Dáil debates

Thursday, 12 July 2018

Fossil Fuel Divestment Bill 2016: Report and Final Stages

 

3:10 pm

Photo of Michael D'ArcyMichael D'Arcy (Wexford, Fine Gael) | Oireachtas source

The amendment effectively replaces the full text of the original Bill, as presented by Deputy Pringle. It is based on an amendment that Deputy Pringle initially proposed on Committee Stage. It has now been agreed after extensive engagement between Deputy Pringle's office, NGOs, Ireland Strategic Investment Fund and the Department of Finance such that it sets challenging but achievable targets.

If Deputy Pringle's amendment is accepted, as I hope it will be, it will insert a new provision in Part 6 of the National Treasury Management Agency (Amendment) Act 2014. This is the part of the 2014 Act that established Ireland Strategic Investment Fund and sets out its statutory remit and investment mandate. The new section will change the ISIF mandate for the future. The changes are designed to restrict ISIF making fossil fuel investments while taking appropriate account of the national transition objective.

The amendment defines what constitutes a fossil fuel undertaking. It is an undertaking for which exploration for extraction or extraction or refinement of fossil fuels accounts for at least 20% of its turnover. The National Treasury Management Agency, as custodian of ISIF, would be obliged to endeavour not to directly invest in fossil fuel undertaking.

Where ISIF is directly invested in a fossil fuel undertaking, the NTMA will be obliged to divest from it as soon as is practicable. This statutory obligation is strong but it allows a small margin of flexibility to take account of the need to comply with applicable contract terms and the importance of preserving fund value for the State.

The provision provides a 15% tolerance threshold for indirect investments. ISIF must ensure it does not maintain investments in an indirect investment that is likely to hold more than 50% of its assets in a fossil fuel undertaking. I wish to emphasise that this is an upper band against which ISIF can be audited. This will mean ISIF will have a strong incentive to keep the fund's exposure substantially lower to take account of sectoral volatility. In addition, provision is made that the Minister may by order prescribe a lower exposure to fossil fuel undertakings in indirect investments.

The proposed section 49A(4) is particularly important. It provides an exemption from the general rules set out for investments and indirect investments. This is to allow ISIF to make certain investments consistent with the State's national transition and climate change objectives. Where an investment is made in a fossil fuel undertaking using that flexibility, ISIF must specify that fact when it publishes the fact that it has made the investment. ISIF will be obliged to report on the measures it takes by way of divestment or otherwise to comply with these measures.

I strongly support this targeted and considered and practical amendment. It will balance the challenges of reducing exposure of fossil fuel investment while enabling ISIF to earn investment returns for the Irish taxpayer and, most important, support through its investments projects designed to assist in the national transition objective. I commend Deputy Pringle on his work in advancing this Bill and I commend the amendment to the House.

I wish to touch upon some other matters briefly. They relate to the work between Deputy Pringle's office, non-Government agencies and organisations, including Trócaire, ISIF and the Department of Finance. We had a really good strong robust debate on Committee Stage. If anything, that really helped to focus minds. Everyone wanted to achieve the objective. The question was how we got there. I commend Deputy Pringle on his flexibility in allowing ISIF and the Department of Finance to have that level of flexibility. Without that, I am unsure whether we would be where we are today.

I want to touch on some other items quickly, including the 2040 Rebuilding Ireland plan. The largest level of expenditure between now and 2040 will be in sustainable projects and sustainability with regard to how to de-carbonise Irish society. This is something to which I am personally committed on the financial services side of my brief. I believe this is where most investment will occur in future.

I have used a particular figure in the past. To decarbonise Europe per annum, the shortfall is €160 billion. Valdis Dombrovskis, Vice-President of the European Commission, attended the European Financial Forum and quoted a figure of €180 billion. That is how much we are short in Europe every year and that is not taking into account the billions of euro currently being invested to decarbonise Europe. We are trillions of euro short worldwide when it comes to decarbonising to protect the planet.

In terms of financial services, my objective is to make Ireland the global hub for sustainable green financial services, green bonds and products that can be sold around the world. If we can do that here in Ireland - and throughout the country, not just in Dublin where most people talk about basing financial services - it will have a huge benefit. Not only will we administer them from here but we will also spend them here.

I am concerned about something that is happening now, which I see in my own county, whereby people are objecting to everything. It is everywhere. Wind farms are objected to. We brought in new controls to keep turbines back from property boundaries, which is appropriate. There are objections to solar farms. People are creating fear and doubt and saying the craziest things about renewable energies that are clean and tested and have been for decades. It has to stop or we will never meet these targets.

Events like what happened with the Apple data centre in Athenry cannot continue. People who object to a project because it is close to them are wrong in so doing.

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