Countries such as the UK, Australia, Sweden and the Netherlands are doing better than Ireland when it comes to green infrastructure investment.
Ireland has the opportunity to improve its commitment to green infrastructure investment.
An analysis of 15 developed countries by PwC showed that Ireland has an average score, closer to the median.
“For private finance to be deployed effectively, governments must lead by providing both public funding and a robust policy framework”
The 15 countries reviewed are: Australia, Belgium, Canada, Czech Republic, France, Germany, Italy, Ireland, Netherlands, Poland, Portugal, Spain, Sweden, the UK and the USA.
Closing the green gap
PwC’s ‘Green Infrastructure Finance Propensity Index’ reveals the level of commitment by these countries to deliver green infrastructure.
The Index aims to identify a country’s progress on green infrastructure investment and compares the countries across two dimensions: the enabling environment for green investment which considers whether a country’s macroeconomic fundamentals enable new financial commitments to sustainable infrastructure assets. Secondly, the commitment to green investments, which deals with the overall commitment of a country’s government to green infrastructure.
Ireland has an average score, close to the median of many of the countries sampled, across both dimensions. This points to a considerable opportunity to improve Ireland’s commitment to green infrastructure investment and to better enable that investment.
Countries doing better than Ireland in both dimensions, such as Australia, the UK and Sweden, are better positioned to close their green infrastructure gaps than others.
“The analysis shows that Ireland has more work to do to close its green infrastructure gap – which is the difference between where Ireland needs to be to deliver green infrastructure and where it is now,” said Robert Costello, Leader, PwC Ireland Capital Projects & Infrastructure Practice.
“The analysis is also a useful tool for policymakers in determining where to concentrate their efforts to ensure Ireland can close this gap as it transitions to a net-zero economy.”
“Energy, industry and buildings account for more than 70% of global greenhouse gasses. Decarbonising these sectors will require substantial infrastructure investment. Public funding alone is not sufficient. For private finance to be deployed effectively, governments must lead by providing both public funding and a robust policy framework.”
Investing in a greener future
Through analysis of the underlying data, PwC has identified three broad measures to help Ireland move into the top right quadrant of PwC’s Green Infrastructure Finance Propensity Index and close its infrastructure gap:
First, Ireland should ensure that its pipeline of green infrastructure investment opportunities is sufficiently ambitious to achieve net zero emissions on schedule, while also ensuring that the pipeline is credible.
Ireland has many policy measures in the Climate Action Plan with potential projects that can attract infrastructure finance including EV charging, energy efficiency and retrofitting and public transport but no firm commitments on which ones will involve private investment. At present there is a heavy reliance on semi state companies to raise this finance.
In addition, the revised National Development Plan includes plans for €165bn of investment up to 2030. While work has begun on the delivery of elements of this plan, certain actions that would enable the involvement of further private finance have yet to be completed.
Second, the planning regime should be reformed to enable more efficient delivery of green infrastructure. In 2021 the Government announced a large-scale review of planning laws aimed to reduce complexity and add certainty to the process. This certainty is needed to attract investment interest. It is also important to ensure that planning authorities are adequately and competently resourced to deal with the projects required to deliver our climate action targets.
Third, sufficient public funding must be made available to ensure timely delivery of the infrastructure. While a large number of projects in the National Development Plan will be publicly funded, there is often a role for public funding to help stimulate private investment. For example, part funding capital costs on energy efficiency projects to make them commercially viable or on electric vehicle charging projects.
“It is a range of measures that will provide the overall solutions,” Costello concluded. “Failure to put in place any one of the pieces could undermine success. Coordination and collaboration between partners across borders, industries, and between the public and private sectors is key to effective and efficient decarbonisation.
“In particular, the Government must provide sufficient conditions to ensure timely delivery and relevant, support with the right regulatory environment or enabling public funding. In terms of public investment, it not only has the direct effect of ensuring that a project gets off the ground, but it also sends a signal to the market that the pipeline is credible and worth the attention of private investors. Public investment also de-risks projects, which is particularly important where new technologies are being deployed at scale.”