There is no established link between the billions of euros spent on climate policies and tangible outcomes, the State’s budgetary watchdog has warned, writes Sarah McGuinness.

A new report from the Oireachtas’s Parliamentary Budget Office (PBO) shows that at least €24bn will have been pumped into “climate-favourable expenditure” between 2020 and the end of this year.

However, the paper states that “there remains a lack of clear linkage” between spending and outcomes, as it called for the establishment of “clear and distinct performance metrics linked to climate-related spending”.

It specifically highlights the spending of carbon tax revenues, noting that millions of ringfenced euros went towards projects that should not have received the funding.

It added that “transparency” is “paramount” to the public buy-in to the tax.

The PBO paper, published late last week, examines climate and environmental expenditure for the year ahead.

In 2025, an estimated €9.12bn, or 10% of total voted expenditure, has been identified as having an impact on the climate and environment – both favourable and unfavourable.

Just shy of €7bn is estimated to have a favourable climate impact this year, with €2.12bn having an unfavourable climate impact.

This €7bn sum is up on €5.4bn in 2024, and €2.03bn in 2020.

The total spend between 2020 and the end of 2025 will amount to €24bn, according to data contained in the report.

The PBO recognises that efforts have been made to ramp up climate spending in the State and improve the presentation of environmental spending.

However, it notes gaps in “clear and distinct performance metrics” and reporting mechanisms.

“Ireland has set ambitious, but necessary, environmental targets as part of its global commitments in taking climate action,” the paper states.

“Setting policy pathways and investing in infrastructure and activities that promote positive environmental behaviours is essential to achieve these goals.

“This, in turn, requires that not only new funding be put in place, but that existing funding be quantified for its potential impact – positive or negative – on the climate and environment.

“Progress in meeting these targets is slow, with greater strides – rather than incremental changes – being required.”

The document outlines “a lack of clear linkage between spending and outputs or outcomes”.

It says: “The PBO believes that it is essential that departments engage in a process of setting clear and separate performance metrics linked to all climate-related spending – including the use of carbon tax revenues.”

Carbon taxes were first introduced in December 2009 and apply to most liquid fuels, to natural gas and to coal and peat.

The Government has committed to increasing carbon tax rates from €26 per tonne of CO2 emitted in 2020 to €100 per tonne by 2030, and to use the additional revenue generated in specific expenditure programmes.

The yield for the tax has increased dramatically in recent years, from €388m in 2013 to €935m in 2023.

The PBO report estimates that spending from ringfenced carbon tax revenues is expected to reach €951m in 2025.

However, it points to data contained in the 2023 accounts of the Comptroller & Auditor General (C&AG), which highlights that between 2020 and 2023 only 61% of hypothecated carbon tax revenues “can be verified as being spent in the target areas”.

The PBO flags numerous areas of “key concern”, including €13m out of €28m in carbon tax funding that was deferred between 2020 and 2023 being used on programmes that were not targeted to receive carbon tax funding.

It also highlights €262m that went unspent and was surrendered back to the Exchequer, while more than €240m in revenues allocated to the Department of Social Protection could not be “sufficiently traced to confirm they were spent on the schemes for which they were intended”.

To “ensure confidence” in the correct use of carbon tax revenues, the PBO suggests that the reporting around the allocation and out-turn of the tax “be made more transparent”.

“Demonstrating the proper use of these funds is paramount in helping maintain public support for this key climate action measure,” it said.

The PBO document also notes that while Ireland’s harmful emissions are reducing, “the rate of change is slow”.

It states that annual emissions for 2021-2023 have exceeded carbon budget targets, “thus requiring even steeper emissions reductions in 2024, 2025, and beyond”.

John Fitzgerald, economist and former member of the Climate Change Advisory Council, said that even more investment is needed to get Ireland closer to its climate goals.

“It is not obvious to me that there is any major waste [in climate spending] – and in fact the problem is that we haven’t spent enough,” he added.