Jennifer Carroll MacNeill (Dún Laoghaire, Fine Gael) | Oireachtas source

I thank Deputies Pringle, Connolly and Joan Collins for putting forward this motion and giving us an opportunity to talk about this matter.

I disagree with Deputy Pringle's comments that COP was a farce. I do not agree that it was. The progress overnight was really important. Eamon Ryan was one of the EU's lead negotiators and he has put enormous effort into two things in the past two weeks, the first of which was the early achievement of the loss and damage fund and the scale it was achieved at. It was one of Ireland's priorities for COP to try to support small island nations. The Deputy correctly identified those countries as not having contributed to the climate damage we are experiencing, but which face the burden. Ireland's contribution to the fund was €25 million straight away, which made us the second highest per capitacontributor globally, with the UAE ahead of us. Events may have overtaken and bigger contributions may have been made on a per capitabasis, but it is a strong statement by the Irish Government to be the second highest per capitacontributor to something so significant, on which Ireland and Germany led the negotiations and which Eamon Ryan and the Government pushed in a really important way. It is a real delivery and it is not unique to the loss and damage fund.

As a Minister of State at the Department of Finance, when I was at COP for finance day on behalf of the Government, I was able to announce €12 million for the centre for emergency response flooding, which is led by the UN. That put us in the top ten contributors, not just on a per capitabasis, but on an absolute basis, which is just another example of how much Ireland is committed to making sure this works. Eamon Ryan's work on behalf of the EU in the past two weeks has been really important. It is important that this agreement, which has been welcomed by environmentalist groups, genuinely links science and climate change for the first time - it should have happened years ago, but it happened this time - and genuinely names fossil fuels as the source of the difficulty. This is a big achievement by Eamon Ryan, not only on behalf of Ireland, but on behalf of the EU. It is a step change, so I do not agree it is a farce. We all want it to go further, but it is important, this morning of all mornings, to recognise the significant change.

It is important to recognise how the mobilisation of Irish capital and Irish taxpayers' money is being used to support the transition, especially by ISIF. At COP I highlighted this work internationally. For example, in 2017, ISIF took a 28% stake in a renewables company for €76 million of Irish taxpayers' money. In 2020, when we divested our stake down to 4%, that company was generating 528 MW of power through renewable sources. In 2023, three years later, that output was trebled, with 1,450 MW of renewable power being delivered across Denmark, the Netherlands, Finland, France, Germany, Spain, Portugal and Sweden, with €10.5 billion of assets that all originally came from seed capital of ISIF funding delivered across Europe. The company says it will be generating 400 GW of renewable energy across Europe by 2030, and I believe it. That shows the extraordinary multiplier effect of Irish capital being invested correctly by ISIF in projects that will really land, work and deliver.

The Government is not opposing the motion. I compliment Deputy Pringle and his colleagues on their earlier work on this in 2018. I was proud at COP to be able to say that Ireland was the first State to move away from investment of any kind in fossil fuels. The Fossil Fuel Divestment Act achieved that. At the time, we reached a compromise which enabled us to be the first country to do so while still enabling the type of investment by ISIF I described, which enables the fund to grow significantly to be able to mobilise Irish capital in significant ways.

There are a few difficulties with the motion on which we would like to find a compromise. We would like to make sure we can achieve something further where possible, without compromising the ability of ISIF to do the kind of work I described or to continue to grow Irish funds. Crucially, we must not compromise the ability of the Future Ireland Fund and the climate action fund to be able to invest in the ways we need them to.

I will not outline the Government's position on Climate Action and Low Carbon Development Act and our carbon budgets because Deputies are already more than familiar with it. We have a significant climate action plan. The update of that plan was published on 21 December 2022, setting out how we can accelerate the actions required to respond to the climate crisis.

I will focus on the motion. As Deputies will be aware, the 2018 Act requires ISIF to divest from companies engaged in exploration, extraction or refinement of fossil fuels, which includes coal, oil, peat, natural gas or any equivalents. A fossil fuel undertaking is defined as being in the business of "exploration for or extraction or refinement of a fossil fuel where such activity accounts for 20 per cent or more of the turnover of that undertaking...". In the case of a group, the 20% is defined by reference to the aggregate turnover of the group, based on the most recently published audited financial statements. The Act defines indirect investment as meaning:

... an investment of the assets of the Fund in an investment product or in a collective investment undertaking but does not include financial derivative instruments, exchange traded funds or hedge funds.

The NTMA, is required to:

... endeavour to ensure that the assets of the Fund are not directly invested in a fossil fuel undertaking ... unless it is satisfied on reasonable grounds that such indirect investment is unlikely to have in excess of 15 per cent of its assets, or such lower percentage as the Minister may prescribe ... invested in a fossil fuel undertaking.

If the Act was amended as proposed in the motion, to avoid being in breach of the relevant statutory provisions, ISIF would have to divest from and may be prevented from investing in substantial investments that may have minimal or no exposure to fossil fuel undertakings, and where exclusions would have no consequence to the issue of fossil fuel use. Deputies should be aware that the call to amend the Act by removing the exclusionary clause in section 49A(1) regarding financial derivative instruments, exchange traded funds or hedge funds would also significantly limit ISIF's investment universe and its ability to deliver on its commercial mandate, which is important. As I said, crucially it would have the potential to reduce the investment horizon for the proposed Future Ireland Fund and the Infrastructure, Climate and Nature Fund.

ISIF has developed a list of 243 fossil fuel undertakings in which it will not invest, having regard to the criteria in the 2018 Act. The list is updated on a semi-annual basis and is available on the ISIF website. There is no need for regular review of the legislation. It is already happening and is available for Deputies to see.

The motion suggests going beyond the current definition of fossil fuel undertakings to include fossil fuel utilisation, which according to the motion:

... should be defined in a manner that targets economic entities that fall within an agreed bracket so as to strike a balance that allows for meaningful climate policy while acknowledging any existing barriers within the renewable infrastructure ...

It is unclear what that means in a legislative context.

As I said, this is a matter on which we are aligned in principle. We would like to find workable compromises that continue Ireland's leadership on this point, while not hamstringing the very investment vehicles that enable us to deliver projects such as the renewables one I mentioned and to develop the Irish sovereign wealth position to be able to invest in a range of different projects, crucially including climate infrastructure. It should be appreciated that ISIF is a responsible investor and its overarching approach to sustainability and responsible investment includes ensuring the whole portfolio, third-party managers and investee companies consider potential climate risks and opportunities, as appropriate, as part of ISIF's decision-making and portfolio management. ISIF seeks to engage with like-minded investors and organisations that share its ambition to deliver on ESG priorities. ISIF is a founding signatory of the principles of responsible investment; a supporter of CDP, formerly the carbon disclosure project, and Climate Action 100+; and an endorser of the One Planet Sovereign Wealth Funds initiative and the Santiago principles.

We would argue that the ISIF is already a responsible investor, investing in the sorts of projects we want to see delivered in respect of renewables not just for Ireland but also for Europe.

More broadly, on the Government's position on developing onshore and offshore wind and solar projects, I would say in response to Deputy McNamara that we are already a leader in onshore renewables. The strategy was to deliver quickly for the consumer and to deliver renewables as quickly as possible. Obviously, from a commercial perspective, it was easier to develop onshore than offshore. I assure the House that my commitment, as a Deputy in Dún Laoghaire and as a member of the Government for whatever period I am, is definitely to deliver on offshore opportunities. There is a windfarm proposal near my constituency and that of the Minister of State, Deputy Ossian Smyth. I will speak for him when I say we are firmly behind that project, as we are behind other projects that will deliver on the opportunity to make Ireland a genuinely energy-independent and sustainable state. It will put us in a completely different position not only in terms of our output in energy and fossil fuels but also in terms of our macroeconomic security and independence. There is a considerable opportunity here and one of the basic reasons to be in and to remain in politics is to deliver on that opportunity alone. I assure the House of my commitment and that of the Government.

See this speech in context