The clean-tech tax changes to the Finance Bill have been welcomed by the Green IFSC, which says Ireland’s Government is likely the first in the world to recognise forest carbon credits in tax legislation.
Yesterday’s announcement about Finance Bill 2012 will extend the range of carbon offsets that an investment company can acquire, to explicitly include forest carbon credits. A consequential amendment to the Stamp Duty Consolidation Act is also being made to facilitate this measure.
The Green IFSC says the bill changes will likely boost green finance business in the forestry sector.
Forests and carbon footprint
As regards forests and the race to reduce the planet’s carbon footprint, UN statistics have revealed that 20pc of the world’s carbon emissions come from forests.
The UN’s REDD programme, which has been set up to help keep the developing world’s forests intact, is estimated to be valued at US$50bn over the next few years.
Paul Harris, member of the Green IFSC Steering Group, pointed to how the new provision in Irish tax legislation will serve to help the UN reach its targets as he said it would assist investors operating through the UN programme in the monetisation of forest carbon credits.
"The change is an important contribution to the emergence of the forest carbon bond market as it provides, for the first time, a cost-efficient structure for the monetisation of forest carbon credits which should prompt issuers and investors to engage with this element of the developing global low carbon economy," explained Harris.
Dublin’s potential to be a hub for green financial business to transact
He said that the changes should also help entice the financial markets to look "favourably" upon Dublin’s credentials as a location for listing of green and environmental bonds. According to Harris, the Bill changes around clean tech also reflect the commitment and expertise of the various Green IFSC working groups who understand the regulatory changes that are needed to make Ireland a pivotal location for green financial business to transact.
A 3D photo scanner pioneered by Irish company Treemetrics. The scanner helps foresters determine width, height, volume of trees, as well as wood quality
Irish clean-tech player Treemetrics
One Irish start-up that has been steadily channeling its energies in the forestry clean-tech space is Cork-based Treemetrics. The company was co-founded by agricultural science graduates Enda Keane and Garret Mullooly back in 2005. It is aiming to revolutionise the forestry industry via its cloud-based platform that also harnesses Google Earth. Keane and Mullooly say the aim is to bring foresters around the globe into the digital century using cloud computing.
An Enterprise Ireland HPSU, Treemetrics is fast making waves in the forestry industry. Recently, the company secured contracts with some of the planet’s most prominent state forest owners, including the British Forestry Commission, Forestry South Australia and the state forest owner in Finland – Metsahallitus.
Treemetrics is also seeking to double its workforce to 20 this year.
Speaking about the changes to yesterday’s Bill around forests, Treemetrics CEO Enda Keane said that this new tax change would give the company, as well as Ireland, a competitive advantage.
"If we can get our forests back on track and run more efficiently that would obviously go a long way to reducing the world’s carbon footprint. Anything which validates forest carbon and helps encourage growth in investing in forests is very welcome," said Keane.
He said that the real benefit of such a move as that in the Finance Bill would be seen in the years to come, especially as Ireland had one of the lowest forestation levels in the world – up from 1pc at the foundation of the State in 1922 to 10pc today. Keane said it meant Ireland is in an ideal neutral position to be seen as a world authority in carbon validation and trading in the sector to help tackle deforestation globally.
Just last week, Taoiseach Enda Kenny visited Treemetric’s facility down in Cork when it was announced that serial games entrepreneur and tech investor Dylan Collins had become chairman of Treemetrics. Collins is currently also start-up ambassador for Enterprise Ireland.
Ireland’s green economy push
But back to the Finance Bill and the Government’s push to focus on propelling Ireland’s green economy.
Here’s what Taoiseach Enda Kenny had to say about the clean-tech element of the Bill changes yesterday: "This provision in the Finance Bill is the latest in a series of developments by the Irish Government to ensure Ireland is in the best possible position to capitalize on the financing needs of the future green economy – and attract new business and jobs to our shores as well as give a competitive advantage to indigenous companies operating in this space."
The IFSC Clearing House Group and the Department of an Taoiseach set up the Green IFSC initiative to capitalise on the growing area of green finance. Global investment in clean energy reached US$260bn in 2011, up 5pc on 2010 and almost five times the total of US$53.6bn in 2004, so it a strong focal point for investors right now.
In the past two years collaboratve efforts between the Green IFSC, the Irish Government and the private sector has resulted in a number of additional tax changes in the area of green finance in a bid to grow business and jobs in the sector.
Other recent tax changes assisted by the Green IFSC, include:
- The inclusion of carbon offsets within the existing structured finance regime (S110, TCA 1997)
- Relief from stamp duty on transfers of greenhouse gas emissions allowances (S90A SDCA 1999)
- Extension of corporation tax relief for investments made in renewable energy projects up to 31 December 2014 (S486B TCA 1997)
- Inclusion of companies involved in production of energy from renewable sources within Income Tax Relief Scheme for Investment in Corporate Trades – Employment and Investment Incentive (S488 TCA 1997).