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Session 2 - Ireland - Laura Kevany

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Green Budgeting Virtual Meeting - 5 October 2020

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Session 2 - Ireland - Laura Kevany

  1. 1. Greening Ireland’s Recovery Laura Kevany OECD Paris Collaborative on Green Budgeting 5th October 2020
  2. 2. 2 Rialtas na hÉireann | Government of Ireland To serve the public interest by supporting the delivery of well-managed, well-targeted and sustainable public spending through modernised, effective and accountable public services. The role of the Department of Public Expenditure and Reform
  3. 3. 3 Rialtas na hÉireann | Government of Ireland Ireland’s Climate Challenge 60.9m tonnes of Greenhouse Gas Emissions in 2018 • An Emissions Profile more similar to New Zealand than other EU Member States • Total Emissions Decrease of 0.1% versus 2017 Agriculture Transport Buildings Manufacturing Electricity
  4. 4. 4 Rialtas na hÉireann | Government of Ireland Meeting Ireland’s EU targets Ireland has been exceeding our EU annual greenhouse gas emissions limits since 2016. 0.00 5.00 10.00 15.00 20.00 25.00 30.00 35.00 40.00 45.00 50.00 2013 2014 2015 2016 2017 2018 2019 2020 MtonnesCo2eq WAM non-ETS Emission Projections WEM non-ETS Emission Projections Annual Limits
  5. 5. 5 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform The Scale of the Climate Action Challenge -30% non-ETS target EU 2030 target but New Government June 2020 – Coalition incorporating green party New Programme for Government commits to: • 51% cumulative emissions reduction by 2030 • Net zero emissions by 2050 • Some 200 Climate Actions
  6. 6. Twin Challenges – Covid & Brexit
  7. 7. 7 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform 0 10,000 20,000 30,000 40,000 50,000 60,000 total social protection health transport other 2019 2020 current expenditure = €53.7 bn → €9.9 bn → 22.6% year-on-year increase additional Covid-related expenditure on social protection → €6.9 bn → 45.4% year-on-year additional Covid-related expenditure on health → €2.0 bn → 15.9% year-on-year Covid Spending to Date • Tax receipts down 3% on 2019 • Spending to support the economy is up 25% A deficit of €9.4 billion was recorded to end-September 2020. This compares with a surplus of €38 million in the same period last year. Spent on: • 45% Increase in Health Expenditure • 16% Increase in Social Protection Expenditure • 17% Capital Increase – mostly to support vulnerable business Votedgrosscurrentexpendituretoend-q3,2020vs2019,€millions
  8. 8. 8 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform Covid Recovery Packages Already one stimulus programme launched – July “Jobs” package. €7.4 (c. 2% GDP) billion package of measures designed to stimulate a jobs- led recovery • extension of covid employment supports, 0% loans, credit guarantees, support for higher education But also support for sustainable initiatives:  €10m New Green Enterprise Fund  €100m commitment for Energy Efficiency  €113m investment in sustainable mobility Small sums for climate but intended to lay foundation for capital investment in 2021
  9. 9. 9 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform Budget 2021 • Ireland’s National Budget to be published on October 13th 2020 • A Covid and Brexit budget. Commitment to climate also. • Likely to be increase in carbon tax and renewed commitment to hypothecation of revenues
  10. 10. 10 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform 3 Key Medium/Long Term Recovery Packages 1. National Economic Plan • To be launched November 2020 • Objective to set out where Ireland want to get to post-crisis, the longer-term policy approaches to get us there and associated trade-offs, while ensuring short term responses to the pandemic and Brexit are consistent with longer-term goals. 2. EU Recovery & Resilience Fund • National Plans required by April 2021. • Objective to invest in the EU’s common priorities, notably green, digital and social resilience to help create jobs and sustainable growth, while modernising EU economies. • €312.5 billion in grants and up to €360 billion in loans - 37% of available funds must be allocated for climate purposes. 3. National Development Plan • To be published Q2 2021 • The most critical document to “green” as it will determine the specific public investments to made over 2021- 2030.
  11. 11. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 11 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform Strategic Investment Need to align investment with priorities for post-crisis economy, through the forthcoming review of the National Development Plan. • Counter-cyclical policy – counterbalancing effect to the economic impact of Covid-19 • Green investment – retrofitting, public transport infrastructure, renewable energy, the Climate Action Fund and R&D • Regional development – in particular, sustainable regional development • Priority infrastructure gaps – such as housing, flood defences, transport and water infrastructure • Changes in enterprise and labour market – research and innovation, broadband, higher and further education infrastructure, and digital hubs How to leverage private investment (high savings rate) to support priorities Use Plan to identify priorities for accessing EU Recovery and Resilience Fund, and other EU Funds such as Just Transition Fund
  12. 12. Body Level One Body Level Two Body Level Three Body Level Four Body Level Five 12 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform Investment Needs for a Low Carbon Economy • Social and economic disruption of the green transition requires investment in retraining and reskilling opportunities. • Support citizens to make the carbon friendly investment decisions through grants and other active incentives. • Shift the focus within many sectors , such as agriculture, transport, energy, tourism, and construction to a more sustainable model. • Decarbonisation will likely involve downsizing in these sectors which may exacerbate existing economic disparities between the regions and disproportionately impact lower income groups, unless alternative green and sustainable jobs are created for displaced workers. • Ensuring a Just Transition is a central component of our approach, supporting workers, sectors, and regions most exposed, and engaging with workers from disrupted sectors and regions to guide them towards education, retraining and employment opportunities. • Complementing the Climate Plan, focussed attention is given to increasing our capacity and understanding in sustainable areas including the development of a National Circular Economy Action Plan and encouraging more Green RD&I.
  13. 13. 13 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform Greening the Recovery Plans The specific tools that will be used to asses the “greenness” of recovery plans are still under consideration. However:  A “green” strategic framework will set through the development over the next 6 months of a new Government Climate Action Plan that will give effect to the new targets articulated in the Programme for Government  This will influence the Exchequer resource allocation decisions that will need to be made in the National Development Plan  Ex-Ante Impact Assessments will be required for measures proposed in the National Development Plan – both climate positive and climate negative. The goal is to determine the emissions savings that may be achieved, along with the potential cost per tonne of emissions saved (while not ignoring co-benefits)  Since Ireland will soon set a legislative goal to reach net zero emissions by 2050, green conditionality likely to attach to long term investments.
  14. 14. 14 An Roinn Caiteachais Phoiblí agus Athchóirithe | Department of Public Expenditure and Reform Taking Stock • Ireland has come through the initial economic shock of covid with unprecedented levels of State intervention stabilising the economy • We still face significant uncertainty around the continued impact of covid and the potential impact of Brexit • After the publication of Budget 2021, consideration will move to the development of recovery packages • The scale and nature of the challenge to meet Irelands ambitious carbon emissions targets and lay the foundations for achieving carbon neutral economy by 2050 cannot be overstated • Our climate performance has to go from negligible reductions of 0.1% to reach an average of 7% per annum • This will not be achieved without a complete refocus of societal priorities, coupled with adequate State investment. • 6 – 9 months available to meet the clear political imperative and public expectation • Balancing the recovery plans will be tricky as will avoiding confusion
  15. 15. Contact us: Laura.kevany@per.gov.ie Ken.cleary@per.gov.ie

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