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Budget 2024 has given increased funding for retrofitting, transport and a new climate-related fund, but some experts have criticised the lack of clarity or urgency in addressing the crisis.
Unsurprisingly, Budget 2024 is another year focused on cost-of-living measures, but some significant announcements were made to address the climate crisis.
Funding was announced to makes homes more energy efficient, improve transport and help improve biodiversity by supporting farmers. Budget 2024 also created two new funds which both have ties to climate action, though the specifics around how this funding will be used are unclear.
During the Budget’s announcement today (10 October), Minister for Finance Michael McGrath, TD, said the climate crisis will impact “all parts of our society” and that “nobody will escape”. He added that it looks “virtually certain” that 2023 will be the warmest year on record.
“This government has taken action to manage the transition to a climate-neutral and climate-resilient society in the knowledge that it will have macroeconomic and fiscal implications,” McGrath said.
Two new funds
The latest Budget has created two “major” funds, the first of which is called the Infrastructure, Climate and Nature Fund. This fund is designed to support sustained investment into infrastructure in the future and deliver capital projects when “it is clear our climate targets are not being reached”.
This fund will grow by €2bn for seven consecutive years, with the goal of reaching €14bn by 2030. However, McGrath said the climate and nature component of this fund is only worth €3.15bn.
Despite this, the fund has been welcomed by some experts. EY Ireland partner and head of government and infrastructure, Shane MacSweeney, called the creation of this fund “significant” as it “future-proofs” and reaffirms the Government’s commitment to infrastructure investment.
“All too frequently, infrastructure expenditure is one of the first areas to be cut during an economic downturn, so pre-empting this cycle via the establishment of a new fund now is welcome long-term, strategic decision-making,” MacSweeney said.
“Infrastructure investment is unique, in that not only does it boost productivity and economic growth, while also helping us to deliver on our Climate Action Plan, it also makes citizens’ lives better.”
The second fund is called the Future Ireland Fund, and is expected to receive a €4.3bn investment every year to reach €100bn in value by 2035. This fund will cover a range of expected costs in the future, including climate-related costs.
Energy and climate
A variety of supports have been announced to help Ireland reduce its environmental impact. One of these is a €90m package to retrofit social housing next year, in order to help people reduce their energy bills and meet climate targets.
The carbon tax cost – per tonne of carbon dioxide emitted for petrol and diesel – is being raised from €48.50 to €56.00 from tomorrow (11 October). Minister for Public Expenditure Paschal Donohoe, TD, said an additional €165m of carbon tax revenue will be available in 2024 to support a just transition and address fuel poverty.
This raises the total carbon tax revenue available for investment to €788m, with half of this being invested to improve the energy efficiency of homes.
Meanwhile, €32m of carbon tax funding will be provided to the Department of Agriculture, Food and the Marine next year. This is designed to support up to 50,000 farmers to “improve biodiversity, climate, air and water quality outcomes”, according to Donohoe.
Funding will also be provided to create new solar supports that will let households profit by selling electricity back to the grid.
To help Irish citizens, three €150 energy credits will be provided to roughly 2m households, providing a total of €450 towards energy bills this winter. These energy credits are €150 less than those provided in Budget 2023.
Minister for the Environment, Climate and Communications Eamon Ryan, TD, said the Government is conscious that people are “still facing higher energy bills than before the invasion of Ukraine”.
“That’s why I am glad that our Department can provide for three electricity credits again this year, which, along with a suite of targeted social welfare measures, can help ensure that households, and particularly those who need help most, can be supported to help meet their bills over the coming winter,” Ryan said.
Transport
Donohoe said that – as transport plays a “critical role” in both connectivity and Ireland’s climate ambitions, Budget 2024 will provide €3.5bn to the Department of Transport. However, this is the same allocation as last year.
“This funding will support the construction of MetroLink, the Cork Commuter Rail project and investment in electric and hybrid-electric buses and the essential infrastructure required for new bus and rail fleets such as the electrification of bus and rail depots,” Donohoe said.
Donohoe said the Government is also committed to invest “almost €1m per day” in cycling and walking infrastructure.
To support the adoption of electric vehicles (EVs), Budget 2024 extends the Vehicle Registration Tax (VRT) relief for battery EVS for a further two years, to the end of 2025. This relief applies to battery electric vehicles with a value of up to €50,000, McGrath said.
‘A lack of urgency’
Despite the significant level of investment announced for the two new funds, there are some uncertainties around how it will be invested. Conall Bolger, the CEO of the Irish Solar Energy Association (ISEA) said the new €14bn fund is “welcomed” but took issue with the lack of detail.
“The crisis we face is now, not in seven year’s time, and there is a lack of clarity on how these investments will address today’s challenges,” Bolger said.
The ISEA said the commitments to address the climate crisis lack urgency and fail to deliver meaningful action. Bolger was critical of the failure to remove tax barriers that prevent farmers leasing land for solar developments.
“Central to Ireland’s decarbonisation plan is the government’s own stated ambition to develop 8GW of solar energy by 2030,” Bolger said. “This will require approximately 25,000 acres of solar farms within this decade and making this a reality will require the cooperation of farmers across the country.”
Ibec, the lobbying group representing Irish businesses, also welcomed the new Infrastructure, Climate and Nature Fund, but cautioned that the “success of this ambition will be measured by the effectiveness of its implementation”.
Despite this caution, Ibec CEO Danny McCoy said the infrastructure fund demonstrates that Budget 2024 strikes the “right balance between investment ambition while further enhancing social cohesion”.
“The fund will ensure the protection of public capital projects during cyclical downturns, reduce the need for ‘catch-up’ spending, provide improved value for money and offer greater certainty to sectors downstream of infrastructure delivery,” McCoy said. “This, in turn, would enable organisations to build capacity and retain skills in both the public and private sectors.”
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