Budget 2018 milestones – climate action for competitiveness and environmental quality
24 October 2017
Two measures in Budget 2018 mark milestones in Irish public policy on climate action. However, for now, they are unlikely to catch the imagination of a general public concerned with a housing crisis and finding their way through a recovery. From those that have noticed them, there is criticism that they do not go far enough – this too is understandable, given the scale of the transition required for climate action.
To make policy progress in the Irish system of public administration requires: (i) a Department of Finance and Department of Public Expenditure-agreed budget line and (ii) an agreed scheme or programme. Two Ministers have part (i) in place after the recent Budget and it looks like part (ii) will not be too far behind. The most difficult bit can be getting to an agreed decision to take action.
Firstly, Minister for Communications, Climate Action and Environment Denis Naughten’s Budget announcements included an initial provision of €7 million for a long-anticipated Renewable Heat Incentive (RHI). The incentive would be designed to kick-start the development of a renewable heat market in Ireland.
There have been a number of consultative engagements taken by the Department of Communications, Climate Action and Energy on a proposed RHI and its predecessor department over the past year and a half. A draft National Bioenergy Plan published in 2014 had pointed towards the need for a Renewable Heat Incentive for large heat-users.
Large heat users means for example our large agri-food processors, who bucked the trend of severe recession with continuing export-led growth in the past decade. Will the likes of Apple, intending to put in place a large data centre in Athenry, Co Galway, using renewable energy, be looking at this too?
Obligations to meet renewables requirements
Under the 2009 Renewable Energy Directive, Ireland has a legal obligation to meet 16% of its overall energy requirements from renewable sources. To help meet that obligation, Ireland is committed to ensure that by 2020, some 12% of our heating demand will come from renewable sources. We in Ireland face an uphill struggle on that target now.
At the end of 2015, we had reached a level of 6.5% on the renewable heat target. According to the Sustainable Energy Authority of Ireland (SEAI), Ireland had an energy import dependency of 85% in 2014, with 97% of that being from fossil fuels. Energy security, economic competitiveness and sustainability are intertwined here.
The experience in other EU member states has been that a state-support system is required to get a renewable heat sector up and running over a ten- to fifteen-year timeframe and until such time as it becomes self-sustaining. Then, supports would be tapered off.
The pie-chart diagram for Ireland’s greenhouse-gas emissions shows agriculture and transport as having the two biggest slices (see Figure 1). This scenario came as a surprise to a group of innovation organisations from other EU member states during a presentation I gave to the BioBase4SME consortium in Brussels the day before the Budget. Their big emissions challenge was in the industrial sector.
The second measure – one in the portfolio of a different department – of Minister for Transport, Tourism and Sport, Minister Shane Ross included €35 million to facilitate innovation for pilot initiatives for low-emission transport. Another EU Directive, the 2014 Alternative Fuels Infrastructure Directive, is required to be transposed in Ireland, with proposed targets for fuelling points for electric vehicles and natural gas vehicles on the horizon.
On the surface, neither of the two climate action-related initiatives seem to have any inter-connection as solutions to a cross-sectoral problem. Arguably, a general public that includes people who changed over to diesel cars a number of years ago may now be engaged with the issue of diesel not being as emissions-friendly as previously thought. They may engage with the idea that a compressed methane gas-fuelled truck could be better for clean air than a diesel one.
A few steps on, they may be interested to know that natural gas is a straightforward causeway to renewable biomethane in transport. Renewable biogas can be generated sustainably from farming and agri-food by-products, residues and past-use-by-date food that unfortunately cannot be eaten.
A renewable heat incentive could develop a market for renewable biomethane, not only for large heat users, but also for large transport vehicles such as trucks and buses. The climate action challenges are cross-sectoral and the solutions can be cross-sectoral too.
Transition to low-carbon economy
Minister Naughten recently referred to comedian Oliver Callan’s description of him as “the Minister for the Apocalypse”. There is a challenge in that a worst-case scenario is looming, but the transition to a low-carbon economy will take time, significant behavioural change and space to pilot innovations.
Recently, we saw the Nobel Prize for economics awarded in the field of behavioural economics. The most important word in the actual title of Minister Naughten’s department may be the word ‘action’. Perfection is the enemy of good springs to mind. Ireland is on a burning platform and faced with cross-sectoral environmental policy challenges. Climate change impacts our environment and our economic competitiveness. The solutions for Ireland look like they will need to be inherently cross-sectoral, too.
The SEAI has estimated that the cost to Ireland of not meeting our overall renewable energy targets may be in the range of €100 million to €150 million for each percentage point Ireland falls short of the overall 16% renewable energy target.
The Oireachtas Committee on Budgetary Oversight has recently warned about the potential fines facing us for non-compliance, estimating a potential sum of €610 million by 2020. A portion of that level of funds could have positive near-term impacts on meeting Ireland’s renewable heat and transport requirements.
Innovation, by its nature, is an uncertain journey to a new paradigm. Arguably for Ireland, climate action requires innovating now to give space to workable solutions before we have unwanted scenarios forced upon us in less than a decade.
Two apparently separate, and yet connected, steps for climate action have been taken in Budget 2018. Hopefully, they will prove examples of further action to build on in the coming year.
Pádraic Ó hUiginn is a research fellow and programme manager for environmental policy innovation projects at NUI Galway’s Ryan Institute. He was part of the BioBase N.W.E. consortium that won an EU RegioStars Award for innovation for SMEs in Brussels (on Budget day). He has also worked at four different government departments, including environment, as a policy and communications adviser.