The purpose of the The National Oil Reserves Agency (Amendment) and Provision of Central Treasury Services Act 2020is to amend the National Oil Reserves Agency Act 2007 (as amended) to provide for the establishment of the Climate Action Fund on a statutory basis, extend the purposes for which the levy on relevant disposals of petroleum products is paid to include providing funding to the Climate Action Fund and provide for payment of a portion of the levy monies collected by the National Oil Reserve Agency (NORA) to the Climate Action Fund.
The NORA levy (also known as the petroleum product levy) is collected at a rate of €0.02 per litre on most oil products placed on the market and is used to fund the activitities of NORA, primarily in the maintenance of the State’s strategic oil reserves. These amendments to the NORA Act will allow for the repurposing of NORA levy monies to support projects and inititives from the Climate Action Fund that can contribute to achieving the State’s climate action goals in a cost effective manner.
Designated under NTMA
The Act also amends the the National Treasury Management Agency (Amendment) Act 2000 to provide for NORA as a “designated body”, to whom the National Treasury Management Agency (NTMA) may provide “central treasury services”. This allows the NTMA to take deposits from and/or make advances to NORA, as an alternative to the current utilisation of the commercial banks.
The Act also provides for Irish Water to be given “designated body” status under the NTMA legislation. This facility is required to facilitate the restructuring of Irish Water’s funding arrangements, whereby existing funding from mainly commercial banks can be replaced with more competitively priced State funded debt facilities. The NTMA facility to Irish Water is intended to cover short-term and temporary timing-related funding requirements.
Provision is also made in the Act to provide for technical changes to the Biofuels Obligation Scheme and for the fixing of the rate of the Biofuels Levy to a nominal amount to incentivise the use of biofuels.
NORA Levy Changes
The 2020 Act revokes existing provisions of secondary legislation that set the rate of the NORA levy (Regulation 4(1) of, and Schedule 1 to, the National Oil Reserves Agency Act 2007 (Returns and Levy) Regulations 2007 (S.I. No. 567 of 2007)). These revocations are required as the Act deletes the existing provisions of the Principal Act that allow the Minister to set the rate of the levy by regulation and inserts a new provision that fixes the rate of the levy at 2 cent per litre.
The 2020 Act expands the functions and powers of NORA to now include paying NORA levy funds into the Climate Action Fund, as directed by the Minister.
The 2020 Act provides for the payment of expenses from the proceeds of the NORA levy or biofuel levy monies recovered (recovered levy or biofuels levy proceeds are those which have not been paid to NORA within the time frame specified by regulation by the Minister and which are then required to be recovered by NORA).
The definition of the expenses of NORA and any designated subsidiary includes not only the costs incurred in the collecting of the NORA levy and biofuels levy,and also the costs incurred in recovering the NORA levy and the biofuels levy.
The 2020 Act expands the purpose for which the levy is paid from the current purpose of funding the expenses of NORA to also include contributing to the Climate Action Fund. This section also sets the rate of the levy to €0.02 per litre by statute.
The Minister may an annual direction to NORA to pay a specified amount of levy monies to the Climate Action Fund. Only levy monies collected and recovered after the legislation has commenced may be paid to the Climate Action Fund.
Prior to making a direction, the Minister is required to consult with NORA, the Minister for Public Expenditure and Reform and the Minister for Finance. The Minister is required to be reasonably satisfied in making a direction that NORA will have adequate financial resources remaining, after payment has been made, to meet its expenses during the remainder of the current financial year. In addition, the Minister must consider the amount specified to be appropriate, having regard to any future expenditure which may be required in subsequent years.
The Act specifies the matters that the Minister must have regard to in order to determine the cash balance of NORA, the proceeds likely to accrue, and the estimated expenses of NORA, during the current financial year. For this purpose, the Minister will have regard to, inter alia, NORA’s Strategy Statement, information provided by NORA during the consultation prior to the making of the direction, the proceeds of the levy collected in the previous financial year, NORA’s expenses in the previous financial year and NORA’s Financial Statements for the previous financial year, where available.
The 2020 Act makes a consequential amendment to the Principal Act, so that it no longer refers to the Minister setting the rate of the levy but instead refers to section 37A(1A), which fixes the rate of the levy at €0.02 per litre.The rate of the levy is specified in the context of the monthly levy assessment notice provided by the Minister to oil company’s and oil consumers.
The 2020 Act removes the ability of the Minister to set the rate of the levy by regulation. In addition, other provisions relating to the Ministers power to set the rate of the levy by regulation are also deleted. These provisions are no longer required as the rate of the levy is now set by the 2020 Act and cannot be adjusted by the Minister.
Climate Action Fund
The 2020 Act, establishes and provides governance arrangements for the Climate Action Fund. The fund shall be established on the commencement of the Act and shall be controlled by the Minister or by persons to whom the management and control of the fund has been delegated by order of the Minster. The fund will consist of such accounts that the Minister shall determine as necessary, with provision made for the submission of the accounts of the fund to the Comptroller and Auditor General for audit and the laying of a copy of the report of the Comptroller and Auditor General and audited accounts before each House of the Oireachtas.
The purpose of the fund is outlined and includes supporting projects, initiatives or research that seeks to reduce greenhouse gas emissions, increase the production or use of renewable energy or improve energy efficiency in the State. In addition, provision is made for projects or initiatives to support regions and sectors of the economy impacted by the transition to a low carbon economy.
Provision is made for the Minister to invite proposals to avail of monies from the fund. Monies may only be paid from the fund to persons who have conducted projects in accordance with the guidelines specified by the Minister, in consultation with the Minister for Public Expenditure and Reform. Provision is also made for the establishment of a committee to advise the Minister on any aspect of the Minister’s functions relating to the fund. Provision is further made for the payment of the expenses incurred in connection with the administration of the fund, with the consent of the Minister for Public Expenditure and Reform.
There are changes in Departmental responsibilities, whereby references to the Minister for the Environment, Heritage and Local Government, as a consultee on matters relating to the biofuels obligation scheme, are amended to the Minister for Transport, Tourism and Sport. The Minister for Finance is also added as a consultee, as appropriate.
The amount of biofuel certificates from the two previous obligation periods which may be used in the current period is reduced from the previous cap of 25% to 15% of the total obligation.
Reference to the Minister for the Environment, Heritage and Local Government in section 44J of the Principal Act, as a consultee relating to the biofuels obligation scheme, is amended to the Minister for Transport, Tourism and Sport. The Minister for Finance is also added as a consultee within this section.
The 2021 Act amends section 44N of the Principal Act by setting the rate of the biofuel levy at €0.001 per litre of biofuels placed on the market. Setting the rate of the biofuel levy to a nominal amount removes an anomaly which currently exists, whereby the levy placed on biofuels is the same as that on petroleum products placed on the market.
The Act no longer refers to the Minister setting the rate of the biofuel levy, but instead refers to the rate of the biofuel levy specified in section which fixes the rate of the biofuel levy at €0.001 per litre.