€2bn in government spending may have negative impact on environment, says report

It says the figure of €1.99bn is “conservative” as it excludes spending on infrastructure such as roads which spans several years.

The items deemed potentially harmful were highlighted after a review of the budget for 2023 which was announced last September.

They include farming grants, regional airport supports, payments to the Industrial Development Agency (IDA) and Enterprise Ireland, and the fuel allowance for low-income households and the over-70s.

They do not include spending on the day-to-day running of public bodies and services which may also fuel climate change through the type of supplies bought and how they are transported.

The report, by staff from the Government’s economic evaluation service in the Department of Public Expenditure and Reform, says: “It should be noted that this paper represents a first step in the process of identifying potentially climate harmful Exchequer supports.

“The total figure of €1.99bn is likely a conservative estimate of the environmentally harmful activity the Exchequer will fund in 2023.”

The report’s findings were provided to Sinn Féin TD Darren O’Rourke in reply to parliamentary questions to Public Expenditure and Reform Minister Paschal Donohoe.

The minister said work was ongoing to improve ways of calculating the climate impact of public spending.

He said his department was committed “to developing and applying definitions to identify and track government spending that may be having a negative impact on climate and environmental outcomes”.

The Organisation for Economic Co-operation and Development (OECD) is preparing guidelines for assessing large capital projects in Ireland, he said. ​

“On completion of the report, my department will evaluate the OECD’s recommendations before considering what changes may be appropriate for the new infrastructure guidelines.”

Mr O’Rourke welcomed the steps but said the pace needed to quicken. ​

“We have traditional cost-benefit analysis but there is an urgent need to update those tools to include the carbon and climate impact of individual projects and of ongoing expenditure.”

He was also concerned that the climate cost of tax measures that subsidised fossil fuels through exemptions and rebates was not fully accounted for.

“It’s important we shine a light on that area, particularly at a time when the fossil-fuel industry is making spectacular profits.”

The report says identifying a spending item as potentially climate harmful “does not suggest that it is flawed or should be halted”.

It means instead that “careful consideration should be undertaken to determine if there are potentially less distortionary means of achieving the outcomes the expenditure supports”.

The report and the replies to Mr O’Rourke show the prominent role assigned to the expenditure minister in climate policy.

Yet, Independent.iereported at the weekend that Mr Donohoe had twice refused to attend the Committee on Environment and Climate Action.