The government has published its bill on a proposed Infrastructure, Climate and Nature Fund, which is aimed at directing public spending towards climate change and nature objectives.

The legislation was launched in a combined bill alongside the separate but related Future Ireland Fund. Both funds were announced as part of Budget 2024 last year.

According to the Department of Finance, the Infrastructure, Climate and Nature Fund will seek to deal with the “pro-cyclicity” of public spending on climate and nature related actions – in other words, to provide sustained funding even in periods of economic downturn.

The fund is also aimed at water quality and biodiversity issues.

The department said that the fund will provide for resources for spending in a future downturn to support expenditure through the economic and fiscal cycle.

It is intended that €2 billion will be invested in this fund each year from 2024 to 2030, providing for a total fund of €14 billion.

The department said that this amount equates to the average amount of capital expenditure under the National Development Plan from 2023 to 2028.

Commenting on this fund, Minister for Finance Michael McGrath said it would provide “an essential buffer for expenditure by the state during an economic downturn”.

“This will help smoothen the investment cycle and help support employment at a critical time of economic distress. The fund will also provide support to designate environmental projects that will contribute to a range of climate, water and biodiversity objectives.”

Minister for Public Expenditure, National Development Plan (NDP) Delivery and Reform Paschal Donohoe said: “The fund will provide support for the economy in times of exceptional need, helping to smooth the investment cycle and avoid the ‘stop-start’ public capital investment that we have experienced in the past.

“It will also invest in the transition to a low-carbon economy, with €3.15 billion being set aside specifically to invest in environmental projects that address climate change issues and nature and water quality degradation over the period 2026 to 2030,” Minister Donohoe added.

The other fund which makes up the second part of this legislative bill, the Future Ireland Fund, is aimed at funding for not just climate-related issues but also issues relating to an ageing population and digitalisation, among other issues.

For each year from 2024 to 2035, 0.8% of GDP will be invested in this fund, while around €4.1 billion will also be transferred from the dissolution of the National Reserve Fund this year. The fund has the capacity to grow to €100 billion by 2035, but there is no upper limit on its size.