Minister for the Environment Richard Bruton has said he “cannot contemplate” a scenario where the oil industry dictates the Government’s climate change action plans.
Mr Bruton was responding to a threat from the Irish Petroleum Industry Association (IPIA) of legal action in relation to the Government’s funding of the €500 million climate plan using oil levies.
Surplus levies should be handed back to the association to assist its climate change mitigation measures, the IPIA said. Mr Bruton said this was “not a runner”.
When it established the Climate Action Fund last year, the Government announced that it would be principally financed by diverting money from the oil products levy which was introduced in 1996 to pay for the running of the National Oil Reserves Agency (Nora).
The agency is responsible for holding 90 days of oil stocks for supply in an emergency. The levy, which is 2 cent per litre, is paid by consumers and transferred by oil companies to Nora.
The IPIA, which represents oil companies, has told Mr Bruton that under the law, all funds generated from the levy must be used exclusively to fund the operations of the agency itself.
The association is understood to have told Mr Bruton during a series of meetings that according to its legal advice, the levy must be set at a rate which meets the running costs of the agency, but that it should not exceed this. Despite this, it is understood that Nora has built up a cash balance of up to €200 million.
Any attempt to use this extra cash would be unlawful, the IPIA said. The association has said the surplus funds should be used to support IPIA activities which would be aimed at helping Ireland reach its climate targets.
However, Mr Bruton has rejected this proposal.
“I cannot contemplate a situation where this money is handed back to industry, or that a new fund is created where industry could oversee or determine the types of projects to be supported. That is not a runner,” he said.
“Such an approach would not give the public confidence that the money was being used in a fair and independent way to support our climate objectives. The IPIA have also suggested that the surplus should be used to offset future levy liabilities. That is not a runner.”
Mr Bruton said he realised the Government’s climate action plans were “a threat to the profits of the oil industry”.
In particular, the oil industry would be hit by plans to move to electric vehicles and renewable heating systems, he said.
“I hope that in the years ahead the oil industry concentrates on diversifying into renewable energy and supporting the transition towards net zero-carbon emissions. It would be counterproductive for them to try to stall important climate action.”
The levy was “not paid for from the pockets of the oil industry – it is entirely paid by the consumer at the pump,” Mr Bruton said. It was up to him to decide what projects were supported by the fund he said.
“The Government will not contemplate a situation where the oil industry can determine how the Nora fund surplus is invested or used.”
The €500 million fund was a crucial part of delivering on climate action, he said. “I regret that the oil industry is threatening legal action against the Government.”
People Before Profit TD Bríd Smith said the legal threats showed the industry remained determined to put its interest before climate action. “The arrogance and confidence of the fossil fuel industry is rising as fast as our emissions.”