Barry O’Flynn: a Green IFSC

Barry O’Flynn of the Green IFSC steering group tells Stephen Dineen about the vision of Ireland becoming a hub for green financing and carbon management.

For Barry O’Flynn, head of cleantech and environmental finance at Ernst and Young, there is no denying the fundamentals of the global energy landscape. In his address to the Environment Ireland conference he spelt them out. The age of cheap oil is over. Energy demand is escalating. Global temperature rises are linked to the growth in greenhouse gas emissions.

“In plain English: when it comes to energy, it’s all about importing less, consuming less and polluting less. And in the process, creating an industry while you can.”

One possible low-carbon sector in Ireland is a green IFSC. In January this year the Green IFSC steering group, of which O’Flynn was a member, published its report on how existing IFSC infrastructure could be leveraged towards green financing and enterprise. “The initiative,” says O’Flynn, “is to leverage what we have in the green space, and do it in spades.”

Three areas of opportunity were identified by the group. “Attracting green funds” was the first, he tells eolas, “given the funds administration infrastructure that we [Ireland] have.” Ireland has approximately €2 trillion in funds management here. Secondly, while “there are a few other carbon trading markets,” there is no “home” for the voluntary offset carbon market. Ireland “could be well positioned to take that on.” Thirdly, there is a need to increase Ireland’s innovation, enterprise and skills base.

The group produced a 100 day plan and O’Flynn says the Taoiseach is likely to announce details of an executive team to implement it in the coming months.

According to the Government’s Strategy for the International Financial Services Industry in Ireland 2011-2016, launched in July, Ireland will be developed as “a centre of excellence in green finance and carbon management”, resulting in “the expansion of many of the existing IFSC sectors and creation of new areas of opportunity including carbon management, intellectual property commercialisation, private equity investment and ‘Green Tech’ fund management.”

O’Flynn told the conference that greening the IFSC would give it (and the country) several opportunities. Funds could be attracted to invest in domestic green infrastructure whilst also being incentivised to use existing IFSC infrastructure and resources. There could be a shift from back office and administrative support to trading and origination (processing of loans). Domestic infrastructure could be used as the pilot for innovative financing that could be deployed elsewhere in Europe.

A focus on carbon trading could see Ireland become a voluntary offset trading centre and repository. This could happen whilst enhancing domestic trading capabilities and providing necessary incentives to attract and retain them in the process.

Carbon trading is “a very niche part of the financial services sector”. It is specialised, “so it would be quite a technical challenge to make Dublin or the IFSC the carbon hub.” Trading is large and growing, however, and “there’s no reason why we shouldn’t be doing it and giving it a shot,” he contends.

The IFSC, which directly employs approximately 33,000 people, and recorded employment growth last year, has been “a huge success story for Ireland, so essentially this is about enhancing and retaining that facility,” O’Flynn believes. There are “a lot of capital cities” trying to become a green financial hub, such as Singapore, Luxembourg, Toronto. They are “all seeing the same opportunity here, so the goal right now is: ‘let’s stay ahead of the pack and use this.’”

Renewable potential

Dublin differs from other financial cities in branding terms by not only being in a green country with a green economy but “we already have a very strong focus on renewables and [have] huge potential for renewables.”

He says there is no shortage of investors out there willing “to invest in long-term renewable energy assets given appropriate long-term regulatory environments.” There are already many investors in the Irish market and indigenous companies are “global leaders in a lot of this space.” Furthermore, Ireland already has “huge technical competence in managing lots of wind [energy] on a network,” so the skill set is already there.

O’Flynn, who worked in the renewable energy sector before joining Ernst and Young, says a greener financial hub will require several specific actions: leveraging the existing infrastructure to attract green funds and expanding it for carbon trading; focussed branding and marketing; and attracting funds for domestic green projects.

The immediate task for policy makers, from an investor perspective, is to put into the public domain “a very clear, well-supported roadmap for what we’re going to do, with very clear targets, accountabilities, year-on-year objectives and actions.” It needs to be done in a way that “is lowest cost to the economy” and it “very much needs to be a public-private initiative.”

In his conference speech he cited the plans of other countries: an oil-free Sweden by 2020; an 80 per cent reduction in UK emissions by 2050; the Chinese five-year plans for energy efficiency, renewables and electric vehicles. Ambitious plans for Ireland could lead to it being:

• a net exporter of renewables;

• one of the least dependent countries for imported fuels;

• a nation with one of the lowest oil consumption and emission levels per capita; and

• a country with one of the least volatile energy prices.

For O’Flynn, whose clients include the UK’s Department of Energy and Climate Change and the South African energy regulator, Ireland’s option of going green is a no-brainer: “We have a formidable talent pool and natural resources, the land, and neighbours who are crying out for renewables on the European continent as a whole”.

The key now, he believes, is to “get everybody walking lock-step and to do this. Let’s look way beyond 2020. This is not about 2020. This is about 2030, 2040, about economic sustainability.” Failure to grasp this would be “one big opportunity cost to the nation.”

Profile

Barry O’Flynn studied engineering at UCD, from where he also graduated with an MBA. He spent nine years working with Eddie O’Connor at Airtricity and Mainstream Renewable Power, where he worked on renewable energy deployment in foreign markets. He moved to Ernst
and Young this year, where he heads the cleantech and environmental finance division, working with clients in countries such as the UK, South Africa and Jordan.

From Dublin, he is married with three children and likes to go running in his spare time.