Seán Canney (Galway East, Independent) | Oireachtas source

I thank the committee for the invitation to appear here today. I will cover the policy implications of the People Before Profit Petroleum and Other Minerals (Amendment) (Climate Emergency Measures) Bill 2018, the steps the Government is taking following on from the recent all-party climate report and the declaration of a climate emergency. I will then remark on the financial implications of the Bill.

As part of its role in meeting the goals of the Paris Agreement, Ireland has a target of a 30% reduction in greenhouse gas emissions by 2030. All credible models, such as those contained in the work done by the International Energy Agency, IEA, the European Commission and University College Cork, UCC, show that in meeting the Paris objectives there will still be a need for some oil and, particularly, gas out to 2050. As a Government, we must plan for how we are going to source that energy for our citizens. If we know and accept that we need some oil and gas during the transition to a low-carbon economy, then there are several clear benefits of using indigenous sources over imported sources. There will be a less harmful impact on the environment, as energy does not have to be moved over long distances. The State will get a tax return, which can be up to 55% in the case of the most recent licensing terms. There can also be energy security benefits in using the Kinsale and Corrib gas fields. The tax income accrued from indigenous sources could be re-invested in the energy transition by helping with the extensive capital investments we must put towards renewable energy and energy efficiency. That is particularly the case regarding our heating and transport systems.

Regarding energy security, Europe accounts for approximately 15% of the world’s demand for oil and gas. In respect of the world’s proven energy reserves, however, Europe, including Norway, accounts for less than 1% of oil and approximately 3% of natural gas reserves. On the other hand, the Middle East and Russia hold over 70% of proven gas reserves. In essence, this Bill will not keep fossil fuels in the ground; it will mean they are taken out of the ground a long way from Ireland, with all the known disadvantages of doing so.

Turning to action being taken by the Government, a number of steps have already been embarked upon. The all-of-Government climate plan, which will shortly be finalised, will set out how this Government intends to make Ireland climate resilient across our entire society. This will involve setting climate goals in all key sectors, including electricity, agriculture, transport, industry, buildings, waste and the public sector. The plan will lead to a significant step-up in policy ambition and delivery to ensure that we at least meet our 2030 targets and get on a clear pathway to meeting our 2050 objectives. It is clear that the development of offshore wind can be a game-changer in helping Ireland reach its ambitious target of 70% renewable electricity by 2030. This must be the focus of our efforts and doing so will put us in a position to take steps such as that proposed in this Bill.

Moving to the specific financial implications, as committee members are no doubt aware, the Ceann Comhairle has determined that a money message is required for this Bill to progress. The background to this position is that on 31 October 2018 the Oireachtas Library and Research Service reported a direct Exchequer cost estimate of between €8 million and €50 million. On 26 November 2018, I expressed my concerns regarding the financial implications of this Bill in a letter to this committee ahead of its meeting to consider a scrutiny report. I then wrote to the Ceann Comhairle on 8 May 2019 to detail my concerns regarding the financial implications of the Bill and requested further consideration of a money message.

The costs set out in my letter included those that are immediately quantifiable, such as the refund of application and licensing fees. Financial implications would also be incurred if this Bill were to be passed because it would be necessary to prepare for a likely legal challenge from existing licence holders. Other financial implications, which are difficult to assess at this point, include likely compensation to be paid to licence holders. Also to be taken into consideration is the lost potential revenue to the State in the form of direct tax revenue. That lost potential revenue could be used to fund the energy transition and taxes arising from economic activity associated with this development.

If there is an impact on the Exchequer, then I am bound to make that known. I also note that since this Bill was introduced, we have new protocols in place that give helpful clarity to all concerned on these processes in future. The Government has indicated that it is opposed to this Bill. It does not reduce Ireland’s emission, it does not encourage renewable energy and it makes Ireland more dependent on energy imports. It will also oblige us to import all our needs at a time when the Kinsale gas field will soon close and the Corrib field is declining. Within five years, that field will only meet a quarter of our gas demand and will be depleted entirely in approximately ten years.