Goodbody and Eirgrid clash over tax exemptions for Reits

State not developers should decide on locations for green projects, says grid operator

Independent MEP Mick Wallace said  that the State should aim to keep renewable energy projects largely in public ownership. File photograph: Dara Mac Dónaill/The Irish Times

Independent MEP Mick Wallace said that the State should aim to keep renewable energy projects largely in public ownership. File photograph: Dara Mac Dónaill/The Irish Times

 

A proposal from Goodbody Stockbrokers to exempt investment in land earmarked for green energy from some taxes could clash with the national grid operator’s efforts to control where such projects are located, sources say.

Goodbody executive Joe Gill recently suggested to Minister of State Ossian Smith that laws governing real estate investment trusts (Reits) be extended to land used for renewable energy development, to boost investment in green projects.

Reits are exempt from capital gains and other taxes when they distribute rental profits to shareholders as dividends. Investors pay income tax on those payments. Irish investment trust legislation only covers residential and commercial buildings.

However, energy industry figures say that the proposal potentially conflicts with national grid operator Eirgrid’s efforts to move away from allowing developers to determine the location of wind farms and other renewable electricity projects.

Emissions targets

In a consultation begun earlier this year, Eirgrid argued that the State should determine sites for future green energy projects. Its engineers warn the current situation, which obliges the company to connect such developments to the grid, irrespective of location, will leave the Republic unable to meet 2030 emissions targets.

The national grid operator’s approach favours large-scale renewable projects set close to areas where demand is high, such as Dublin, Cork and other cities.

Sources say any proposal giving any tax exemptions to investments in land earmarked for renewable electricity projects is likely to clash with this. Eirgrid did not comment as it has just finished the consultation on the future development of the national grid.

However, Independent MEP Mick Wallace argued that the State should aim to keep renewable energy projects largely in public ownership.

The suggestion from Mr Gill, Goodbody’s green economy advocate, noted that the Reit legislation stimulated investment in the Republic’s ailing property market during the recession.

Tweaking

Mr Gill’s email, released to Mr Wallace through a freedom of information request, says that tweaking the law to include land on which renewable energy assets – wind, solar and hydro – are placed “could unleash another wave of capital into stock market-listed entities in Dublin”.

Goodbody said on Tuesday that Mr Gill put the idea to Mr Smith, his local TD, “in a personal capacity” while discussing an unrelated issue. “There was no company document or strategy behind it, and it was not on behalf of any client,” the firm added.

Mr Wallace acknowledged that green finance had a role to play in cutting carbon emissions. “But why should we privilege one form of investment vehicle, like Reits, over another?” he asked.

“If you’re in favour of tax incentives for renewables, why not create a new mechanism which provides incentives to a variety of investment structures, that might include, for example, community-owned energy projects and co-operatives?” Mr Wallace added.