Joint Committee on Environment and Climate Action debate -
Tuesday, 22 Oct 2024

Engagement with Minister for the Environment, Climate and Communications on COP29

An Cathaoirleach

Deputy Alan Farrell sends his apologies. He is unable to attend this part of the session. The purpose of this part of the meeting is to have a discussion with the Minister, Deputy Ryan, in advance of COP29. On my behalf and that of the committee, I congratulate the Minister on the recent announcement that he will be one half of the ministerial pairing leading the negotiations on adaptations. I congratulate him on taking up that role and wish him well in it. I welcome the Minister's officials to the meeting.

I remind witnesses of our long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. If their statements are potentially defamatory in relation to an identifiable person or entity, I will direct them to discontinue their remarks. It is imperative that they comply with any such direction.

Members of the committee are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official, either by name or in such a way as to make him or her identifiable. I remind members that they are only allowed to participate in the meeting if they are physically located in the Leinster House complex. In this regard, I ask those members who are joining us online to confirm, prior to making their contribution to the meeting, that they are on the grounds of Leinster House.

Minister for the Environment, Climate and Communications (Deputy Eamon Ryan)

I thank the Cathaoirleach and members of the committee for inviting me to discuss COP29, which is scheduled to commence in Baku, Azerbaijan, in less than three weeks. I recently attended the pre-COP meetings in Baku, during which I was honoured to be formally announced by the COP29 presidency as one half of the ministerial pairing leading negotiations on adaptation. I thank the Chair for mentioning that. Ministerial pairings are made up of one minister from a developed country and one from a developing country who work together to facilitate negotiations on key issues. I will be working with my counterpart from Costa Rica, Franz Tattenbach, the Minister of Environment and Energy.

As the members will all know, adaptation is an increasingly urgent issue and endeavour that deals with the actions required to adjust to the present and future impacts of climate change like flooding, sea level rises or extreme heat, bush fires or desertification, which are now annual occurrences across the globe and, indeed, much closer to home as well. Ireland has a very strong track record on adaptation in our climate and development work with small island developing states and least developed countries. Unusually, approximately 80% of our climate finance is directed to projects which solely or in part contribute to adaptation action. This is a record to be proud of. Ireland was also prominent in the establishment of a fund for responding to loss and damage and shares a seat on that fund’s board. This track record gives us real credibility when we are engaging with our global partners on adaptation.

While I will be working to facilitate the negotiations on adaptation, as part of the overall progress towards a strong COP outcome, I will also remain active as part of the European Union team. On 14 October, I attended a meeting of the environment configuration of the Council in Luxembourg, where we agreed the EU’s ambitious negotiating mandate for this COP. I have provided a copy of these Council conclusions to the committee for its information.

The headline item for COP29 will be the negotiations on a new collective quantified goal, the NCQG. The NCQG will replace the current collective goal of developed countries to mobilise $100 billion per year in climate finance, which was first committed to at COP15. The OECD has been tracking delivery of this goal and has confirmed that it was reached in 2022, when some $115 billion was mobilised. From 2025 onwards, the NCQG will replace this goal.

The NCQG outcome must be fit for purpose, ambitious, achievable and respond to the challenge at hand, requiring us all to speed up the global transformation towards net zero and climate-resilient economies. Much of these negotiations will turn on two major issues, namely, how much will the new goal be and who will be contributing to it. On the first issue, it is clear that the amounts needed to address climate change globally are considerable. On the energy transition alone, the International Energy Agency has estimated that there needs to be $4.3 trillion invested in clean energy annually up to 2030 if our targets are going to be met. It is not realistic or sustainable for this level of investment to come from public finance alone. The NCQG will need to be multilayered with public finance at its core but with a broader outer layer encompassing funding from multiple sources, instruments, channels and actors, both international and domestic. Innovative sources of finance, such as from the fossil fuel sector, should also be a part of this vital mosaic of solutions.

On the issue of the donor base, currently only a limited number of parties to the United Nations Framework Convention on Climate Change, UNFCCC, are required to contribute to climate finance, based on a list that has not changed since the early 1990s. Despite this, many parties have seen considerable economic growth in the intervening years that has, in some instances, been derived from or linked to fossil fuels. While developed countries will and should continue to take the lead in providing climate finance, broadening the contributor base to include some of these parties would demonstrate true global solidarity, improve the sustainability of the overall goal and help bridge the finance needs of the countries most vulnerable to the impacts of climate change.

Moving to mitigation, it is important that the momentum from COP28 is not wasted. The UAE consensus was a true milestone in the UNFCCC process. For the first time, a COP decision recognised the role fossil fuels play in contributing to climate change and parties committed to transitioning away from their use in energy systems. Ambitious targets were also set to triple renewable energy and double energy efficiency.

However, setting energy targets alone is not enough. COP29 must deliver an outcome that ensures the UAE consensus, including its energy targets, are followed up on and implemented.

A decision on Article 6 of the Paris Agreement is also expected to be a key deliverable of COP29. Article 6 will establish a process for the trading of carbon credits. It will mean countries will be able to meet their carbon neutrality targets through the buying of carbon credits from carbon avoidance or removal projects in other countries that are willing to transfer their achievements. Discussions on Article 6 have been ongoing for some time but I am hopeful there will be an outcome that ensures the system is effective, transparent and accountable and ensures the highest level of environmental integrity in the markets.

Ireland’s engagement at COP is a whole-of-government endeavour. I am proud to be leading the Irish delegation again this year. The delegation is made up of officials from across multiple Government Departments and a range of agencies, including the Environmental Protection Agency, Met Éireann and the Central Bank of Ireland, many of whom are working throughout the year on these critical issues. I thank the Cathaoirleach for the invitation today. I am happy to take any questions he or the members may have on our preparations for this COP.

An Cathaoirleach

I thank the Minister for his opening statement. I will invite members to ask their questions. Would Deputy Whitmore like to go first?

Deputy Jennifer Whitmore

I thank the Minister. I acknowledge his position in the COP and commend him on it. It is a really important platform and it is great to see Ireland represented so well on that international stage.

When we talk about the COP, human rights issues relating to the host country often come up. This year, Azerbaijan is the host. Last year, it was the UAE. Today, I will raise human rights issues relating to Israel. Israel will be represented at the COP. It will be showcasing a lot of its high-tech carbon innovations. The document that was circulated on the preparations for the 29th Conference of the Parties, in which the outcomes of proceedings were documented and the aspirations for the meeting were written down, says that the EU "REITERATES that, when taking action to address climate change, all Parties should protect, respect, promote and consider their obligations on human rights". The document talks about underlining "the need for enabling infrastructure such as transmission and distribution power grids" and the need for "international engagement through strong rules-based multilateralism", which it says is essential, and "effective cooperation with developing countries". Those aspirations or recommendations within the document ring really hollow when one considers what we see one of the participants in this particular meeting of the COP doing in Gaza. The Minister has previously stated that we should be using every diplomatic lever we can to raise our concerns with Israel as regards the genocide, the murder of thousands of children and the mayhem inflicted on Gaza over the last year. Will he take this opportunity to raise that with Israel? We need to stop seeing Israel as a normal state and taking a business-as-usual approach towards it. It is important to raise our objections and absolute horror at what Israel is doing at every opportunity.

Setting aside the human rights issues and the genocide - it is incredible that I am even saying that - and looking at emissions and climate change, in the first two months of the war in Gaza, the same amount of emissions were produced as would be produced by 20 developing countries. To rebuild Gaza is going to release emissions equivalent to those of 135 countries. On a standard basis, when Israel is not in the middle of a war such as that we see now, its military produces emissions equivalent to those of Cyprus. It is something we need to raise with Israel. We need to raise our horror at what it is doing in Gaza but also the hypocrisy of Israel attending the COP when it is destroying lives and an entire country.

There is an onus on us to do that. Will the Minister be raising that? I hope he will.

Deputy Eamon Ryan

I agree. We have an obligation on the international stage, wherever we are, to raise the concern we have about what is happening in the Middle East. I do not want in any way to minimise that, but we have similar concerns about what is happening in Ukraine, Sudan, South Sudan and elsewhere. However, "Yes" is the answer. We would look for whatever opportunity we can. We need to remember that the European Union acts in a sense as our representative in the climate negotiations. We are there as representatives of the European team. That is where primarily initially we make our voice very clearly heard that what is happening in Gaza, south Lebanon and the West Bank impacts everything, not just emissions as the Deputy has set out there, but also trust in the international order. That is one of the casualties at the moment. There are hundreds of thousands of casualties, but trust in the UN process itself is undermined by what is ongoing in Gaza.

Deputy Jennifer Whitmore

I am glad to hear that the Minister will be raising it and trying to push it through with the European element of it. Was it a gap in the Paris Agreement that military emissions were not accounted for, considering the huge amount of emissions derived from military activities and in particular from countries such as the US and Israel?

Deputy Eamon Ryan

One of the bigger gaps was not identifying the source of the problem, which is the use of fossil fuels. As I said, that was in some way rectified last year in the UAE when we started to focus on that. That goes across many areas but also includes military use. I do not have the figures globally but I recall that in the US, the military would probably be the largest consumer of fossil fuels.

Deputy Jennifer Whitmore

I think it represents 6% of all emissions. It is larger than aviation.

Deputy Eamon Ryan

That is just one example. We could say the same of the Russian army. I accept that military use of fossil fuels is a significant part of the problem. In international negotiations the key issue will be how much we can afford to support the most vulnerable countries, if we were to divert some of the increased spending that is going towards defence. While we need that, including in our country, if we get the balance wrong, we will see conflict come from climate change. To my mind, investing in climate solutions would be a better defence strategy because it can reduce the cause of conflict in the first place.

Deputy Richard Bruton

I welcome the Minister. What is his assessment of how changes in the geopolitical landscape, to put it at its most euphemistic, the output of war, the increasing tensions, the increasing sense of retaliatory measures between different states which we look to to co-operate in the context of reducing emissions, have put a dampener on progress that can be made at COP29? Are these countries setting that aside to maintain their commitment to the global challenge? I am trying to get an understanding of the state of play, particularly with big countries like the US, China, Russia, India, the other BRICS countries and so on which are very important players in this.

Will there be any progress report this year on where different countries stand on their national contributions? I know there is a sense generally that the target of 1.5° is slipping away. Will, in some sense, member states' toes be held to the fire at this COP to identify where progress is made and where slippage is occurring?

Obviously, climate finance is critical. The role played by the Minister and the European Union in respect of this matter have been very important. Where do we stand with countries that are not willing to sign up as donors? Can any leverage be exercised to broaden that base, which, as the Minister rightly pointed out, is crucial?

Carbon trading opens up the potential for mobilising private finance in innovative ways. What obstacles need to be overcome in moving to having a process of trading carbon credits? Has any preparatory work been done ahead of the COP to remove any potential barriers? Where do the negotiations in that regard stand?

Deputy Eamon Ryan

The Deputy asked if where we stand geopolitically hinders this. We all agree that geopolitically the world is in a very bad place with what is happening in Gaza, Ukraine and elsewhere, and also the fear of impending potential trade wars with protectionist policies on the rise. There is also a deep injustice in the current financing system, particularly for the new industrial revolution that is taking place. In Baku two weeks ago, I met a representative from the African Union who made the simple point that IRENA had just published the latest update as to what new renewable power, which is a revolution that is taking hold, was delivered last year. It was 473 GW in the world but only 2.7 GW of that had been delivered in Africa. We need to recognise that is a fundamental geopolitical injustice.

We could despair and think it would be impossible to get agreement, but I would argue that there are two or three examples showing it is not impossible. First is the fact hat we were able to get agreement last year in the same environment in the UAE where consensus was agreed. Second is the progress in the COP negotiations on biodiversity that are ongoing at the moment in Colombia. Similarly last year very significant progress was made in the biodiversity convention. On issues where everyone is at risk, which is the case with climate change and the loss of biodiversity, in recent years we have still been able to make progress. It is important to hold on to that as a possibility.

This will be very difficult. As someone in the European Union delegation described it two weeks ago, this COP is probably the most difficult negotiation since Paris because it is about money and that will never be easy, particularly at this time. We all know of budget difficulties in many of our neighbouring countries in Europe. The US public debt levels are very high. It is not easy to see how we might get agreement; it could be very challenging.

I might answer the Deputy's third question before going back to the issue about progress reports. The focus will be on how much developed countries can commit to. That, on its own, will not be enough and it must be a multilayered approach. Private finance must be in the mix. Some people will say that this is just the West and developed countries absolving themselves, and that should not be the focus. I fundamentally disagree. The great injustice taking place in the world at the moment is that many of the poorest countries are frozen out of private finance and capital markets. Therefore, that must be addressed as well as addressing public finance.

In terms of broadening the base, I absolutely agree with the European Union position that we cannot just freeze the world in a 1992 division of which countries are annex 1 and annex 2, or which are developed and which are underdeveloped, without ever reviewing what countries might have commitments in that regard. Clearly some countries in the intervening 32 years have become exceedingly wealthy on the back, for example, of fossil fuel sales. I do not see a logical reason to exclude them. The same applies to countries with huge emissions history now on the back of development, which is very welcome.

However, to say that they are forever defined one way or the other does not make sense. That is going to be a real challenge in the negotiations. One of the ways it may be resolved, or one of the ways I see some of the negotiations going, would be an assessment of what exactly the current flows of finance are in what we might call south-south transactions, from developing countries to other developing countries, which are quite significant, and start at least getting a real base of what is actually happening in the world, rather than just pretending we are all living back in 1992.

The third question was around whether member states will be held to the fire. I do not believe that will be the key outcome of the negotiations in Baku. We all, collectively, held our feet to the fire last year when there was a global stocktake, and that clearly showed that the level of emissions reductions is nowhere near enough to meet the scale of the challenge and follow the North Star of keeping temperature increases below, or bringing it back below, a 1.5°C average increase. That process is designed to happen next year. It is a troika of Conference of the Parties meetings, from the UAE meeting on that consensus on transitioning away from fossil fuels to the negotiations this year to raise the finance necessary for us all to adjust in a just way and then, next year, the requirement on all parties to have submitted their updated nationally declared contributions, NDCs. The process is that they are due to be submitted in February. Some parties may be later but we know that the UNFCCC next summer, into September, will be doing that exercise of measuring the nationally declared contributions and assessing them against what is needed. Next year is the point, on the tenth anniversary of the Paris climate agreement, at which we ask a fundamental question, namely, are we living up to the agreement or not? This year, it is important that we do not trip ourselves up and put everything back to next year and that we get progress on issues such as Article 6, climate finance, and the monitoring and reporting.

To answer the Deputy's fourth question with regard to Article 6, I have been involved in a number of climate negotiations in recent years. I recall everyone saying in Glasgow that Article 6 was a key element that we had to progress, which we did. The same was said in Sharm el-Sheikh and in Dubai but we need to continue and sign off on a lot of the progress made in Baku on Article 6. It is one of the layers of finance and one of the ways in which we can get access to the more developing countries for the carbon credits that they may be able to raise.

To achieve that and many other things, one of the most important areas we need to progress is the tracking, tracing, reporting, accounting and auditing of what is happening. We should be aiming for a system where we audit, track and trace material flows, particularly rare-earth materials which would be central to the new industrial revolution, energy and the extraction, processing and deployment of those, and also measuring and monitoring both energy flows and energy financing. There are various benefits from that. First, a really reliable, international, gold-standard reporting mechanism would make it much easier to get a trusted Article 6 market in place because it would be based on international reporting standards. It is also critical with regard to developing climate justice and getting finance into the developing countries.

The most significant political developments in climate in recent years have been the signing of the Nairobi Declaration in Kenya last year, which followed up on the Bridgetown Initiative in Barbados. It was also very much connected to the climate pact for people and the planet, which the French Government held in Paris last year. These developments all put development and climate centre stage. What I hear from the developing countries in that regard is that they want fairness, not freebies. A proper reporting, auditing, accounting and traceability system will help improve fairness. That transparency kills corruption and lowers the interest rate and cost of private financing for developing countries, along with other public finance contributions we need to make, particularly to support grid and regulatory systems and the kind of hard-yard stuff we know in our country is the foundation for decarbonisation.

That tracking, tracing and reporting system will probably be the most important thing for Article 6 but also for many other interconnected issues. It is not just about how much core funding goes into the NCQG, although that needs to increase significantly, but also about some of the other mechanisms alongside it that make the overall balanced outcome, as it was described by the Ugandan representative in Baku two weeks ago. Those were introductory words of the European Union submission. We want a "balanced outcome". We need a variety of measures.

An Cathaoirleach

I thank the Minister and Deputy Bruton. We will go to Senator Higgins, who is joining us from her office.

Senator Alice-Mary Higgins

I thank the Chair. I want to come in on a few of the issues. I understand it is very important that Ireland will have this responsibility in having a key role in some of the finance aspects that are to be discussed and with regard to adaptation in particular.

I have a couple of questions about the NCQG. As I understand it, this is one of the big issues that will be discussed - the idea of the new collective quantified goal on climate finance. It comes from a context where the $100 billion in climate finance was certainly not delivered in the way that had been promised. It has been pointed out by NGOs that only between $28 billion and $35 billion in grant-based finance came through in 2022. The majority of the climate finance that has come through is in loans. Those who are experiencing the worst impacts of climate change, and who have in many cases done the least to cause it, are having to borrow from countries which they are already indebted to, or from private finance, in order to deal with the consequences of climate change or to adapt to it.

With regard to the question of the NCQG on climate finance, what proportion of that should or will be in the form of grant-based or public funding, or what proportion of that will he be pressing for, versus the idea of private funding? Private funding, particularly loans, come at a cost. I remember at one of the previous COPs testimony from, I think, Barbados, that the country had to borrow money three times to build a bridge because it kept getting destroyed by ever more extreme climate events. Each time, the country ended up in further debt even though it was not the cause of these extreme climate events. There is a problem if more loans and debt are added to developing countries to deal with the consequences. Will the Minister address that in respect of looking at the new collective quantified goal on climate finance?

On the idea of the multilayered goal, while loans are part of that, on the other side there is what could be argued is the debt owed in terms of loss and damage. There seems to have been a reluctance to have a sub-goal explicitly on loss and damage. Will the Minister comment on whether there should be a sub-goal within the new quantified goal that is explicitly for loss and damage? Again, that almost amounts to debt moving in the other direction in terms of it being owed by developing countries for the loss and damage caused by the actions of developed countries.

Will the Minister comment on what the target might be? Will it be $1 trillion, as NGOs have been calling for, in grant-based public funding, rather than loan-based funding? There is the question of a sub-goal on loss and damage and whether there will be clear definitions on excluding loans from that new collective quantified goal. I ask the Minister to comment on those matters.

Separately, there seems to have been a bit of a blurring of the line between Article 2.1 of the Paris Agreement, which concerned a reform of finance generally to ensure finance flows would be consistent to pathways for lower greenhouse gas emissions. Again, that is almost about a reform of the finance sector as an area that can cause harm, but instead it seems to be that has been looped into the NCQG to say participating in that would be enough.

I have a last finance question and if have an opportunity later, I might come back with another question on the COP. I would like the Minister to comment on two concerns I have. Europe has cut its overseas development aid by €2 billion. Does the Minister anticipate that cut having an impact on the environment in the discussions that are happening? We do not want to see cuts in development aid to justify increased spending on climate as they are separate. Ireland has a very proud record of not having tied aid or payments. Is there a danger of having tied conditionalities attached to this climate finance? An example might be access to the minerals located in many of these developing countries. There is the question of ensuring we do not have inappropriate conditionalities or tied asks attached to that financing and those other questions about the level of financing, subgoals for loss and damage and exclusions of loans as well as the importance for a separate approach to Article 2.1, which is around best practice in finance generally and is not answerable by the existence of the NCQG.

Deputy Eamon Ryan

I thank the Senator. I was very proud we were asked to do the job we are being asked to do on adaptation because as she says, it is central. It is the most important issue, especially for the most developing countries, because that is where they need the resources most immediately. Their definition of "adaptation" is much broader than what others might see. It is not just a flood defence, sea wall or a well and often crosses over into how to reduce emissions. Often it can be, and should be, centred on nature-based solutions, which means we are funding very locally. Our principles around that in Ireland are very well-understood and very progressive. Through cultural experience going back over the decades we have shown a real ability to listen locally and support local leadership in how financing might be spent and how it works. As I said, 80% of our climate finance funding goes to adaptation. It should also be recognised this State has absolutely delivered what we committed to. We have doubled our funding for climate finance. Next year it will be €225 million, as we promised. The climate finance in adaptation is 100% grant aid. There are no loans. We have a good story to tell which maybe helps us listen to what other people have to say.

The $115 billion is complicated because some of that was always going to be mobilised private finance. Going from memory, it might have been $95 billion in public finance. Some of that, as the Senator said, is in the form of loans, whereas Ireland does it as a grant. There was also a further $20 billion attached to it. It was always designed to have a combination, that is, the original NCQG was to have both mobilised private finance with public finance. As to the question of how I see the new NCQG, she is right there is differentiation between that and the much wider, bigger issue about where the overall financial flows need to go. However, it cannot be simplified right down to say it is just about how much the developed countries will give in public grant finance and everything else is a separate issue. I come back to work we were doing in the International Energy Agency this year, which I think I mentioned in my opening comments. Its assessment was $4.3 trillion per year needs to be invested per annum in the energy side alone. It assessed that beneath that, the developing countries other than China, which is already making its investment possible, need an investment of $1.5 trillion per annum for them to be part of this solution. I am going on memory for that figure.

When I talk to people in those countries, including the small island countries and less developed countries, especially the ones in Africa we tend to be close to, they insist it has to include private finance because one of their problems is they are completely frozen out of the markets. It is true they have debt problems and ones that were often made worse by what has happened during Covid and the war in Ukraine, and that debt must be addressed. The finance ministers meeting in Washington this week have a key role in that. That should not blind us and have us saying this is all just about public finance and we should not look to bring private finance in. What Mia Mottley, the Prime Minister of Barbados, said is it is not just that the pier has washed away three times but that countries like hers are paying three times the interest rate a developed country is paying. Thus, if we ignore that financing issue or do not avail of this opportunity in how we design the NCQG in a layered approach as the EU is arguing, we are doing a disservice to the most developing countries.

There is indeed going to have to be an increase in the scale of public financing and my argument is that it absolutely should not be tied, especially not if it is tied to resource extraction, as the Senator said, or any other geopolitical considerations. We are very much opposed to that and never apply it. One of the other benefits of Irish aid is it is not tied. There is debate on whether we should include our climate finances as part of our overseas development aid. I believe we should because it is central to development and to alleviating the worst poverty, so we would be mis-defining it, in a sense, if we did not see it as part of our overseas development aid, which needs to be increased. The exact level of the fund, or the exact mechanism here, will not be decided, I imagine, until the last few days of the climate negotiations. These typically go until the last minute. We have a challenge because when the NCQG was originally designed it was the leaders of government who came in at the last stage in Copenhagen and in a sense salvaged a COP that was heading towards disagreement by creating the NCQG. In this instance in Baku, the leaders will be coming in the early days. As to exactly how we reach agreement, I will be upfront in saying people have not had sight yet of how this can be landed, how we can get agreement, but we need to get agreement. The measure of our success should be how closely it lives up to this central purpose of the NCQG, namely, aligning development and climate action. That has to be in a variety of ways through Article 6, including, innovative sources of financing, public finance and mobilised private capital as well. That is what I hear African leaders, representatives of the small island states and the LDCs we tend to be close to saying to me.

Senator Alice-Mary Higgins

What of the loss and damage subtarget?

Deputy Eamon Ryan

There are different views on that, including within the European Union, and we have to take a European Union position on it. One of the aspects will be whether we suballocate or have a special allocation for loss and damage. There is some good news with loss and damage. We as a country were centrally involved in its establishment and in the positioning of it as a fund to especially target the most vulnerable countries. We have learned the lessons from the establishment of other funds like the Green Climate Fund and others. I have no criticism of them today, but they took a long time to establish. There was broad agreement in Baku two weeks ago that the loss and damage fund has been established very quickly by historical comparison. Its board, which we have a representative on, is functioning very well. One of the outcomes of Baku has to be the making operational of the fund. Whether there will then be an exact allocation within the NCQG will be one of the issues negotiated in Baku. It is not decided yet.

Senator Alice-Mary Higgins

The Minister mentioned €225 million as our share, but our share of the $100 billion has been estimated to be in excess of $400 million.

We have a situation where a loan given to a developing country is required to be repaid in full whereas the debt as regards moneys promised but not delivered - Ireland should be giving $400 million per annum as part of the original $100 billion promised - is not necessarily regarded as something that needs to be delivered on. Going into this-----

An Cathaoirleach

I am mindful of the time.

Senator Alice-Mary Higgins

Are others indicating to come in?

An Cathaoirleach

I will give the Minister a chance to respond. I will check whether colleagues want to come back in for another round. If not, I will come back to the Senator.

Senator Alice-Mary Higgins

I will come in for another round, if I may.

Deputy Eamon Ryan

We have doubled our climate finance in the last three years, as we promised we would. As I have said, this funding is not loans; it is 100% grants. It is not tied. It goes to the poorest. It is designed to enhance communities. It is not just us coming in as if we know everything and controlling things from the top down. It is actually a really good international example of collaboration at a local level. It is also very focused on gender. We are proud of what our development agencies have done. It goes right back to our missionary tradition. Coming from a country that has suffered from migration, we have a certain cultural affinity or understanding for countries that are in difficult circumstances. That is why we have the potential to play a role as a bridge between developed countries and developing countries. We are good at providing aid.

Deputy Richard Bruton

I was struck by the statistic the Minister provided that, of the 473 GW of renewable energy put in place, only 2.7 GW is in Africa. Has the Minister been able to probe what is going on there? I recently met the Moroccan ambassador to Ireland and he identified great opportunity in this area, to which he is very committed. What are the barriers? Are they funding barriers or are they more tangible ones such as those we have encountered ourselves in grid preparedness and interconnection? Can we develop some micropolicies that might crack the problems of renewable energy in Africa? I suspect that there are substantial untapped opportunities there.

Deputy Eamon Ryan

There are. That 2.7 GW was just last year, although every year is the same. A large chunk of new renewable energy is solar and a very large chunk of it is going to China. China's renewable energy is growing 20% per annum and it has more than the rest of the world combined. Europe is probably in second place, growing by 10% per annum. It has about 20% of overall global renewables. The US is in third place and is catching up because of the Inflation Reduction Act, IRA.

Coming back to what I said about not wanting to get into a trade war, if it turns out that it is just Europe, China and America fighting for first place in this industrial revolution, there is a risk the rest of the world will fall behind. That would be a disastrous outcome. I recall that, two or three years ago when I knew I would be taking on a role in some of these climate negotiations, I went to four people I saw as having been the most experienced and involved over the years. They told me that the most important thing in international negotiations on climate is that developing countries are not left behind. If we can sort that, it will be good for Europe, China and America. There is more than enough work for everybody to do and, if we do not address this, we will not meet our climate targets and we will continue to see conflict in the likes of sub-Saharan Africa and west Africa. As the impacts of climate change hit, there will be more wars and more forced migration, which hinders and stresses the countries migrants leave as well as those they come to. Focusing on development and climate is in the interests of the West as well as those of developing countries.

It is highly complicated and complex. I may now spend some time looking at very specific projects and trying to find examples of why things are not working. It often might relate to currency risks. If your revenue stream is in a developing country where the currency might be subject to devaluation but your capital payment costs are in a hard currency because of where you are buying equipment in from, that can create real challenges. As the Deputy has said, the strength of the grid and regulatory and administrative systems are also a factor. That is in no way a criticism of developing countries. We have our own challenges in that regard. However, these systems tend to be particularly weak in such countries.

On the continent of Africa, there are 650 million people who are not on any grid and who have no access to energy. It is very hard to get your first step on the ladder when you are caught in that spiral. During the Covid pandemic, western countries were typically able to provide great economic stimulus to support their countries while developing countries were not able to at all. They were therefore hit very badly by the Covid pandemic. They were then similarly hit by the high fossil fuel prices that came with the war in Ukraine and by the high interest rates that were introduced to dampen the inflation that arose in the western world as a result. There was a triple whammy in developing countries, which has left them in a very difficult place at this time.

The resolution goes back to what I said about transparency and auditing accounting systems so that the rating agencies have a better understanding of what is happening. They have a role in this. To my mind, they do not accurately assess the real rating risk. The World Bank, the IMF and the regional development banks also have responsibilities. They have not traditionally paid sufficient attention to the need for capital investment, particularly in the development of renewable alternatives in developing countries. How they finance such investment and arrange such loans is going to be part of the solution. This process, whereby public finance is put in but that is done to mobilise private finance, is one of the key ways to break this logjam. It is the exact same as what we did in de-risking home loans for retrofitting. In a similar way, if public finance can de-risk a loan for, let us say, the first quarter of the default risk, private finance can be brought in on top of that, bringing the interest rate right down, which is, as Mia Mottley has said, one of the biggest problems. It is not just about countries being indebted. The cost of debt being so high is what really cripples them. It is about a combination of investing in grids, regulatory systems, de-risking blended finance systems, good tracing, accounting and reporting rules and public finance at the scale we are going to need.

Deputy Richard Bruton

The structural question is whether all these microeconomic matters are addressed at the UN or if it is solely the macroeconomic thing of how much money is in the pot.

Deputy Eamon Ryan

The UN has an interest in this. We need to refer to it. Going back to what I was saying, if it is just about the pot and you do not change the financial system, the fundamental problem that our global finance systems are not aligned with climate change remains. Senator Higgins is right; you have to be careful. You can broaden out and look at all financial flows but you can also criticise the other approach. It would not be responsible to only look at the quantity of public grant and not make sure it was used to leverage real change either.

Deputy Darren O'Rourke

I will pick up on that point because I am interested in it. I will just raise two things. On the overall level of funding for the NCQG, I presume it is the case that negotiations will determine where things land in that regard. Will the Minister provide any insights he might have as to starting positions and anything that has come from pre-COP engagements? On the public-private mix as regards finance, will the Minister give us a sense of the levers available to raise finance both publicly and privately? Has there been discussion on the taxation of wealth-related emissions or fossil fuel companies? What type of suite of measures will be considered in line with the Minister's reference to wider reforms of the financial system? Will the Minister start with that?

Deputy Eamon Ryan

In Baku recently, no one was talking about the quantum of the NCQG. To a certain extent, you must agree in order to make negotiations work. It is not just about that core figure.

In so many ways, it is about the architecture around it - in adaptation, mitigation, Article 6, transparency and so on. That will only come towards the end of the negotiations when people get down to talking quantums. One of the reasons the European Union emphasises layers is that it is about broadening the base. In that instance, it is not just about those countries that are able to do so, which may have changed significantly in the past 30 years; it is also about other sources of finance. An example of where it would come from came up this week in a meeting of the G20 finance ministers in Brazil. They have proposed a billionaires tax. My understanding is that this tax on wealth above a certain amount has the potential to raise €250 billion a year. They argue that it would give a substantial financial flow that may help with climate transition.

My departmental office developed some position papers in recent years on how we see investments from fossil fuels switching into clean energy. The IEA has done some good research on that. I mentioned some of those figures earlier. The expectation on a business-by-use model is that even by the end of this decade, there would still be €800 billion a year going into fossil fuel development, including extraction, exploration, and so on. To meet our climate targets, we know that it must halve. One of the questions is how we could use that €400 billion or how we could regulate globally or internationally to incentivise so that the switch takes place. The sum of €400 billion is not small in the scale of what we are talking about. That obligation and applying the polluter-pays principle that the industries that are the source of the problem, or the use of the materials that is the source of the problem, can become the source of the solution. It has been interesting to ask those questions in my own engagement with fossil fuel companies and countries. How come they are still going to be investing so much money given what we know?

Then we come to very difficult and challenging negotiation issues, which are centrally important. I refer to the questions that the Beyond Oil & Gas Alliance or the Fossil Fuel Non-Proliferation Treaty Initiative are asking. If we are to keep the fossil fuels in the ground, how do we support those countries that might wish to do that in a way that makes it viable? This is not small change that we are talking about. It is not a small issue.

All of these issues will not be resolved in Baku, but we must keep them in mind, especially when it comes to developing countries that have just discovered large quantities of gas or oil. When we say: "Sorry, you're too late. You can't use it.", they have a valid justice question: "How come everyone else built up their countries on the back of it?" How we keep the fossil fuels in the ground is as important an issue as how we finance the clean.

Deputy Darren O'Rourke

I thank the Minister. This is my final question. The governance of funds is an issue that came up on the back of last year's COP where there were welcome developments and commitments. We can talk about where they come from and whether they are in the form of a grant or loan, but has the architecture been developed for the overall governance, distribution and monitoring of how they are used? Will it be further discussed at COP29? What does the Minister expect in that regard? What will he seek?

Deputy Eamon Ryan

That it key. It is part of the reporting, tracing and accountability issue I mentioned earlier. It has taken us time to set up some of the funds. Everyone recognises the Green Climate Fund was slow to start and bureaucratic in its formation, but we have learned the lessons and it is starting to deploy more capital. Often what countries are looking for is speed and ease of accessibility as much anything else. Sometimes it can be an administrative burden, especially for small island states that do not necessarily have the resources but there are high-impact risks if a typhoon hits. One of the issues we must consider is how to provide specific funding, in particular for smaller island states and smaller less developed and developing countries, to give them the capability to access the funds.

It is almost about resourcing their administrative systems, which will be key, especially in smaller states. A lot of the funding we deploy is done directly through links with our embassies and NGOs such as Trócaire, Concern, Christian Aid, and so on. We also fund and support the likes of the adaptation fund, to take one example. Sometimes we are best doing it through international funds. We use a mix of different vehicles. The governance and accessibility of the funds will be one of the key issues.

Deputy Darren O'Rourke

I thank the Minister.

Senator Alice-Mary Higgins

The Minister mentioned the polluter-pays principle. That often seems to be somewhat at odds with some of the narrative on de-risking. I recall there was tension at the COP between de-risking versus loss and damage, on the basis that de-risking often involves the routing of public finance into exactly the private actors, for example, very large energy companies and banks, that had driven and profited from a lot of the current climate crisis. The idea is that they would change policy but the public would take the cost of that shift.

It is interesting that the Minister mentions regulation and incentivisation. It seems there is a space where there is tension in terms of whether we are going to regulate by means of a polluter-pays principle or incentivise through de-risking, which is routing public money. The Minister mentions that funding might be better routed to support countries to keep the oil in the ground or to put it towards loss and damage. He mentions the island states. Some activists from island states have been very clear, even in the use of analogies with the post abolition era whereby slave owners were given reparations to help them make the transition but slaves were not. This is a very important piece. There are serious choices rather than putting the emphasis on regulation and incentivisation. De-risking itself comes with some risks in that it might take public moneys away from areas such grant-based funding for loss and damage or incentives for countries to keep fossil fuels in the ground.

I have two specific final questions. The Minister mentions the importance of keeping fossil fuels in the ground. Has Ireland's credibility with the Beyond Oil and Gas Alliance been damaged? It was stated that Ireland has closed the door on oil and gas and that we are leading the way to help other countries move against it, but we have just put in place an advantageous planning process in respect of commercial liquefied natural gas. That relates to the extraction of liquefied natural gas, including fracked gas. I tabled an amendment to explicitly exclude fracked gas from such infrastructure, which was not accepted by the Government. We are not talking about any State terminal that might exist in the future. We are talking about that fact that there is a specific provision in the planning legislation which allows infrastructure, including commercial infrastructure, for liquefied natural gas to benefit from a fast-track planning process. Does that weaken our credibility as members of the Beyond Oil and Gas Alliance, given that we are continuing to contribute to the international trade in liquefied natural gas, which includes fracked gas?

The Minister mentions that the nationally determined contributions, an important point, will really be hashed out in the next year. In regard to conflict, is he in favour of the carbon emissions from military activities being included in the auditing of countries when nationally determined contributions are being assessed?

Deputy Eamon Ryan

For this transition we need traceability and auditing and accounting systems that are transparent on energy flows, financial flows and material flows. That is a big task but that is what we need. The new digital technologies available to us, including AI and others, should give us that capability. It should not exclude any country or any sectors.

Senator Alice-Mary Higgins

To be clear, should it include military emissions?

Deputy Eamon Ryan

Yes, all emissions.

An Cathaoirleach

We will just let the Minister answer.

Deputy Eamon Ryan

Senator Higgins asked a second question about Beyond Oil and Gas.

At the UN General Assembly in New York this year, I was asked to chair the latest meeting of the Beyond Oil and Gas Alliance. There is no diminution whatsoever in our status in that regard because that misinformed view that there is some promotion of commercial LNG facilities is totally untrue and not the case. There was useful discussion in the Oireachtas during parliamentary questions last week which cleared up that we are not going to go in that direction. As a country, we have proud position on this issue, because we are not allowing fracked gas in Ireland, we are not exploring for oil and gas, and we are shutting down the use of coal in power generation. We will not develop a commercial LNG facility. There is widespread political agreement on that. I have asked my Department to conduct further analysis of whether we might need something as a strategic security reserve to see if the possibility of further interconnection, storage and other mechanisms could let us avoid that need. We were able to speak not just as members but recently chairing the Beyond Oil and Gas Alliance.

Lastly, with regard to the issue of de-risking or deregulating, I agree that part of what we need is strong regulations around the tracking, tracing, reporting and financial flows, but I keep coming back to the point that if the Senator thinks we should be limited to that, she is disadvantaging some of the poorest countries in the world in my experience. I was in Nairobi last year at the climate summit in Africa, considering how we would bring climate and development together. I was in a room with eight energy ministers and their key issue was how they de-risk so they get the development that they see happening in the developed countries but that is not happening in Africa. That injustice cannot be ignored and cannot be delivered unless we de-risk and deliver what Mia Mottley said, which is to bring those interest rates down and bring justice to the world. Walking away from that responsibility would be a terrible mistake and outcome.

Senator Alice-Mary Higgins

I have to come in on two issues. On the question of de-risking, it is a matter of how public moneys are used. It is not whether there should be action in respect of private finance but how public money is routed towards private companies, which is a slightly different issue. It is not about de-risking nationally. There is a factual issue I have to come in on because there was a suggestion of an untruth there. This is not a matter of whether we as a State choose to develop a State commercial facility. The fact is that the language in the new planning legislation explicitly names, as strategic infrastructure, LNG infrastructure, and indeed allows access to a speeded up planning process that bypasses local authorities and goes straight to the new commission. There was a suggestion of untruths. It is not usual the practice that there would be accusations of untruth and I am certainly not in the business of such. I want to be clear-----

Deputy Eamon Ryan

I do not think-----

Senator Alice-Mary Higgins

-----that factually, there are measures in the Act that are available to commercial actors. That is not the same question as whether the State chooses to develop its own terminal. The fact is that any actor can avail of the provisions in the Planning and Development Act, which are there in black and white.

Deputy Eamon Ryan

I do not think I mentioned untruth. I am not sure what the Senator is referring to. To be clear, the wording of that technical amendment was to ensure that there were not inconsistencies across other laws and so on. It in no way implies that the State will seek, approve or support the development of a commercial gas facility. We need to reduce our gas across so many different areas. We can do that. We are starting to see it in one area where it is most important, which is power generation. The latest figures were out today. I cannot remember the exact figure. Is it 19% or 16%? It was a high double figure reduction in emissions from power generation in the past year. The first quarter of this year was similar to what happened last year. We need to rapidly and radically reduce our demand of gas. There is no case for the expansion of gas use in our State on a commercial basis. We need to go in the exact opposite direction. This Government is absolutely focused on that.

I do not think depicting that in another way is an accurate reflection of where we are as a State.

Senator Alice-Mary Higgins

It is what is in the legislation.

Deputy Eamon Ryan

I will finish on the other issue. I agree, and think I said in my earlier response, that the target of public financing should be on areas like enhancing electricity grids and enhancing administrative and regulatory capacity. Our job is not necessarily to fund or finance energy companies. There are certain instances such as climate mitigation, with a small farmer or even at a more local level, with people in a house who have to burn wood or charcoal for the fire or cooking, where we should invest so that that family does not have to worsen their local environment and does not have the ill-health effects that come from that. Our public finances should be targeted at the most vulnerable in the same way that we try to target the loss and damage funding at the most vulnerable. Part of that involves investing in the capability of developing countries to avail of private finance. That is investing in their State and their local community. That is key. I have heard some make the case that it is just about the amount of public finance in grant aid. That is important but framing it in that way alone is doing a disservice to the poorest people in the world.

Senator Alice-Mary Higgins

The Minister mentioned a suite of measures relating to carbon markets. It is anticipated that there will be progress on the rules on carbon markets at the next COP. I know there is much concern that they may be weak rules. Will the Minister indicate how he plans to engage in the discussion on the carbon market rules that may be coming into place?

Deputy Eamon Ryan

I agree that they need to be strong. They need to be strong, more than anything else, on the accounting and reporting regimes, so there is real transparency. There will be crossover across these various strands in mitigation, adaptation and Article 6. As one of the ministerial pairs, I look forward to those negotiations as they get to the closing stages.

An Cathaoirleach

Do colleagues want to come in again? No. We are at the end of the session. I thank the Minister and his officials for coming in today and engaging with us ahead of the Minister's trip to COP29, where he will take up that important role. On behalf of the committee, I congratulate the Minister on his selection. He is the first Irish representative to hold a senior negotiating position at COP. That is something that we can all be proud of as a country.

The joint committee adjourned at 1.48 p.m. until 11 a.m. on Tuesday, 5 November 2024.