Global Climate Action Summit, San Francisco, Thursday, 13 September 2018
Thank you to the panellists for the valuable discussion that we have heard today. It is clear that the global investor community, as well as the financial system more broadly, has an essential role to play in enabling the scaling up of both ambition and the action needed to meet the goals of the Paris Agreement.
The investment gap and economic dividend
At a global scale, estimates of the financing requirements are in the range of up to €90 trillion. Clearly the public sector cannot cover the full extent of the investment required.
Private capital is therefore essential if we want to reach our decarbonisation targets in the coming years, with green and climate finance having a substantial role to play in mobilising the necessary private capital for this investment.
As the Global Commission on the New Climate Economy reported this week, there is also a huge economic dividend at stake. Bold action by the international community could yield a direct economic gain of US$26 trillion through to 2030 compared with business-as-usual. So the economic case is clear.
There is an onus on Government to create the policy, taxation and regulatory environment to galvanise private sector investment. Integral to achieving this is the need to engage with the private sector and understand how we can jointly address this challenge.
Action being taken in Ireland
In Ireland we are doing this through our ten-year National Development Plan, published earlier this year, which commits 20% of its total budget, or almost €22bn, to investments in climate action plus an additional €8.6bn in sustainable mobility.
For Ireland, this represents a huge leap forward in our approach to addressing climate action, both in the scale of our ambition and the funding that we're making available, as a Government, to meet the challenges.
We also recognise that Government does not have a monopoly on good ideas. Therefore as part of this initiative we recently established a €500m internationally accessible Climate Action Fund. Its primary goal is to fund innovative projects that will reduce Ireland's carbon emissions. We are open to any joint ventures that harness creativity;considering applications from small local businesses to global corporations.
A long term signal on carbon pricing is also essential in order to create certainty for business in its medium to long term investment decisions. In Ireland we already have a very broad based carbon tax, at a rate of 20 Euros per tonne. On a cross party basis I have asked the Irish Parliament to bring forward proposals regarding the level and trajectory for pricing carbon out to 2030 and beyond.
I have asked colleagues to look at an innovative new concept in carbon pricing that sets a long-term floor price for a barrel of oil equivalent. This novel approach could address the risk of falling fossil fuel prices that can undermine a traditional carbon tax approach.
So regardless of global production or economic demand for fossil fuels by 2030 the effective price through tax and other measures for fossil fuels would be perhaps €200 per barrel.
Not only does this give control back to the Governments of today's oil consuming economies, but takes control away from oil producers in the future. So by effectively pricing oil out of the market it will act as a major disincentive to investment in further exploration and instead would, I believe, ramp up investment in sustainable alternatives.
Ireland took a further significant step on the low carbon investment journey with the National Treasury Management Agency announcing that it will shortly come to the market with Ireland's first sovereign Green Bond.
Fossil Fuel Divestment Bill
Ireland is also demonstrating global leadership in the divestment agenda. Earlier this year, a huge milestone was achieved when the lower house of the Irish Parliament approved a Bill that requires Ireland's sovereign investment fund to divest of all fossil fuel assets over a five year period.
There is strong cross-party support for this legislation in the Irish Parliament and it will become law shortly.
I am a strong supporter of legislative initiatives such as this which are targeted, considered and practical, while recognising that the low carbon transition must be properly managed.
From the perspective of the Irish Government and our sovereign investment fund, this means continuing to generate investment returns for the Irish tax-payer, while supporting Ireland's transition to a low carbon, climate resilient and environmentally sustainable economy by 2050.
For all of our economies around the world, the transition will mean that certain industries that exist today will no longer do so in the future.
In Ireland we have our own domestically produced fossil fuel - peat - which stabilizes regional parts of our grid and is a significant employer in the midlands of Ireland.
Yesterday I spoke at a Powering Past Coal event. I believe the toolkit available through this excellent initiative will help us to achieve our objective of taking peat and all dirty fossil fuels out of power generation within the next decade, while providing a just transition to green employment for the families so reliant on these jobs today.
We must create sustainable jobs that meet the skills capacity of the existing workforce and jobs for their children as well. Government planning is essential for this and in the coming weeks in Ireland we will set out a roadmap, showing how we intend to achieve this within the next decade.
Finally, underpinning all these initiatives, government engagement with business and broader society is essential. In Ireland we have developed a very innovative model to achieve this – our National Dialogue on Climate Action. It brings together representatives of national and local government, business and industry as well as ordinary citizens to chart a path forward in addressing climate change.
Achieving consensus is essential if government and business are to successfully work together to enable the transition to a low carbon, climate resilient and environmentally sustainable society.
Plans will come to nothing unless funding scale, an estimated €90 trillion I mentioned at the outset, is made available to drive this transition.
That's why initiatives such as the green bond and global divestment movement are so critical.
To conclude, I would like to once again commend the panellists and participants for this rich discussion, and to thank you all in your ongoing work in facilitating the transition of the world's financial system to help build the low carbon economy that the world needs.