The total figure of €1.9 billion was identified in a staff paper published by my Department in February 2023, entitled ‘A Review of Fossil Fuel Subsidies and other Potentially Climate Harmful Supports’. This represents the first step in fulfilling the Climate Action Plan commitment to develop and apply definitions to identify and track government spending that may be having a negative impact on climate and environmental outcomes.
The review defined a subsidy as any government support that confers an advantage on consumers or producers in order to supplement their income or lower their costs. A subsidy is considered to be a Potentially Climate Harmful Support if it is likely to incentivise behaviour that increases greenhouse gas emissions, irrespective of its importance for other policy purposes.
Expenditure was tagged at the budgetary subhead level, which is the most granular level of expenditure reported in the Revised Estimates Volume. In several instances, not all of the expenditure within a subhead is potentially climate harmful, but the full subhead is included on the basis that a material portion of the spending constitutes potentially climate harmful expenditure. Therefore, the €1.9 billion figure is likely an over-estimate of the level of potentially climate harmful supports in 2023.
It is important to note that the identification of a subhead as a potentially climate harmful support does not necessarily mean that a programme should be curtailed. Rather, it means that careful consideration should be given to determining if there are other ways of achieving the outcomes the expenditure supports in a way that is more environmentally friendly. It is the responsibility of individual Government Departments to respond to the identification of specific items as potentially climate-harmful supports to ensure they are taking the optimal approach to meeting their sectoral and climate targets.
My Department has begun working towards tracking of both climate-favourable and potentially climate-unfavourable expenditure across a wider range of areas, including adaptation and biodiversity, and is currently in the process of developing an appropriate methodology for this, informed by international experience and the lessons learned to date. This planned expansion of green budget tagging will play an important role in strengthening our understanding of the direct and indirect climate impacts of public expenditure.
This is a continually evolving area of budgetary reform, and it may of benefit for my officials to arrange a more in-depth briefing on this work, and to directly consider any concerns or comments you may have in relation to the proposed plan of work.
