Irish Parliament Majority Signals First Of Its Kind Fossil Fuel Divestment Legislation

In the first ever Government vote on fossil fuel divestment, the Irish Parliament (the Dáil) decided today to progress a Private Member’s Bill to the Committee stage for detailed consideration.

The Private Members Bill, introduced by Independent TD Thomas Pringle, proposes that the Irish Government instruct the National Treasury Management Agency (NTMA) to divest the €8billion Ireland Strategic Investment Fund from all current fossil fuel investments, and prohibits any future investments in the industry.

The move comes ahead of a review of The Government Pension Fund of Norway to consider divesting from high emission companies in their portfolio later this year and plans by the New ZealandSuper Fund to have a target in place by the end of June 2017 to reduce its carbon footprint by cutting fossil fuel exposure and seeking greener investments.

According to the International Energy Agency, to meet the Paris Climate Agreement and keep temperature rises well below 2°C, global demand for fossil fuels must peak by 2020, there must be $16 trillion less investment in fossil fuel related assets compared to business as usual by 2040, and there must be $24tn more investment into renewables and efficient energy usage. Investors are responding to this by amending their portfolios decreasing investment in fossil fuels and increasing investment in clean energy. By December 2016, investors with assets under management of $5.2 trillion had committed to fossil fuel divestment in order to manage the financial risks of climate change to their investment portfolios and support a timely and safe transition to a net-zero carbon economy as agreed in the Paris Agreement.

Quotes from stakeholders

Thomas Pringle, the TD who introduced the bill, said “National governments have an essential role to play in backing up their Paris pledges by ensuring public funds are well placed to support the clean energy transition, and protected from the inevitable decline of the fossil fuel industry.”

Sian Ferguson, spokesperson for Europeans for Divest Invest, said “As the Bank of England reminded us on Monday, limiting emissions to prevent climate change might leave a substantial proportion of the world’s carbon reserves unusable which could lead to revaluations across a range of financial assets. With renewable energy now cheaper or the same cost as new fossil fuel generation, and electric vehicles expected to reach the equivalent milestone by 2022, the big oil and gas companies are significantly overpriced, posing risk for investors. The Irish Parliament is acting in the interests of the Irish people, as well as in support of the global effort needed to reign in climate change.

Ian Halstead, Investment Consultant at L&P Investment Services, specialists in sustainable investing, said “climate change presents a number of risks for investors. Divesting from fossil fuels and investing in climate solutions is a sensible way for investors like the Strategic Investment Fund to manage these risks. Technological advancement and government policy are making sustainable investments increasingly attractive compared to coal, oil and gas, which may end up becoming stranded assets (surplus to society’s requirements). The International Financial Stability Board recently recommended that investors fully integrate climate risks into their investment thinking; this recommendation will accelerate investors’ transition from fossil fuel investments to environmentally-friendly solutions”.

Executive Director of Trócaire, Éamonn Meehan said: “Major cities from Copenhagen to Berlin to Sydney have already committed to divest from the fossil fuel industry. However, if the Fossil Fuel Divestment Bill is passed, Ireland would be the first country to ban investment of public money into the fossil fuel industry.With a climate-sceptic recently inaugurated into the White House, this move by elected representatives in Ireland will send out a powerful message. The Irish political system is now finally acknowledging what the overwhelming majority of people already know:  That to have a fighting chance to combat catastrophic climate change we must phase out fossil fuels and stop the growth of the industry that is driving this crisis. I have seen it on the ground, from Malawi to Honduras, climate change is decimating the world’s poorest communities. The support of a majority in the Dáil for this Bill is an incredibly important moment for the climate justice movement in Ireland and will inspire other countries to follow our lead.”