Friday, 17 July 2020
National Oil Reserves Agency (Amendment) and Provision of Central Treasury Services Bill 2020: Committee and Remaining Stages
I move amendment No. 1:
In page 6, between lines 31 and 32, to insert the following: “and
(c) by the insertion of the following subsection after subsection (5):“(6) The Agency, in the performance of its functions and powers under this section, shall be cognisant of the Fossil Fuel Divestment Act 2018 and Irish and EU climate targets. A regular report on actions or positions taken in a representative capacity under section 8 will be provided to the Minister.”.”.
Considerable functions and powers are given to the agency under the National Oil Reserves Agency Act, some of which are subject to the approval of the Minister and some of which are not. I will cite two examples as I am conscious that we have to get through many amendments. The agency may, subject to the approval of the Minister, "enter into joint ventures, partnerships or other commercial arrangements with other persons to construct, acquire, maintain and develop in the State or elsewhere works, plants, equipment, storage tanks" and so forth. This relates back to an issue we have not teased out. Perhaps the Minister will indicate when we will have an opportunity to talk about the scale down and clean up issue, which is important.
Many decisions are going to be made by the agency in the context we discussed, namely, that of an internationally shifting environment in which many companies are going bankrupt and many assets are being purchased and disposed of. There is another function I wish to highlight, which is representing at the request of the Minister a Minister of the Government at meetings of international bodies insofar as those meetings relate to the holdings of oil stocks. Again, I acknowledge there is some specialism within the actions of the agency, but those functions as the agency performs them exist in a climate which is changing and in an environment that is shifting in terms of the political and economic landscape around the energy industries. Most importantly, there has been a changed policy environment in Ireland since 2007. We now have the Fossil Fuel Divestment Act 2018 and climate targets we must meet.
The amendment is simple. It provides that the agency as it performs all these functions, and I am not attempting to take them away, would be cognisant of the Fossil Fuel Divestment Act and of Irish and EU climate targets and that it would report in respect of the actions it takes in a representative capacity on how it was cognisant and did reflect that it was aware of, for example, the exit plan or the scale-down plan or our climate targets in these international meetings. We certainly do not want some agency authorised by the State to take a position at an international meeting in favour of new drilling or the creation of new, unnecessary infrastructure. There is a balance. I recognise the need for the energy reserve. Nobody is contesting that function, but that function should be exercised in a way that is consistent and coherent. I suggest in the amendment that the agency report to the Minister. As many of these actions are subject to the request or approval of the Minister, the Minister could instead assure me that he will ensure that those factors are requested when he gives his request or approval and that he will find a way to be accountable to the Houses for those actions.
I can see the motivation for the amendment but I do not propose to accept it. The agency in its operations has a specific, relatively limited role. It is about energy security and it has always been about the provision of 90 days' stock of oil. To be honest, the meetings and international obligations in that regard are relatively precise and do not go into the wider energy policy areas. That is appropriate.
I agree with the Senator that the provisions of the Fossil Fuel Divestment Act are important and that we must progress from that. We will do so in the expansion of the ending of oil and gas licences now in Irish waters, which is a significant development. It is agreed in the programme for Government that it would apply to gas exploration as well as oil exploration. Similarly, there is an agreement in the programme for Government that we will remove from the projects of common interest, PCI, list items such as LNG terminal applications and that the Department will issue a policy statement which makes it clear that this is not the future direction in which the country is going. Instead, we are going to provide our energy security through large-scale renewables production, increased interconnection in electricity markets and the development of green hydrogen solutions. There is great potential development in the alternative energy world that is now evolving.I absolutely agree that we need to monitor progress and make sure we are up to speed on that, but that is for another day and for different legislation. This is a very precise agency concerning oil stocks maintenance. The function of the Bill is to use some of the revenues that are becoming available for that purpose to invest in a climate fund. I do not think we should try to expand it to the wider energy policy remit.
I am not proposing to give the energy policy remit to the agency; I am trying just to ensure coherence. While we have talked about the State, the powers extend to actions in the State or elsewhere, and in international meetings they relate to wider oil stocks. This is very important. We should absolutely be divesting, but we have seen that Japan, for example, divested at home but then was sponsoring oil-fired plants in Bangladesh. We need a consistency and a coherence. I am not suggesting we widen the function of NORA. I have not included such an extension in the amendment. I am just asking the Minister to assure us that he will ensure we do not take actions that are contradictory to that direction, for example, that the agency does not take a position that would undermine the capacity for divestment of another country or other measures. It is just a very small thing. I accept that the Minister might not be able to accept the amendment at this point but I would like an assurance that he will be checking in on this and cognisant of it. We cannot simply say things happen in a silo. We know they do not.
I am happy to give the Senator that commitment. I have a clear understanding of this not only for environmental reasons but also from the point of view of the State's strategic interests as a leader in decarbonisation and the switch to an alternative, community-orientated, sustainable, renewable, local energy supply system. I commit absolutely to keeping abreast of whatever is happening in this regard to make sure that that is how we are positioned.
I move amendment No. 4:
In page 6, between lines 31 and 32, to insert the following: “Amendment of section 14 of Principal Act
6.Section 14 of the Principal Act is amended—(a) in subsection (3), by the insertion of the following after paragraph (f):“(g) sustainable energy or climate science.”,and
(b) in subsection (8), by the substitution of “the proceeds of the levy collected and recovered and the proceeds of the biofuel levy collected and recovered” for “the levy and biofuel levy”.”.
The amendment again seeks to strengthen not only the Minister's discretion and powers in a way that would be useful but also the confidence of us all, as an Oireachtas and a public, in the operations of agencies empowered by our State such as the National Oil Reserves Agency. At the moment those who may be appointed as directors of the National Oil Reserves Agency are persons with a very specific set of experiences and competences. It is very important, especially as we now look to certain parts of the moneys moving towards a climate action fund but also, as I said, because we recognise that the oil industry is not an industry floating alone but one within a wider energy debate and landscape, that we have other expertise available and that the Minister has the capacity to appoint people with other expertise to the directorship of NORA. Currently any director from the board of directors of NORA can come from oil or oil-related industries, chemical or chemical-related industries, finance, economics, legal matters or energy production and supply industries. There are a few issues here, one being the expertise, none of which relates to the geological reality that oil and the oil industry is something that is happening on the planet that has huge implications, including for climate science. There is no sign, recognition or consideration that this industry has very serious impacts on how it does its work. With the exception of finance, economics and legal matters, the other expertise all relate to industry experience. Again, by their nature, the directors of NORA come from industry and business and may potentially have either past or present interests in the area of oil, chemicals or energy production and supply.The Minister would not have to remove any of those. My amendment would simply add sustainable energy or climate science as two possible considerations when appointing a director to the board of NORA. My other amendment on this matter was ruled out of order and the Minister has not had a chance to address it but in the future, we will hopefully move towards our reserves not simply being oil reserves but sustainable energy reserves. When assessing oil stocks, for example, someone with a background in climate science would recognise that, given a choice between A, B and C, option B may have a less negative climate impact. That consideration and consistency would be there. This amendment simply gives the Minister the capacity to appoint a director who may not have industry experience but who may have academic experience, for example, in sustainable energy or climate science.
I support Senator Higgins. Sometimes there is a propensity in legislation to overly prescribe the make-up of these boards, but the points she has made are valid ones. The Minister may not be inclined to accept an amendment that would further prescribe the make-up of the board. There may also be room to amend the section in the original Act that prescribes the skill sets of the board members. It could be left up to the Minister of the day and we could trust to his or her discretion who would be the right person to fill the position on the board. I say that in the context of what I said in my Second Stage speech about focusing more on energy reserves than specifically oil reserves, because I understand that Act was brought in at a particular time. Going forward, perhaps we could have more room for manoeuvre for the Minister of the day.
What Senator Ward said about the consolidation of Bills is true in so many different ways. We may have to come back to this legislation in five or ten years as we move out of the fossil fuel era into an alternative where energy storage and security would be completely different. It may involve batteries, hydrogen or interconnection. We do not know that yet but in the interim, under international obligations and for our own interests, we need to maintain a certain strategic reserve of oil for transportation. I will be honest; I do not intend to accept the amendment. I can understand where the principle is coming from but the focus of this legislation is very specific. It is not about changing the work NORA has done. It has done its job well, as has the board. The board is made up of people with specific skills in logistics and oil storage, which is what NORA does. It is a very straightforward, specific agency. The real climate expertise has to reside in the Department because that is where the expertise will be required when it comes to how the fund and the community engagement are managed to make sure we get real engagement in coming up with projects. My instinct is to leave well enough alone as regards what NORA does as its core business and focus on the distribution and management of the fund, which is the key new piece. We may need to move away from that in ten or 20 years as we will be in a completely different energy world. I would prefer if we did not have those big storage containers at the end of Poolbeg Peninsula, on Whiddy Island, Whitegate and elsewhere. I would prefer if that was converted to something completely different, but that is legislation for another day. Today is about getting the money from the fund to support climate action.
I thank Senator Ward for his comments. They are very reasonable proposals. I recognise that the Government parties might not be able to support this amendment today, but the Minister should consider the constructive proposals Senator Ward has put forward. We should not be waiting for ten or 20 years. The Minister knows he has four or five years in government ahead of him and we should look to have started a sustainable energy reserve fund by the end of that time. It is not simply that we are waiting for the landscape to change or that we are dealing with the downstream element.We need to be ambitious regarding systemic change.
For example, my minor amendment would ensure that someone with sustainable energy and-or climate energy expertise is on the board of NORA and that person would be familiar with how a reserve agency operated. It might be someone skilled in a future sustainable energy reserve, which we may wish to have. This is about laying down arrows towards and ambition for the future, so we are not waiting for a full shift in the landscape. I refer to laying down the expertise, the skills and the conversations that will allow joined-up thinking. The climate action fund is wonderful and everybody supports it, but it is simply a product of NORA. I refer, however, to the operations of NORA and changing systems. As well as adding new things, we also need to change and challenge some of what we were doing before.
In that context, I am afraid I need to press this amendment. I realise I will probably lose, but it is important to press the amendment because I am trying to send a signal to every agency in this State, and most particularly to those in the very delicate areas that impact on climate, that this is a consideration to be taken on board. We cannot leave well enough alone on anything. Everything will need to change and this is a small practical step towards getting relevant skills, analysis and expertise into the room, which will help us make that change in a just and sensible way.
Garret Ahearn, Catherine Ardagh, Niall Blaney, Paddy Burke, Jerry Buttimer, Malcolm Byrne, Micheál Carrigy, Pat Casey, Shane Cassells, Martin Conway, Ollie Crowe, Emer Currie, Paul Daly, Aidan Davitt, Aisling Dolan, Mary Fitzpatrick, Sharon Keogan, Seán Kyne, John McGahon, Erin McGreehan, Eugene Murphy, Fiona O'Loughlin, Joe O'Reilly, Ned O'Sullivan, Mary Seery Kearney, Barry Ward, Diarmuid Wilson.
I move amendment No. 6:
In page 12, line 16, after “year.” to insert the following:
“Where the Minister for Public Expenditure and Reform declines consent for monies from a source other than the Houses of the Oireachtas to enter the Climate Action Fund, a rationale for such a decision should be published and laid before both Houses.”.
I was glad to hear the Minister mention that he has an ambition for the EU recovery fund and the European Investment Bank, EIB, pan-European guarantee, for example, and for other sources of funding and fiscal instruments that are set up on a pan-European basis. The EU recovery fund will, crucially, not simply provide money in loans but in grants. It will be money that will not require a future repayment from the Exchequer and will not necessarily create a future cost for the State. There are also international initiatives being taken by UN agencies, for example, and others that are aimed towards accelerating our action on climate change. Those are moneys that may come from a source other than the Houses of the Oireachtas. They are not moneys we need to gather in revenue from any levy or from a loan the State will have to repay in the future. These are grant moneys and emergency moneys that might be made available for the climate action fund.
I note that in the legislation the Minister is correctly given the power to have that money come in but it states, "with the consent of the Minister for Public Expenditure and Reform". I am sure the Minister for Public Expenditure and Reform will probably give that consent but my amendment was almost akin to a safeguard because we do not want it to be the case that the Minister for Finance or the Minister for Public Expenditure and Reform, whose remits more rightly relate to the expenditure of the moneys the State holds already, effectively determine exactly where the money goes. Every Minister has an important and crucial role in how they ensure the delivery of their briefs. The Minister for Communications, Climate Action and Environment is in the unusual position whereby some of the moneys available to fulfil his brief and his ambition for his Department, may be externally available without cost. If there was a circumstance in which the Minister for Public Expenditure and Reform was to decline consent for such money to come into the State or to enter the climate action fund, it would be reasonable that he or she would be asked to provide a rationale for same.
This is really an attempt to strengthen the Minister's hand and to ensure that where he sees an opportunity for funding the climate action fund, which will benefit everyone in the State, he is fully empowered to go after that opportunity. The Minister might be able to give me some other assurances that there will never be any obstacle to him doing that or that he will never be told he should not go after funding because another priority is preferred.
I am happy to give that assurance if I can. I cannot see any circumstances where grant funding, in particular, would be available from the European Union or another outside body for a specific project and that it would be refused, particularly if it was recommended by the Department of Communications, Climate Action and Environment, but I will read the note I have for why we cannot accept this amendment. It would be outside of the normal legislative practice, purposes and scope of the Bill. My Department, the Department of Public Expenditure and Reform and the climate action fund are ready and will continue to be subject to the normal financial controls available to Departments and funds, including being subject to the scrutiny of the Comptroller and Auditor General and the laying of accounts before the Oireachtas.As I have said, we must be careful. It is normal procedure for the Department of Public Expenditure and Reform to be involved in this, subject to the provisions of my own technical amendment, amendment No. 8. It is standard practice that a Department does not run its own budget line. It is normal legislative practice for the Department of Public Expenditure and Reform to be reviewing or involved in most areas of my Department, such as the appointment of chairpersons of boards for example. One often finds that State companies in this area are jointly owned by the Minister for Communications, Climate Action and Environment and the Minister for Public Expenditure and Reform. Moving away from that could create constitutional and legal difficulties and on that basis, I cannot accept the amendment.
I move amendment No. 7:
In page 12, line 38, after “economy” to insert “and society”.
We have spoken about the competitive process. I accept that the Minister has said it will not always be a competitive process. That is appropriate because there are actions in some specific areas that simply need to be taken, for example, in the midlands. Shannon is an area that also will need a just transition, especially as the path forward that was planned has now been changed. A new path will be needed. As the Minister said, there are several areas where there may be calls for specific projects. I am a little concerned that the Bill refers to supporting "projects and initiatives in regions in the State and within sectors of the economy impacted by the transition to a low carbon economy". My amendment is very simple. The amended wording would simply read "sectors of the economy and society".
When we think about community development, older people, younger citizens, the question of immigration or the different things that might drive people to leave towns and cities, the concern may not always be about the economy. All the things that make up the fabric of certain areas of the country and various sectors of society will be impacted by a just transition. The Minister's amendment, which I believe will be taken after this one, moves away from a competitive framing. I seek assurances that projects that aim to enable particular sectors of society to achieve a just transition will also be able to access funding. In other words, I would like assurances that this will not just be about the economy. As I said earlier, it is not just rural Ireland that is made up of communities, but so too are suburban Ireland and urban Ireland as well.
The appropriate intervention in a community that has lost a source of employment may be another form of employment. It may be an economic measure. Alternatively, a social intervention may be needed. For example, some communities are built around power stations. How do we make sure that social interventions keep communities connected and keep life in local towns? Will those projects also be supported? They are also a part of a just transition. Jobs are crucially important but not everything begins with a job. There are other threads in our society that also need to be minded. I am hopeful that the Government amendment No. 8 will address some of the concerns reflected in my amendment No. 7.
I thank the Senator. I cannot accept the amendment but I can give her the assurances that amendment No. 8 does that. It is envisaged that it will assist us in engaging with these issues. The first work to be done on a just transition will involve spending money on bog rehabilitation to create new jobs and alternative employment for workers who leave companies like Bord na Móna.I also signalled on Committee Stage in the Dáil that we would consider the introduction of some of the provisions suggested in an amendment from Deputy Whitmore with regard to community resilience as an example of a project that could be considered. I indicated that because of the timelines involved in this Bill I would be looking to draft a possible amendment that we might include in the climate action Bill when we introduce it later in the year and that might provide further assurances.
I have one other reflection. I do not disagree with what the Senator said. I cannot accept the amendment because I am concerned about affecting the ability to implement the legislation by 1 August and draw down the funding. There is a third category. Sometimes we will have projects that are purely environmental in nature. We should not be afraid of identifying them as subjects. Sometimes, for example with bog rehabilitation, the actual practice itself is an environmental project as well as a societal and economic one.
I cannot accept the amendment, but I hope Government amendment No. 8 will address some of the Senator's concerns and that the promised further revisions to incorporate community resilience as one of the objectives may also allay some of her concerns.
It is interesting that the Minister has mentioned the environmental projects. Care work might not be profitable, but it is important. Ecological care as well as social care are very good examples of things in which the State might wish to invest in a community in transition. Our national parks and monuments could be subjects of community resilience. Given the focus on community resilience in the forthcoming Bill and that the Minister believes that will be able to widen the scope and ambition of the climate action fund in the way I have been seeking, I will not press the amendment at this time.
This amendment amends section 15 on page 13. The amendment is being undertaken following discussions between my Department and the Office of the Attorney General. It was determined that an amendment to section 15 of the Bill by way of Committee Stage amendment would be appropriate in order to clarify the basis on which the Minister may support climate action projects. The aim of the amendment is to provide legal clarity beyond any doubt in support of the intent of the Bill that it will be possible for the Minister to provide funding for climate action projects by way of either a competitive process or a non-competitive allocation. Therefore, it will not be mandatory for the Minister to conduct a competitive project-selection process prior to supporting a climate project through the Climate Action Fund.
Clarification of this matter in the Bill is important because there may be climate-related projects or investments that are not economic or commercial by nature and therefore may not be applicable for consideration by way of, or successful under, a competitive selection process. This amendment will provide the necessary certainty that the fund can support such non-commercial projects as applicable. This follows on from our previous discussion.
I am very glad that such a mechanism is there. I think it will be very important. Not everything always benefits from a competitive process. At times a collaborative process is a more useful approach. In other aspects of community development, competitive tendering has on occasion led to a loss of a sense of empowerment whereby funding needed to be given to projects from the ground up. It is useful to recognise that other funding mechanisms are sometimes more appropriate in order to get engagement, empowerment and buy-in on a scheme, project or initiative.
I support the amendment, which widens the scope for communities in an appropriate way.Senator Higgins raised a very important point about communities and community projects. I am very much involved with the Lanesborough community as it is literally down the road from me. Every second household had a job with Bord na Móna or with the ESB. This is why I am so strongly committed on this. The real way to keep a community together is to create jobs. We do not want people going from the area and we do not want unemployment to hit the area because it moves people away.
On the matter of funding, the Minister will be well aware that organisations such as Bord na Móna, ESB and Coillte are currently funding many community projects such as the Sliabh Bawn walkway, which I recently walked backwards, and they are involving themselves in projects for older communities also. While these projects are there, I agree that it is very important to have that as part and parcel of what we are doing.
I move amendment No. 9:
In page 16, between lines 1 and 2, to insert the following:
“Amendment of Principal Act - Report on levy 28. The Principal Act is amended by the insertion of the following after section 64:“Report on levy
64A. Within 24 Months of the passing of the National Oil Reserves Agency (Amendment) and Provision of Central Treasury Services Act 2020 the Minister shall publish and lay before both Houses of the Oireachtas a report on a review which will have considered—(a) the effectiveness and appropriateness of limiting the levy to ‘disposals of petroleum products’,
(b) the potential for future introduction of levies which reflect the reserves, material assets, or capital held by oil companies, and
(c) the evolving national and international legal and financial landscape in respect of such potential levies.”.”.
Amendment No. 9 asks that the Minister would publish a review and lay it before both Houses of the Oireachtas. Because the Bill before us today involves the opening up of the National Oil Reserves Agency, it invites us to have consideration and a review of how it has operated, and of the changed landscape and the changing climate that surrounds it. This amendment is simply asking for a report, which the Minister might provide to us. I have given a very long timeline for this because I recognise there might be more immediate work. The timeline is 24 months, that is, within the first two years of the Minister's tenure, by which time the Minister will publish and lay before the Houses a report looking at: the effectiveness and appropriateness of limiting the levy to disposals of petroleum products; the potential for future introduction of levies which reflect the reserves, material assets, or capital held by oil companies; and the evolving national and international legal and financial landscape in respect of such potential levies.
I recognise that the National Oil Reserves Agency Act reflects a collective European commitment that each country should have an oil reserve, and that it was driven by an issue relating to energy security. I am not in any way disputing that but I believe that the decision was obviously made at that time, perhaps at the European level, that the focus should be in levies on the disposal of petroleum products. This is levies on sale or consumption of the products of oil as it is being sold and products as they are bought on a day-to-day basis. That was brought in at a time when this was entirely focused on a certain vision of energy security that almost presumed an environment in which oil would continue to be one of the main products trading, and that normal purchasing of oil would generate large revenue all the time. In fact, we are in a world where, due to the plastics directive at European level or from Ireland's divestment policy, we are moving away from the focus on oil and petroleum products on many levels. We want to move away from them being such a large part of the commercial market. We want less consumption.When we look at energy security and the costs of changes in energy, is it appropriate that we base it on a levy on consumption of something that we do not want people to consume? Many other policies and laws that we will be bringing in relate to getting people to consume less of these things. There are nonetheless large accumulated assets. Fortunes have been made over decades from the sale of oil and petroleum products. The cost has been carried by society and by citizens in parts of the world who do not consume a lot but have reaped the impact of climate change for over a decade. This is not the future and is happening now.
Looking at Pigovian taxation, which I know has been looked at in the past, we need to consider how we ensure that oil companies are not simply contributing to our energy security but also contributing to the costs associated with the damage done by oil and petroleum. How do we ensure that oil companies are preparing us for the future so that we do not simply see a move from a long period in which we have subsidised oil and petroleum products because of the wide social dependence on them, but rather a move towards asking them to pay their share? It is not enough simply to ask consumers to pay their share in a levy on the product that they buy in the shop. We need to think in a different way. We know the concerns that have been expressed about that.
The main thing is the capital, assets and financial reserves that companies have. We know that they have them because, as I described earlier, we have seen that when those companies leave, they take that capital reserve and the moneys that they have and give it to small numbers of executives. I mentioned earlier that 250 oil and gas companies in the USA are likely to declare bankruptcy or close down by the end of next year. One of those companies required a €40 million clean-up. Whiting Petroleum gave €15 million in cash bonuses six days before it declared bankruptcy. There are too many examples to list. The chief executive of MDC received an €8.5 million payment just before the company went bankrupt. I am thinking of those capital reserves and the moneys that are there. Many of these companies will move on and reinvent themselves as the market rightly changes. We will be left with the clean-up costs and the reality that the companies will not be in a position to contribute in the same way to the NORA fund on an ongoing basis.
I am not asking for this today or even tomorrow but that within two years, Ireland would provide leadership. I am not saying to change the European legislation. That is outside our scope. I am asking for a report that shows that Ireland is giving leadership in thinking these issues through and, over the next 24 months, applying some expertise and thought to anticipating what securing a reserve for our energy security and appropriately ensuring that oil companies pay their costs may look like. We should have more imagination about that rather than assuming that things will stay as they are, because we know that is not true.
There may be other ways that the Minister can give this report. He may not have to commit to giving it as part of this legislation but it is crucial. We do not want to be responding after the fact. We do not want to be told that NORA is not paying very much into the climate action fund because those levies are not working as they used to. We do not want to find out that we have substantial clean-up costs associated with companies exiting. Let us get ahead of it and have ideas. When, at the European Environment Council in two years, for example, the ministers are collectively reviewing legislation about oil reserves, Ireland should have some ideas.
I do not propose to accept the amendment. The purpose of the Bill is to establish the climate action fund and provide for the use of surplus NORA levies to be paid to the fund to pay for climate action projects. There may be another mechanism to achieve the Senator's objectives. The programme for Government contains a commitment in respect of the establishment of a tax commission which, in my experience, would typically complete its work within a two-year period. When this energy transition takes place and, hopefully, we see a reduction in the revenues generated from the sale of petroleum and related products, we will be asking the tax commission about the gap that will exist in our tax base and the adjustments that will be required to fill it. That will require wide-ranging thinking and a simultaneous assessment of taxation policy and social welfare policy. Taxation policy in particular will have to evolve to answer the question. I cannot accept the amendment but I think the tax commission should be given a specific brief to answer some of the points that the Senator has raised.
I very much welcome the Minister's commitment to bring these issues to the tax commission because that is important. There are many issues I would like to bring to the tax commission and I am aware that the tax commission review will be large and will deal with many issues. I am glad that the Minister intends to bring these issues to the tax commission and I hope that some of the points I have put forward are useful in that regard. However, I wish to emphasise how important I think this is. The Minister can take it as a compliment when I say that I would ideally love him to be doing this review and focusing on these issues. I will press the amendment. I recognise and appreciate that the Minister is going to seek other ways to come at the problems I have outlined but, until they are under way, we need to mark the importance of the issue. The clock needs to start now on the changes that are needed. The clock should not start in one or two years after the tax commission is established. At that point, deciding that we should be considering a review would be too late because that could take us to four years from now, by which time the Government might be gone. I want to make sure that we get moving and thinking about these issues now. In that context, I press the amendment. If I am not successful, I look forward to finding other ways to engage on the issue.
Garret Ahearn, Paddy Burke, Jerry Buttimer, Malcolm Byrne, Micheál Carrigy, Pat Casey, Shane Cassells, Martin Conway, Ollie Crowe, Emer Currie, Paul Daly, Aidan Davitt, Aisling Dolan, Sharon Keogan, Seán Kyne, John McGahon, Erin McGreehan, Eugene Murphy, Fiona O'Loughlin, Joe O'Reilly, Ned O'Sullivan, Mary Seery Kearney, Barry Ward, Diarmuid Wilson.
I move amendment No. 10:
In page 16, between lines 1 and 2, to insert the following: “Amendment of Principal Act - Report on palm oil
28.The Principal Act is amended by the insertion of the following after section 67:“Report on palm oil
67A.Within 12 months of the passing of the National Oil Reserves Agency (Amendment) and Provision of Central Treasury Services Act 2020 the Minister shall publish and lay before both Houses of the Oireachtas a report setting out analysis and direction as to whether palm oil, including any used cooking oil which primarily consists of palm oil, should be excluded from recognition as a ‘biofuel’ for the purposes of this Act.”.”.
The Minister will be aware that the Bill provides for a more favourable levy on biofuels compared with the levy on other fuels. That was discussed earlier and on Second Stage. I want to highlight a major concern, of which I know the Minister is aware because we have discussed it previously at the Joint Committee on Climate Action. It relates to an aspect of biofuels, specifically palm oil. Palm oil has an extraordinarily negative impact on climate, the environment and biodiversity as a result of the indirect land-use risks and deforestation associated with its production. This deforestation results in a great loss of flora, fauna and biodiversity.
Palm oil is a key issue yet we know from a 2019 report that it has been finding its way into our biofuel supply indirectly, often through the mechanism of being described as used cooking oil. In response to very concerning reports last year which suggested that up to one third of used cooking oil entering the biodiesel supply in Europe could consist of repurposed palm oil, the European Parliament introduced changes that ended some of its policy support for palm oil biodiesel under the renewable energy directive, RED II, scheme. At that time, the Department of Communications, Climate Action and Environment indicated that it was going to review this area.
Biofuels and biodiesel cut across the other part of the Minister's mandate and brief. Drivers in the European Union are the biggest users of palm oil in the world. They use more than the food and cosmetics industries combined. Many of us have become aware of the food industry's over-reliance on palm oil and some of us will check labels and try to avoid it. However, palm oil is entering our cars disguised as something good, namely, biofuel. It is almost given an imprimatur as a sensible and more environmentally appropriate alternative.Given the lesser rate of levy attached to biofuel, is it possible for the Minister to produce a report or find some other mechanism, either through the Bill or perhaps through his work on transport policy, to make sure there is analysis on palm oil and used cooking oil whereby it is not being factored into the biofuel which, under the Bill, is being given a better levy? Bear in mind that there is a strange anomaly whereby used cooking oil is double counted and has a double benefit in our system.
I do not propose to accept the amendment relating to palm oil being excluded as a biofuel for the purposes of the Act as it is outside the scope of the Bill. However, I do share the Senator's concerns regarding the use of palm oil as a feedstock in the production of biofuels. The risk in terms of the production of biofuels is that feedstock will be grown on cropland previously used to grow food or feed for livestock or is rich in biodiversity, with the consequent risk that agricultural production is moved to marginal land. This land can include areas important for storing carbon and maintaining biodiversity, such as peatlands and forests.
The recast EU renewable energy directive agreed in 2018 sets limits on the use of certain feedstock for biofuels, bioliquids and biomass fuels, including palm oil. The directive must be transposed into Irish law by the middle of next year. I am considering setting a limit of 0% for certain such biofuels which displace the production of food in land use far earlier than the required end date of 2030 permitted under the directive. This would have the effect of ceasing the supply of biofuels produced using palm oil as a feedstock in Ireland.
I am very glad to hear the Minister is considering a strong interpretation of the directive. Of course the directive should not set the ceiling but should be the start of what we want in our ambition. I certainly agree that 2030 is far too late to wait and it will be a major issue next year. We really need to be looking for this exit and I hope we see it in the lifetime of the Government at an absolute minimum.
Will the Minister give me a little assurance not so much directly related to palm oil as a feedstock but on the question of used cooking oil? This is oil that purports to be environmentally sound because it is being used a second time. The very nice original concept is that oil which has already been used for cooking is used again as fuel. We know that investigations by EurActiv and many others have pointed to a serious concern whereby in many cases what is marketed as used cooking oil is, in fact, palm oil. Implausible amounts of used cooking oil emerge, which are far ahead of what could credibly be produced in countries if every single drop of oil used in cooking was counted and then trebled. I appreciate the Minister's points on the directive. Will he make a comment on the specific issue of used cooking oil which is, in many cases, palm oil? The Minister does not have to go into detail but perhaps he will indicate whether he plans to look at the issue of double counting of used cooking oil in biodiesel.
I absolutely commit that the implementation of the directive here does include the issue of the double counting of cooking oil. I was aware of the scandal that has emerged in this regard and certainly we will look to address this at the same time as we implement the other conditions in the directive.
I thank the Members of the Seanad for their support on this. The timing required is unfortunate. I very much appreciate the help given in order that we can avail of the timing to get it commenced on 1 August. I thank everyone for their help in that regard.