October 20, 2020

Budget 2021: Where do climate and biodiversity stand in the new budget plan?

Green Energy Investment

Discussions concerning budget and climate have dominated news stories this year. Reaching a total of €24.5 billion in supportive measures, Budget 2021 amounts to nearly eight times the size of the previous Budget plan.

Given the significant implications of the pandemic, a major portion of this investment will be allocated into healthcare and social protection, consisting of €20.2 billion and €22 billion respectively. The question many environmental industry leaders are now asking is where does the climate and biodiversity challenges fit into the budget plans?

Climate Tax – The first specific climate measure announced in the Minister for Finance Paschal Donohoe’s speech indicated a rise in carbon tax. This increase will be by €7.50 this year onwards to 2029 and rise again by €6.50 in 2030, bringing the total carbon tax to €100/tonne by the end of the decade. Roisin Shortall representing the Social Democrats highlighted that a carbon tax can be an effective measure in changing behaviour, but requires a commitment that ensured people will not be punished by related measures. Shortall believed the €5 increase associated with the living alone allowance and the €3.50 fuel allowance increase was not sufficient.

Government reports suggest that the additional revenue raised will be invested into particular schemes such as energy efficiency, social protection and test environment projects in agriculture. Revenue generated from the tax will also be allocated towards the Continued Carbon Tax Investment Programme.

Despite a slight increase in the carbon tax compared to the previous year, many core components within the programme will remain at 2020 funding levels. This includes the 2021 Programme allocations to fuel allowance, peatlands rehabilitation and the Just Transition Fund. Reports suggest that the Aggregated Housing Upgrade Scheme will not receive funding by 2021. In 2020, the scheme was allocated €20 million within the programme.

Vehicle Registration Tax/Motor Tax – VRT rates and bands have changed so that lower VRT rates will be applied to lower-emitting vehicles. Higher emitting vehicles will be forced to pay more in tax. Minister Donohoe believes the change will encourage motorists active in the market for a new car to make more greener choices. According to the minister, tax reliefs for plug-in hybrid electric vehicles and other hybrids will be allowed to expire, based on Government believes that the lower VRT rates will be applied to cars that emit less.

Motor tax bands and rates have changed, and from January all new vehicles will be taxed on their emitting capacity, with higher emissions vehicles incurring higher taxation. Sinn Fein has warned that the measures do not provide a fair transition and that the increases will impact those who are less likely to afford a tax increase and others in rural regions who have a higher dependence on vehicles.

Energy Efficiency 

An added 100 million generated from carbon tax revenues will go towards energy efficiency in homes, according to the Minister for Public Expenditure and Reform Michael McGrath. This equates to over 80% increase in funding from the budget of last year. The investment will be supported by further Exchequer funds to enable increased staffing levels in the Department of the Environment and the Sustainable Energy Authority of Ireland, according to recent budget documents.

Retrofitting grants will be allocated through the Warmer Home Scheme and Minister McGrath said the Government believes the existing waiting lists are just too long. The National Home Retrofit Scheme will be open to homeowners who are looking to enhance the energy efficiency of their home to a BR rating. It is anticipated that over half of the funding required for these energy efficiency measures will come from revenues generated through a carbon tax.

Public Transport 

The budget will include a €1 billion increase in public transport, representing a part of the €10.1 billion capital expenditure planned for next year. According to Eamon Ryan, the Minister for Climate, the allocation will ensure our transport network can grow sustainably for the years to come, provide communities with efficient and affordable transport alternatives while continuing to work towards our climate and environmental targets. Funding will predominantly be allocated at programmes such as BusConnects, MetroLink and Dart Expansion, as well as towards enhancing active travel systems. Minister Ryan stated that €360 million will go towards supporting walking and cycling projects across Ireland and an additional €50 million allocated towards Greenways.


What is yet to be clearly presented is how much of the budget will be directed towards the National Parks and Wildlife Service (NPWS). Minister McGrath recently told the Assembly of Ireland that approximately €29 million will be shared among heritage organisations, one of which being the NPWS. Environmental and ecological campaigners have actively called for supportive exchequer funding into the organisations, which is currently provided €14 million. The Irish Wildlife Trust and Birdwatch Ireland have called for €50 and €100 million respectively in previous funding requirements. How much of this money will be allocated directly to the NPWS is yet to be confirmed.