As traditional measures of economic performance do not fully capture the specific impacts of climate and environmental policies on public finances, green budgeting is part of the annual budgetary process in Ireland.
Green budgeting refers to the process of documenting the impact of budgetary measures and wider fiscal policy on the transition to a more sustainable and climate-friendly economy. The objective is to make government action on climate change more transparent, which can help promote policy changes with improved environmental outcomes.
In Ireland, the Department of Finance sets out a green budgeting methodology by which government can measure and design fiscal policy to influence individual and business behavior toward supporting and away from harming climate and environmental goals.
- The method considers the climate impact of tax measures from a monetary perspective and encompasses both tax revenue and expenditure measures (including subsidies related to potential revenue forgone). Measures are considered to have a climate-positive impact if they make a substantive contribution to climate change mitigation or adaptation objectives, and a climate-negative impact if they harm these objectives.
- This tax analysis undertaken by the Department of Finance complements the green budgeting expenditure analysis undertaken by the Department of Public Expenditure, NDP Delivery and Reform (DPENDR).
At the European level, Ireland is an active participant in the European Commission’s green budgeting expert group, and the OECD Paris Collaborative on Green Budgeting, as well as the Coalition of Finance Ministers for Climate Action. These engagements include training, exchange, and sharing expertise to learn from best practice for green budgeting.
Keywords
budget taggingbudgetary processesmethodologiespolicy mixpolicy process
