The Government has been threatened with legal action over the funding of its €500 million climate plan.
In setting up the Climate Action Fund last year, the Government announced that it would be principally financed by diverting monies from the oil products levy which was introduced in 1996 to pay for the running of the National Oil Reserves Agency (Nora).
The agency is responsible for holding 90 days of oil stocks for supply in an emergency.
The levy, which is at 2 cents per litre, is paid by oil companies to the agency.
The Irish Petroleum Industry Association (IPIA), which represents oil companies, has told Minister for Climate Action Richard Bruton that under the law, all funds generated from the levy must be used exclusively to fund the operations of the agency itself.
The association is understood to have told Mr Bruton during a series of meetings that according to its legal advice, the levy must be set at a rate which meets the running costs of the agency, but that it should not exceed this. Despite this, it is understood that Nora has built up a cash balance of up to €200 million.
The IPIA has told the Minister its legal advice states that any attempt to use this extra cash would be unlawful. The association has said the surplus funds should be used to support IPIA activities which would be aimed at helping Ireland reach its climate targets.
Its membership represents the majority of the oil industry in Ireland.
A spokeswoman for the Department of Communications said the department is working on new legislation to allow the Minister to repurpose the fund.
“In order to repurpose the levy, the National Oil Reserves Agency [Amendment] Bill has been included in the Government’s legislative programme since Autumn 2018. The Government approved the general scheme of the Bill in November 2018. The department is working with the Attorney General’s Office to progress the Bill.
“There has been no expenditure of Nora levy funds to date on projects under the Climate Action Fund.”
The Government previously predicted that annual contributions to the fund from the Nora levy would be about €60 million on average per annum from 2020.
The Climate Action Fund is one of four funds established under the National Development Plan 2018-2027 as part of Project Ireland 2040.
The first call for applications under the fund took place last year and was a competitive call for grant funding that was open to the private sector and the public sector with the exception of Government departments. In the first round of the fund €77 million was allocated to seven projects.