Budget 2023 was announced on 27 September, with Minster for Finance, Pashcal Donohoe T.D., describing climate change as the one of the key challenges of our times, the effects of which are becoming more frequent and more destructive. Commenting, Minister Donohoe stated that “[p]rotecting our environment is the responsibility of us all and Government is acting to reduce emissions and support newer cleaner technologies, particularly in energy and transport”, before committing to continuing the additional funding needed for measures, such as retrofitting and more sustainable modes of travel.
Minister Donohoe announced that there would be an increase of just over two cent VAT inclusive per litre of petrol and diesel. This is caused by the increase in the rate per tonne of carbon dioxide emitted for petrol and diesel from €41 to €48.50 from 12 October. However, this increase is to be ‘offset’ with a reduction to zero of the National Oil Reserves Agency (NORA) levy in recognition of the sharp cost of living challenges currently being faced by society. The price at the pump will not go up as a result of taxes or levies, so the measure is unlikely to have much impact in reducing the use of petrol and diesel by consumers.
In his speech, Minister for Public Expenditure and Reform, Michael McGrath T.D. described the need “to reduce our dependence on energy imports, particularly from Russia, by becoming more efficient in how we use energy and especially by accelerating the shift to renewable energy, in line with our existing climate goals”, before announcing the provision of €850 million in capital investment to the Department of the Environment, Climate and Communications in 2023.
Positive climate and environmental measures in Budget 2023 include:
- €337 million to go towards grants for energy efficiency, to fund over 37,000 home energy upgrades including households in, or at risk of, energy poverty through the Warmer Homes Scheme, described by the Minister as “the highest funding ever committed to energy efficiency.”
- funding to be provided to support the introduction of a new low-cost loan scheme for residential retrofit
- extra funding and resources to be provided to the National Parks and Wildlife Service and the Marine Area Regulatory Authority (MARA)
- an increase of €0.8 billion in core capital expenditure funding for 2023, with a particular focus on climate action, alongside housing and health. This includes
- capital allocation to the Department of Transport for investment towards Active Travel, Greenways and the roads network, as well as the continued delivery of Transport’s ongoing Megaprojects MetroLink, DART+ Programme and BusConnects. This investment, along with the reductions announced in passenger fares, and the continued roll out of electric vehicle grants, aims to assist Ireland in meeting its ambitious climate targets.
- an extra €150 million in capital allocation to the Department of the Environment, Climate and Communications in 2023 to provide a response to the challenges presented in reducing carbon emissions, improving energy efficiency and facilitating the achievement of national goals set under the Programme for Government and the Climate Action Plan.
- funding to be invested through Skillnet Ireland to support business through upskilling in emerging technologies and expansion of programmes to include sustainable finance, green tech and responding to climate change
- €87 million in 2023 to retrofit at least 2,400 social homes to a Building Energy Rating of B2, in line with commitments in the Climate Action Plan
- funding for 4,800 additional apprenticeship places and 4,000 registrations to deliver on the Housing for All and Climate Action plans and for over 2,000 Skillnet places in sustainable finance, green tech and climate change
- The Department of Public Expenditure and Reform is currently working with the OECD to update Ireland’s Public Spending Code framework to ensure that it is robust in the face of changing priorities and to ensure that it takes appropriate account of the climate and environmental impact of investment decisions.
Carbon Tax
Speaking about Carbon Tax, Minister McGrath stated that “[a]s set out in the Programme for Government, every additional euro raised in carbon tax will be returned to the people of Ireland through energy efficiency upgrades, social protection schemes to protect the most vulnerable and measures to incentivise farming in a more environmentally friendly way.”
In 2023, the total Carbon Tax revenue available for investment will be €623 million. Almost half of this is to be invested in improving the energy efficiency of homes. It will allow for investment to support over 37,000 home energy upgrades, including bringing over 13,800 homes to a Building Energy Rating (BER) of B2, and 6,000 free upgrades to the homes of those in, or at risk of, energy poverty.
35 percent of the total Carbon Tax revenues expected to be raised will be spent on social protection measures this year to ensure that increases in the carbon tax are progressive. The total cost of these interventions is projected to be €57 million in 2023.
The table below details the allocation of the increased carbon tax revenues in 2023:
Table 15: Allocation of Carbon Tax Expenditures in 2023
|
€ m - 2023
|
Department
|
€ m –
2022
|
1. Total Investment in Residential & Community Energy Efficiency (Cumulative funding from Carbon Tax increases from 2020 to 2023 inclusive)
|
291
|
DECC
|
202
|
2. Total Targeted Social Protection Interventions (Cumulative funding from Carbon Tax increases from 2020 to 2023 inclusive)
|
218
|
DSP
|
174
|
3. Incentivising farming in a greener and more sustainable way (Cumulative funding from Carbon Tax increases from 2020 to 2023 inclusive)
|
81
|
DAFM
|
3
|
4. Continuation of 2020 Carbon Tax Investment Programmes in Other Departments
|
33
|
Various
|
33
|
Total Expenditure
|
623
|
|
412
|