Sustainability

Key measures

The speeches from both Ministers have promised a wide range of capital budgets and levers to assist Ireland in meeting its climate obligations and objectives. Reflecting the unique opportunity of the budget surplus and other one-off revenue sources, the Budget is one which has a greener future at its core. Significant funding has been earmarked for the “Ireland of tomorrow” through the Infrastructure, Climate and Nature Fund, a €750M investment in grid infrastructure, capital funding for the Department of Environment, Climate and Communications, and an investment by ISIF in infrastructure to aid in the deployment of offshore wind projects.

Who will be affected?

The country as a whole will be impacted by the measures and funding announced today will hope to stimulate the market to aid in the deployment of sustainable infrastructure by outlining the government’s willingness to fund the transition to a greener future.

Our view

It has long been documented that Ireland’s demand for energy is increasing through an increase in digital infrastructure and population. With such growth in demand there has always been a worry about the strain this would have on Ireland’s grid infrastructure - in some instances resulting in the refusal of certain digital infrastructure projects in the Greater Dublin Area - and how the grid could accommodate the potential of renewable energy.

 In order for Ireland’s economy to decarbonize more gird infrastructure will need to be built out, including more substations and more power lines. Without this in place, the grid won't be able to handle the increased amounts of renewable energy that are expected to be generated later this decade. The announcement of €750m funding to support capital spending on the further development of our country’s grid is a major boost in helping to alleviate these concerns and support Ireland’s expanding energy consumption. It remains to be seen what “direct equity” investment in grid infrastructure means in this regard, but this we would expect will be deployed in Eirgrid given their integral role in our grid infrastructure.

Overall, the announcement is welcome and is in line with other countries identifying the need for heavy investment to secure their country’s energy future. However, there has been no clear indication of any increased funding for the planning system which is broadly viewed as being required to help accelerate renewable energy projects. Such further capital funding may become apparent as the Department of Expenditure further outlines how it proposes to spend the Infrastructure, Climate and Nature Fund.

Ireland has committed to significant carbon emission reductions, with 2030 and 2050 being key milestones in its journey to carbon neutrality. With the first milestone growing ever nearer, there was a disappointing lack of supports and incentives announced that can assist companies meet these requirements and to decarbonise. Significant capital and operational investment is required to ensure that ways of working across all industries can be done in a more sustainable manner. In our pre-budget submission Deloitte called for Green and Clean Tax Reforms, outlining a number of proposed incentives that could assist companies in investing in greener practices. We would strongly encourage that these are pursued as a key priority for the Government to ensure that we can meet our legally binding commitments to carbon reduction. The cost of inaction in this area will be substantial.