to the subject matter of the amendment from the Seanad rather than the full Bill.

I wish to make some comments on the National Oil Reserves Agency (Amendment) and Provisions of Central Treasury Services Bill 2020. The National Oil Reserves Agency, NORA, exists in its present form to ensure that Ireland maintains its minimum stockholding requirements for oil and petroleum products. It is there to ensure our national security of energy supply in case of global disruptions. As stated by the website of the Department of Communications, Climate Action and Environment, and in the principal Act, the main purpose of the NORA levy is to fund the maintenance of Ireland’s strategic oil reserves.

In respect of the proposed amendments to the principal Act, the Minister wishes to redeploy the levies on oil and petroleum products to establish the climate action fund and he has advised that it is not envisaged for there to be any significant cost to the Exchequer. In the explanatory memorandum, it is advised that the provision of central treasury services by the National Treasury Management Agency, NTMA, to NORA and Irish Water provides for efficiencies in the financial management of both agencies. I think we all know the state that Irish Water is in financially and now it looks like our Government is going to toy with our energy security of supply. I would therefore like to ask the Minister specifically how the National Oil Reserves Agency will be funded going forward if it is to share its funding with Irish Water, given that there will apparently be no increase in cost to the Exchequer. Does it mean that we are now going to transfer the disgrace and shambles of Irish Water to our security of energy supply?

We have all witnessed the severe disruption that Covid-19 has brought upon us. The failure of our Government to invest in our health system and hospitals created a security of supply issue for our healthcare. Do we now want to jeopardise our security of energy supply by redeploying the money to the climate action fund? The climate action fund will hopefully be a positive development for our country’s transition to cleaner energy sources but can the Minister explain how we will maintain an adequate security of supply going forward when the funds allocated to the National Oil Reserves Agency will now be significantly reduced?

I spoke at some length last week about our security of supply situation regarding our current energy supplies. While I welcome the fact that we will give clear support to the development of renewables and clean energy, I fear that it might not be enough to underline our security of energy supply while keeping energy prices competitive for our citizens.

Renewables are highly volatile due to periods when the wind is blowing or not, or when the sun is shining or it is overcast. As we move towards cleaner energy, the most likely realistic solution will require a combination of renewables with natural gas. As renewables will also take time to develop into the major source of energy for our country, once again, I raise the critical issue of the security of our natural gas supply, which is dire. The Minister wishes to increase energy efficiency under the recently proposed amendments for the climate action fund, and has now received approval for state aid for renewables. This is a great achievement, and we are on our way to reducing emissions, but we need to get our house in order first. While we have great news about the future, it has become increasingly clear that Ireland is severely exposed to security of supply issues in relation to our natural gas supply.

The Minister may have seen on the news recently that the Kinsale gas platform, one of our few indigenous sources of natural gas supply, was recently turned off. This will result in a loss of local jobs in Cork but it also means that we are now in an extremely vulnerable position with regard to our national security of supply for gas. Ireland currently produces more than 50% of our electricity from gas and we import gas via interconnectors from the UK. We have no existing gas storage on the island of Ireland, Corrib gas field will be gone within ten years, and we are now fully reliant on the UK for gas imports. The UK is also reliant on gas imports and is experiencing its own declining gas production in the North Sea.

The UK is also exiting the EU, which means new risks to our economy. The UK and Ireland are good friends now, but the same cannot exactly be said about the EU and the UK who are going through a messy divorce. If trade talks between the EU and the UK were to take a turn, not much would prevent the British national grid operator from increasing tariffs on the interconnectors between the EU and the UK which would in turn directly hurt the Irish economy. I strongly ask the Minister to improve our security of supply situation for natural gas and I propose that, at minimum, the Minister considers a floating liquefied natural gas, LNG, import terminal which can guarantee our security of supply while developing offshore wind power and renewables.

I support our move towards renewables in the coming years but it is clear that it will take time and we must be realistic. Gas can and will play a key role as a transition fuel and in balancing power production from renewables in Ireland. Once offshore wind power production and other renewables are in a position to replace fossil fuels, we can either use a floating LNG terminal as a pure security of supply option or disconnect it entirely if it is desirable for our country. A floating terminal will allow this and we will not be left in the lurch while we make our move towards renewables. This will help to put Ireland's energy transition and economic competitiveness first instead of outsourcing our energy needs to the UK and other countries. I am also aware of a proposal from a company owned and located in Ireland which is ready to put in place world-class LNG infrastructure and commit to importing conventional LNG, not fracked gas. I also have proposals for offshore wind power projects in the County Cork area. These projects can complement each other as well as being truly supportive of our energy transition.

We are in very challenging times and higher energy costs will hurt our economy. I ask, therefore, that the Minister seriously considers both offshore wind power as well as a floating LNG terminal as viable options to support our economy with competitive energy, to diversify and ensure our security of supply of gas, and to ensure a practical, cost-efficient and just implementation of the energy transition in Ireland.

The Minister has said the Government amendment is to provide legal certainty on funding for projects where there will not be a competitive tender. Bog rehabilitation was the example the Minister gave in the Seanad last week. I understand and appreciate the rationale, but as my colleague, Senator Boylan, told the Seanad, and as I put it in this House last week, the Minister must put processes in place to ensure this mechanism is not misused by himself or his successors lest they wish to use it for their own pet projects. It is in everyone's best interests that the highest standards of financial governance and oversight would be in place. This money will be provided by the public, so it is important that there is transparency and accountability in the allocation of these funds. We take the Minister's bona fides on this and therefore we are happy to support the amended Bill.

I had asked for an updated figure on the current financial state of NORA. I understand that it could have a few hundred million euro in its accounts. The latest figures to which we had access were from August 2019. Will the Minister provide the Dáil with the latest figure in his closing statement?

I encourage the Minister to engage more with Deputies and Senators on future climate action legislation. This is our first exchange on legislation. There were some very positive amendments, though not my own, put forward in the Dáil and Seanad and it was a shame that they were not incorporated into the Bill. Most were not controversial and would have added value to the legislation.

Like previous speakers, I acknowledge and appreciate that this amendment provides for funding to be allocated from within the climate action fund to meet the demands associated with the rewetting and reinstatement of peatlands associated with Bord na Móna and the extraction of peat for various uses. However, in welcoming this provision, I ask the Minister to tell the House whether the commitments made by the previous Government on the repatriation of part of the public service obligation, PSO, funding, amounting to €20 million per annum for the next four years, towards this project is not now the case, despite the commitments made and despite the understanding in Bord na Móna and among its workers, the regions and the constituency represented by myself and others. If that is not now the case, does this amendment provide for €20 million per annum over the next four years, as we were told at the time of the announcement when a commitment was given? It would appear from my information that the EU Commission no longer supports that contention, that belief, that understanding, and that commitment that was given in this House and outside. Will the Minister clarify that?

Based on that answer, it is incumbent on me to ask two further questions so that I can get an answer for this House and my constituents. I refer to the funding approved by the European Council this week. Much has been alluded to in regard to the funding made available under various headings, whether it is the Common Agricultural Policy, CAP, or the just transition and the reduction in funding associated with them compared with previous figures. I acknowledge and appreciate that it would have looked far graver months ago were it not for the introduction of the emergency funding that compensates us in relation to the CAP and other areas. I welcome that and appreciate the job faced by those with responsibilities to ensure that any such conditionality helps and assists those who partake in the schemes to improve their incomes and so on.

Will the Minister confirm the inclusion in the transition fund of peatlands in the coal regions? Will he confirm that measures used and targeted towards the regions will target where there are and have been job losses to assist finding alternative jobs in those areas? A commitment was given in the just transition report, which all stakeholders welcomed and approved, that the regions most affected would be targeted for such funding.

On the first round of funding, which was only 50% of what was provided by Government and 50% of what was apparently provided by ESB, this was to be geared towards those areas most affected and that is not necessarily the case. That is no disrespect to those applications in hand, that are being adjudicated upon and will be afforded. In the context of the larger pot of funding that will be available under the Coal Regions in Transition programme, the criteria associated with that must accommodate those areas that are most affected. Nowhere has been more affected in the context of these job losses than the county and constituency I represent. I would appreciate a commitment that that will be the case.

On that same report that was welcomed by all stakeholders and by Government and acknowledged by everybody who participated in its deliberations and ultimate publication by Mr. Kieran Mulvey, there was a commitment in that, which we all respected, to look at alternative use associated with the powerplants in Shannonbridge and Lanesborough. As we speak, I have been made aware of the fact that ESB is seeking tenders and contracts for the decommissioning and demolition of these facilities. That is a far cry from the commitment made by the Just Transition Commissioner and from the response from all parties and none to what was contained in this report's recommendations. I hope the Minister will hold those bodies to account and engage with them to ensure that every opportunity is afforded to the localities and the regions and that the commitments that have been made by representatives, authorities and stakeholders to investigate, explore and ensure that other alternatives are found are fulfilled. I call on the Government to support those alternatives which will have a role in ensuring that these regions have prospects from the facilities proposed to be demolished.

I welcome the commitment contained within the amendment. It is it is incumbent on the Minister to inform the House that this is now a replacement for a commitment that was made previously which was not honoured. The reasons it was not honoured are not yet clear to me and need to be clarified and put on the record of the House.

The Minister needs to go beyond that and to commit to what was originally envisaged, which was a four-year programme. If he cannot do that, I ask them to say that now so that we know exactly where we stand. These people, these areas and these regions have been let down a lot in the past two to three years since the first commitment was made. We cannot afford that to continue or for it to be the case in the future. I am now a member of a Government party and I am supporting this Government on the basis of the ambitions contained in the programme for Government, one of which was to address just transition fairly and appropriately and I hope the Minister can guarantee that is the case and confirm the reasons commitments made previously cannot be stood over and what he is doing to ensure similar commitments can be made by this Government, as are contained within the programme for Government.

Gabhaim buíochas leis an Teachta. De bharr nach bhfuil aon Teachta eile ag iarraidh labhairt, glaoim ar an Aire freagra a thabhairt.

I thank the Deputies for their contributions and I will try to answer some of the questions raised. First, turning to Deputy Naughten, the purpose of this amendment is to allow the sort of projects that Bord na Móna is now looking at in terms of bog rehabilitation, rewetting bogs and storing carbon within the bogs. It is specifically those sorts of projects. My predecessor, Deputy Bruton, the Deputy and other predecessors supported that approach and I am glad to ensure we deliver it here.

On the level of employment, I have seen some figures and I have been encouraged that there is employment here. We do not have the specifics yet and we will have to wait for the fund applications to come in, but there are real employment opportunities for Bord na Móna because the skills involved in this area are the exact skills that the workers in this company have in terms of logistics, managing bogs and the energy and expertise to manage the natural landscape. It will vary. The issue in terms of managing the bogs in this way is that every bog is different and requires site-specific knowledge and different engineering solutions and mechanisms to deliver the right answer.

On what the Deputy said about workers looking for redundancy, I will ask the officials to reply directly to him to outline why it might be the case that workers would be availing of the wage subsidy scheme while at the same time be looking for voluntary redundancy where the State could pay them in that way. I will commit to doing this.

On the stores and stocks of milled peat on the bog between-----

Ballydangan and Cloonfad. We have milled peat on bogs right across the midlands.

The Deputy cited Littleton. The issue of the harvest not proceeding this year relates purely to environmental issues and the environmental impact assessment and it requires the company, as it moves from brown to green, to ensure it does not leave an environmental hazard where the peat would run off into the water. I will pursue that directly with the company to ensure that is what takes place.

There are real employment opportunities for this company across a whole variety of different areas, not just in the rehabilitation of bogs but in new energy projects. The company’s strategic plan last year is going in the right direction and that it should be going further and should be looking at additional and other ventures. Some of the projects it was looking at were too narrow but it is absolutely what we should strive to achieve.

To answer Deputy Michael Collins's question, at the end of last year, the National Oil Reserves Agency, NORA, had a fund, which has been built up over recent years, of €230 million. That provides an ongoing fund and capability for the company for the next number of years to be able to continue what it does, which is to maintain 90 days storage of oil reserves on storage facilities like Whiddy Island, which the Deputy would be very familiar with, and the Poolbeg peninsula. Under an international agreement, it will have to be able to fund, manage and provide such secure energy stores. This climate fund is not designed to remove that but to continue it. The reality is that we can use revenues to do both.

The interim funding of Irish Water by the National Treasury Management Agency, NTMA, in short-term loans was a purely technical issue because NORA and Irish Water are both advised by the NTMA. Long-term funding for Irish Water will not be coming from this fund and there is no connection between Irish Water and NORA which are separate entities. The only connection being the services provided to both by the NTMA. Both are fully independent.

As to the development of a floating LNG import terminal in Cork Harbour, I read a detailed summation from an Irish company recently with interest. That technology has taken off in different places around the world, largely through the development of large quantities of offshore fracked gas from the US market looking for a home. In the programme for Government this Government has committed that that is not a development we want to see in our country. We will be issuing a policy statement to say that is not the direction that we are going in.

There is, however, huge potential for the development of alternative energy systems and secure energy supplies. As has been said, the potential for offshore wind is something with which we have a great opportunity. It will take time. Increasingly, within the European Commission and other agencies, there is a recognition that the conversion of offshore electricity supply into green hydrogen supplies through electrolysis is something in which we may have a real competitive comparative advantage. This is particularly the case where we have infrastructure in places like Cork Harbour, which is a deep safe harbour with deep berths. That may be the future for energy security and energy storage systems. The expertise that exists in those companies would be just as easily developed in that area, where there is growing interest and growing investment. It is an area that could provide significant jobs and economic opportunities, particularly for Cork because of the harbour resources it has.

Deputy O'Rourke asked about the financial state of NORA. As I said, this agency has a fund in the region of €230 million at its disposal, so there are no immediate financial implications for the company.

I was not able to accept the amendments on the day, partly because we wanted to immediately start drawing down the €10 million in funding provided for in this Bill. I indicated that I would look to implement some of the amendments tabled by the Opposition during the drafting of the climate action Bill, which is due in the autumn, especially those that would facilitate or support the use of this fund for community projects, which this amendment also supports.

I give Deputy Cowen a commitment that the just transition approach will be developed for the entire midlands region, which is affected by the move away from the use of peat in both power stations and large, industrial-scale horticultural extraction that is occurring at present. The funding of the bog rehabilitation through the application of public service obligation, PSO, fell foul of advice from the Attorney General that it would not be possible under European law. In no way will that restrict us or stop us from making the necessary investments.

I commit to Deputies that the climate action fund, which will provide funding for the projects that we need, will not just be for a one-off or an annual project. We need the four year programme that was originally meant to be funded. I recall that it was a €20 million PSO per annum. I hope that we will see something in a Government announcement tomorrow which will help us in that regard. It is not just a case of waiting for an application to the climate action fund for us to be able to take action.

Looking at the task we face in the context of making a 50% reduction in emissions over the next ten years and being a net zero emissions country by 2050, as we have committed to along with most European Union countries, the challenge is beyond compare. One of the areas where I believe there is real potential for us to meet the targets is in storing carbon in our bogs and rewetting. The estimates that I have heard from experts are that, if that is a 60 million tonne challenge, which it is at least, we could see something like 10 million tonnes delivered through the management of our peatlands in a different way. We will have to make a significant investment. We are only at the tip of the iceberg of what will have to be done. I commit to doing everything I can to make sure that funding is available.

We will try to draw down some of the funding that was agreed by the European Council. That was a broad framework. It did not cite specific projects. I believe this type of work and the investment in Bord na Móna and other bog management companies is exactly the sort of project that would fit best with the European funding criteria. I agree with Deputy Cowen that the just transition report that was delivered by Mr. Mulvey a couple of months ago has to be delivered. The targeting of both European and national funding in this just transition has to be towards those communities most directly affected, including Deputy Cowen's constituency.

With regard to the power plants, I said at some length at the end of the debate in the Seanad that alternative proposals for the deployment of those stations would be just such a project that might prove suitable in the context of the climate action fund. Many of the projects we are looking at may be small, community projects, but that does not preclude big ideas and an alternative vision for what those plants could be used for. I would also say in that regard that the asset in this area is not just the power station itself but also the grid connection. As anybody involved in the renewable energy industry knows, getting grid access and connection is probably one of the most significant challenges to being able to finance and develop a project. As well as a future for Bord na Móna in bog rehabilitation, energy retrofitting and alternative uses for the bogs in growing various products or being involved in aquaculture, I believe there is significant potential for the company in the development of renewable energy. As well as its power station assets, it should look at leveraging its grid connection assets to make sure it has a bigger, brighter, more secure long-term future. That is the purpose of this amendment and I believe it will have the backing of all Members of this House.

Seanad amendment agreed to.
Seanad amendment reported.

A message will be sent to Seanad Éireann acquainting it accordingly.

Sitting suspended at 5.47 p.m. and resumed at 5.53 p.m.