Guest blog: Climate Change Bill and COVID recovery – friends or enemies?

Economy, Guest Blog, Sustainability | Mon 12 Oct | Author – Business & Finance

Marc Coleman is Founder of Octavian Research Advisory and Public Affairs consultancy. Here he discusses the Government’s Climate Change Bill, and its implications for Irish business.

COVID-19 recovery and Brexit are two huge challenges for Irish business over the coming few years. Now a third challenge – but also an opportunity – has been added. On Wednesday last, the leaders of all three parties of government announced the publication of a Climate Change Bill.

Its key implications for business are:

  • A demanding goal of cutting Ireland’s carbon emissions by 7 per cent per annum.
  • A carbon tax increase of €7.50 per tonne will be imposed each year until 2029 with one further rise of €6.50 in that year, reaching a tax of €200 per tonne by 2030.
  • Mandatory carbon budgets will be set on the advice from a Climate Action Council
  • Budgets will be set on an industry sectoral basis
  • An Oireachtas committee having oversight of budget setting and implementation

Long flagged – this Bill was on the Green Party manifesto and was clearly committed to in last July’s Programme for Government. If enacted, it will copper-fasten the Government’s drive to achieve a carbon neutral economy by 2050. This is in line with the European Council’s endorsement last December of the 2015 Paris Agreement. Between the 2050 goal of eliminating any net carbon emissions from the economy is a 2030 target. Originally set at achieving a 40 per cent reduction compared with benchmark 1990 levels, the EU President Ursula von der Leyen set the bar higher when on 16th September she set a 55 per cent target reduction for 2030. This week, the European parliament went a step further and raised that target to 60 per cent (but this is not yet binding).

The Government aims to pass the Bill by Christmas. That it was published within a hundred days of Government formation illustrates its high political priority.

The Government aims to pass the Bill by Christmas. That it was published within a hundred days of Government formation illustrates its high political priority. The Supreme Court’s recent decision that the Government’s 2017 Climate Mitigation Plan failed to meet the standards of progress required by the 2015 Climate Act underpins this: There is much political and legal capital invested in its success. But as Eamonn Ryan freely admitted on Wednesday, the targets set are very demanding. And they come at a time when businesses are grappling with COVID recovery and Brexit. Clearly, in responding to this challenge, businesses and representative bodies must do two things:

Firstly, research, understand and communicate to stakeholders’ shareholders and government the implications for their business.

Secondly, research and understand how to exploit supports and opportunities that come with the Climate Change Bill. These include extensive initiatives on climate based investment in infrastructure and technology, retraining, tax incentives and grants.

The Bill is part of an extensive agenda of transition that includes several commitments in the Programme for Government as laid out below:

  • Establishing a “Just Transition” Commission to oversee economic transition of those affected by climate action and create new jobs and adjust skilling programmes.
  • A new Renewable Energy Supply Scheme with auctions by end 2020. A whole of government approach to achieving a target of 70 per cent of renewable energy by 2030. Connection to Celtic interconnector.
  • Targets and incentives for community supply of sustainable energy. Promotion of solar and wind microgeneration.
  • New Stress tests for Financial Institutions in relation to sustainable investment. A Task Force on Climate Financial disclosure.
  • End new licenses for gas exploration. Withdraw EU funding from Shannon Liquid Gas Terminal project. Create alternative projects in the Shannon region. No importation of fracked gas.
  • Require Bord na Mona to account for climate, biodiversity and water quality. Establish a Midlands task force to ensure a just transition for those affected
  • Promote more sustainable consumption re-use and disposal of retail packaging (the Waste & Circular Economy initiative).
  • Strengthen Agricultural water safety conservation.

These present existential threats for some sectors that will require accurate research, public affairs engagement and advocacy. Part of a highly ambitious Green New Deal agenda being rolled out across the EU, they also come with incentives, grant aid and other initiatives designed to ease the transition burden.

For other sectors, particularly financial services, sustainable energy and construction there are significant opportunities: On the same day as the Bill’s publication, Mairéad McGuinness was ratified as EU Commissioner for Financial Services. Ireland is also the European hub for the UN Financial Centres for Sustainability and boasts a thriving international financial services sector with a dedicated Minister and Government-backed growth strategy titled “Ireland for Finance” to take leadership in the increasing Green Finance agenda of the EU.

But as we have seen in other areas of recovery policy, the implementation of policy can lag behind policy intent and at a time of rapid and intense pressure on government and business, the ability of any “just transition” policy to adequately help businesses affected by the climate agenda cannot be taken for granted. Engaging trained, expert business advisory and public affairs services will be crucial for businesses, individually and collectively, to reduce the “challenge” of the climate agenda and to access and make the most of its undoubted opportunities.

To find out how we can help you respond and avail of the opportunities in this area don’t hesitate to contact marc.coleman@octavian.ie

Marc Coleman is Founder of Octavian Research Advisory and Public Affairs consultancy (www.octavian.ie) and is also Ireland’s leading thought leader on economic recovery having authored 5 acclaimed books on the topic. He advises, represents and delivers policy focused research and publications for a range of leading businesses and business organisations and advisory bodies. His latest book –  “An Economic Response to Covid-19” – (see www.octavian.ie), published in April, was the first publication to call for a July stimulus and influenced the small business recovery agenda of government response to the crisis. Marc is a former ECB Economist, Irish Times Economics Editor and senior manager with Ibec and holds a scholarship MBA from Smurfit business school