Dáil Éireann Debate, Wednesday - 21 April 2021
46. Deputy Ged Nash asked the Minister for Public Expenditure and Reform the role his Department will play in ensuring that annual departmental spending proposals as part of the annual budgetary cycle are aligned with climate action and carbon-reduction targets; the way in which his Department plans to assess the National Development Plan 2018-2027 against Ireland’s carbon-reduction plans; and if he will make a statement on the matter. [20242/21]
View answerEarlier, we took Second Stage of the Climate Action and Low Carbon Development (Amendment) Bill. I am sure the Minister will agree that budget policy, public spending policy and infrastructure spending would be central levers to allow targets relating to carbon neutrality to be met. Climate action is far too important an issue for it to be sacrificed for short-term political expediency. How does the Minister, who is in charge of public expenditure, plan to align the annual budget process with the five-year carbon budget process? How does he plan to ensure that the national development plan becomes an enabler for us to reach climate neutrality and not an obstacle?
I thank the Deputy for raising this important issue. The new Climate Action and Low Carbon Development (Amendment) Bill will, on enactment, require the Government to adopt a series of economy-wide carbon budgets on a rolling 15-year basis, starting in this year. These economy-wide budgets will then be translated into specific targets for each relevant sector. Ministers will be responsible for achieving the legally binding targets for their own sectoral area, with each Minister accounting for their performance towards sectoral targets and actions before an Oireachtas committee each year. It will be the responsibility of each Minister to ensure that their Department's priorities and spending allocations are aligned with the emissions ceilings in their sectors.
The role that I and my Department will play in this process is twofold. First, in the consultation under way as part of the development of the next climate action plan, I have committed that I will develop a methodology to ensure that any compliance costs that arise from a failure to reach climate and energy targets will be borne by the sector responsible for this failure.
Second, I have committed to the progressive implementation of green budgeting in Ireland. This means the budgetary process will be used to promote the achievement of improved environmental outcomes. This is in parallel with other reforms to the budgetary process on well-being, gender and inequality, which are intended to improve the outcomes in these areas.
My Department has developed and published a methodology for identifying expenditure that is having a positive impact on Ireland's greenhouse gas emissions. Identifying the quantum of Government spending dedicated to addressing climate change is a necessary first step in assessing the effectiveness of this expenditure against climate and environmental goals. Ireland chairs the OECD Paris Collaborative on Green Budgeting and the specific green budgeting reforms that I will implement will be guided by the emerging international best practice from this and other groups.
Additional information not provided on the floor of the House.
On the review of the national development plan, my Department published the phase 1 report of the review on 4 April. As noted in this report, Departments are required to assess every spending proposal against a range of environmental outcomes. The aim of this is to ensure that our public investment priorities are aligned with Ireland’s climate and environmental objectives. It is important to note that all projects included in the plan will be subject to the detailed rigour of the public spending code, which is updated regularly to reflect lessons learned and international good practice. The phase 1 report also sets out the ongoing body of work under way in my Department to strengthen the environmental and climate factors underpinning the code. In particular, I anticipate altering the shadow cost of carbon that applies to all projects once the higher targets envisaged in the draft climate action Bill are adopted. This will ensure that the amount of emissions a project may give rise to is quantified, and a value placed on those emissions that reflects the cost that society will have to bear to eliminate these emissions in the future. I aim to finalise and publish the new national development plan by July 2021.
I thank the Minister. I am really interested to find out how all of this will work in practice. For example, the revised national development plan covers almost the entire period set out in the climate action Bill, during which the target is to reduce greenhouse gas emissions by 51% over two carbon budgets. The Minister will acknowledge that how we spend our money and which national development plan projects we prioritise will dictate and mean the difference between meeting our targets and not meeting them. Will the Minister accept that carbon interim reports will be a driver of budget policy and that his Department, from now on, needs to work on that basis? What specific changes is the Minister planning to allow for that to happen?
The Minister mentioned that he is working on new methodologies in this space. I would appreciate it if he could elaborate on that. We will now have binding mandatory carbon reduction targets. On that basis, will the Minister accept the logic that when we are preparing budgets, Estimates and multi-annual funding envelopes, logically, the money must follow the policy and the law?
I thank the Deputy. This is an issue on which I would be really happy to engage further with the Deputy because it is going to be at the heart of the new national development plan. I will outline what the climate and environmental assessment of the plan involves. As a first step in the climate and environmental review of the national development plan, Departments are required to perform a qualitative assessment of every measure they are putting forward for inclusion in the revised plan against each of seven climate and environmental criteria, including climate mitigation, climate adaptation, water quality, air quality, waste and circular economy, nature and biodiversity and just transition. The cumulative score of each measure across all outcomes will be used to assign a traffic light style rating to the measure. This assessment aims to give Government a high-level view of the compatibility of all measures being considered for inclusion in the national development plan with broader Government climate and environmental policy. The assessment will inform the resource allocation decisions that will need to be taken into account in the context of the review of the national development plan.
On the detail of this, I am interested to know how the Minister for Public Expenditure and Reform will act. For example, if it is clear that a sector like transport or agriculture may miss its targets, what levers are available to the Minister? Does he envisage a situation where he would pivot away from what might be a budgetary norm or an agreement with a Department to prioritise and refocus attention in that Department in order to enable it to meet its sectoral demands and requirements? Will the Minister apprise me of the relationship between his Department and the Department of Environment, Climate and Communications will work and change in practice in respect of the five-year carbon budgeting cycle process? Will that structure of engagement become more regular and more formalised? Will the Department of Environment, Climate and Communications become more embedded in the annual and multi-annual budgeting process? We know that the system of making budgets is not perfect. It has hardly changed over the past century. The annual Estimates and bids process needs to change, culturally and for every other reason, particularly in the context of climate action.
I thank the Deputy. I am happy to provide as much information on this issue as the Deputy would like. Under the Climate Action and Low Carbon Development (Amendment) Bill, where a sector has not complied or is projected to not comply with the assigned sectoral emissions ceiling, the Minister for the Environment, Climate and Communications will, following consultation with the Minister responsible for the relevant sector, set out sector specific actions in the annual update to the climate action plan to address the failure or projected failure. My Department is developing a methodology to ensure that any compliance costs that arise from a failure to reach climate and energy targets will be borne by the sector responsible for this failure. In light of the binding requirements that are now being imposed, this is a particularly important initiative. The traffic light scoring of all national development plan measures will inform the resource allocations that have to be taken by Government. As the Deputy will know, we are hoping to agree on a reviewed national development plan by July.
