The representative body for firms involved in the importation, distribution and marketing of oil products here has dropped a complaint it made to the European Commission alleging illegal State aid, after what it claims has been a significant change in policy stance by the Government.
A year ago Fuels for Ireland lodged the complaint, because it alleged that oil-based energy consumers had been assigned sole responsibility for the funding of the Government's €500m Climate Action Fund (CAF).
This is because the Government had indicated that a levy of 2 cent per litre of fuel sold by oil product sellers, which previously went to fund the National Oil Reserves Agency (NORA), was to be redirected in its entirety to the CAF.
NORA is the body that ensures Ireland has a 90-day stock of oil ready at all times in the event of a global shortage.
In its complaint to the European Commission, Fuels for Ireland said the change in policy would put its members at a competitive disadvantage and was unlawful.
The organisation claimed users of other energy sources, such as coal and peat, which also generate greenhouse gas emissions, have not been held to account in a similar way.
However, the European Commission has now told the organisation, whose members include some of the largest forecourt operators in the country including Applegreen, Circle K, Maxol, Top and Emo, that it had come to the preliminary conclusion that the situation does not amount to State aid.
The Commission told Fuels for Ireland the Government had explained that NORA's funds can be reallocated to the CAF only if NORA’s expenses are fully covered.
The Government also told the Commission that the amount to be transferred to the CAF cannot include levy income collected before 1 August 2020.
The Commission said the Irish authorities further explained that the CAF is financed by other sources as well, though it was not made clear what those sources are.
"In the period 2020-2021, flows from NORA provided slightly more than half of the total proceeds of the CAF," it stated in its preliminary conclusions.
"Furthermore, according to the information at hand, the projects funded by the CAF consist primarily of projects aimed at addressing the negative environmental impact of oil-based energy producers."
Responding to the Commission’s preliminary findings, Fuels for Ireland said it very much welcomed the significant changes in the Government’s position in relation to the funding of the CAF.
It added that a number of the changes in position appear to be directly linked to assuaging the concerns of members which initially led to the submission of its State aid complaint.
"On that basis…Fuels for Ireland does not intend requesting DG Competition to take any further action in respect of this matter at this time," it said.
The organisation said there had been numerous occasions when the Government had publicly stated that CAF would be exclusively funded by the NORA levy, but this policy now appears to have changed.
"Fuels for Ireland intends engaging with the Minister and the Department in relation to the current and future alternative sources of funding (other than the NORA levy) that will contribute towards the CAF so that the burden of financing the CAF does not lie solely with Irish consumers of oil products," it said in the letter to the European Commission.
The organisation said it also noted the view that the primary objective of the NORA oil levy is to fund the operating expenses of NORA, which it claimed should remain the position.
However, it also expressed concern that some or all of the €300m in the NORA levy fund may now be diverted towards the CAF, because NORA's primary objective is being met through its well-resourced position.
Fuels for Ireland also welcomed the development that projects funded by the CAF will consist primarily of those focused on addressing the environmental impact deriving from the use of oil.
"This is, again, a most welcome development, one which will contribute to the additional efforts of our members as they each move towards our industry’s collective goal of being carbon neutral by 2050," it said.
"We will, as an industry body, seek further engagement with these relevant stakeholders to request further information in this regard and see where we may be able to add value for relevant projects given the now stated proposed focus of CAF funding."
But Fuels for Ireland also said that it notes that the Minister for the Environment has not carried through on a promise to reduce the levy to 1c per litre.
The industry body said it will now engage with the Government and monitor the situation, and could re-enter the complaint at a later date if the Government does not satisfactorily implement the position it has outlined.
