6. ENERGY AND CLIMATE

Public transport and modal shifting

In tandem with strong economic recovery, demand for transport services, and therefore also transport congestion, are increasing. The government is addressing these issues by investing in maintaining and expanding the public transport infrastructure. EUR 2.6 billion is allocated for investments in maintenance and asset renewal, and EUR 1 billion will be invested to target congestion and capacity issues, from a total capital allocation of EUR 3.6 billion for public transport for the period 2016-21 (DCCAE, 2017a). The investment in public transport will create viable alternatives to private car use.

The government has earmarked EUR 100 million for Smarter Travel Programmes. These aim to improve access to alternatives to private cars through the increased availability of public transport links and routes that are cycle and walk friendly. Those policies are having a clear impact. The percentage change in modal shift in Dublin has increased from 59% of journeys made through sustainable means in 2010 to almost 70% in 2017 (NTA, 2018).

Improving the fuel economy of the vehicle fleet

A combination of EU regulations for the fuel economy of passenger vehicles and the changes made to vehicle taxation since 2008 have had a quantifiable impact on the availability and deployment of fuel-efficient cars on the Irish market. Vehicles are categorised in seven graduating bands (A to G) based on CO2 emissions levels. Lower emission vehicles are levied with lower VRT and motor taxes to influence purchase decision in favour of fuel-efficient vehicles.

In January 2013, band A (up to 120 grammes carbon dioxide per kilometre [gCO2/km]) was split into four bands and band B (121-140 gCO2/km) into two bands, and the VRT and motor tax were rebalanced accordingly. A zero emissions band for EVs was introduced in 2013 for motor tax purposes only.

The introduction of the tax differentiation has markedly changed the proportion of new passenger cars purchased within the different CO2 bands. Only 12% of new passenger cars purchased were in the A band and 45% in the B band in 2009. But this rose to 54% of purchases in the A bands in 2012, with 38% of purchases in the B bands. Just 4.3% of all new passenger cars had CO2 emissions of 140 gCO2/km or higher in 2017 (CSO, 2018).

The government is carefully monitoring the need to rebalance taxes to stimulate future improvements in energy efficiencies and environmental effects associated with newly emerging vehicles types.

Power sector emissions

Emissions from the electricity sector are covered under the ETS. Ireland has seen a strong increase in renewable electricity and is one of the leading countries in integration of variable renewable energy. But the continuous use of peat and coal in the electricity sector will be a key determinant of future emissions from power generation (Box 6.1).

Emissions relating to the production of electricity consumed by industry accounted for 56% of the total industrial energy-related CO2 emissions. This was more than all the other fuels used by industry combined (SEAI, 2018b). Emissions reductions in the power sector will therefore specifically affect the industry sector.

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Box 6.1 Role of peat in Ireland’s electricity generation

Ireland has the highest share of peat use among IEA member countries. Peat accounted for 7.7% of Ireland’s electricity generation in 2016 and was responsible for 19.3% of CO2 emissions from the electricity sector (figure 6.10).

Peat use for power generation is subsidised through a public service obligation (PSO) that will expire at the end of 2019 in line with the government’s climate objective to move to lower-carbon generation sources. Peat is expected to be replaced by natural gas in the electricity mix.

There are three peat-fired power stations operating in Ireland. The Bord na Móna’s Edenderry peat-fired power station shifted to co-firing with biomass after its PSO support expired in December 2015. The plant is now receiving support under REFIT 3 (see the chapter on “Electricity and renewable electricity”) for co-firing up to 30% of biomass. Bord na Móna announced in October 2018 that it plans to stop using peat for electricity generation by 2028 (2 years earlier than previously planned), and will instead use alternative energy sources.

The two other peat power stations (the ESB West Offaly and Lough Ree plants) will receive the PSO for peat until the end of 2019. It is expected that the termination of PSO support will provide an incentive to convert to alternative, low-carbon generation technologies. The two plants are eligible for support under REFIT 3 of up to 30%, provided they switch to co-firing with biomass and receive planning and environmental consents.

Peat is also used for residential heating; it accounted for 7.5% of the total residential energy demand in 2016. A portion of peat usage is not reflected in official statistics as it is not commercially obtained but harvested privately.

There is also one coal-fired plant in Ireland (Moneypoint), which is owned and operated by the ESB. The plant provides competitively priced baseload electricity generation. Coal accounted for 11.9% of the total electricity generation in 2017. Moneypoint will likely cease coal-fired generation in 2025, which will be replaced by a low-carbon generation technology. The decision about the future of Moneypoint will be taken before 2020.

Figure 6.10 CO2 emissions from power generation by fuel source and electricity generated, 2016

Peat and coal represent a significant share of CO2 emissions from power generation in Ireland, due to their high emission factors.

Note: GWh = gigawatt hour; kgCO2 = kilogramme of carbon dioxide; kt = kilotonne; kWh = kilowatt hour. Source: IEA (2018a), CO Emissions from Fuel Combustion 2018, www.iea.org/statistics/.

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1 The EPA includes emissions from solid fuels, other energy industries and petroleum refining, and also fugitive emissions, in emissions from the energy industry. However, these accounted for only 3-6% of the total emissions from this sector over the period under consideration.

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However, recent trends show that GHG emissions have been growing significantly since 2014 after their rapid fall linked to the 2008 financial crisis, in particular in sectors covered by the EU ESD. With the economic recovery, growth in sectors such as residential buildings and transport has not fully decoupled from GHG emissions. This has coincided with a strong rise of emissions in the agriculture sector related notably to the expansion of dairy farming.

Ireland is therefore set to miss its 20% ESD emissions reduction target for 2020 by a large margin. The current trajectory also indicates that without additional measures, Ireland is likely to fall short of the 2030 target that will be established under the new Effort Sharing Regulation. In addition, it casts serious doubts on the feasibility of the 80% GHG emissions reduction target that Ireland set itself for 2050.

Ireland’s unique emission profile implies that tackling energy sector emissions alone will not suffice to meet the 2030 targets, and that a significant and sustained policy and funding effort for agricultural emissions is required. Urgent corrective measures will be needed in all sectors to rectify the trajectory of emissions reduction.

The new policies, measures and funding put in place by the Irish government since 2017 can potentially narrow the expected shortfall. However, the extent to which these new policies will contribute is determined by the speed of their implementation across sectors. The proposed new measures outlined in the NDP are still in an early phase and the set of actions put in place in 2018 in non-ETS sectors do not appear to reflect the urgency nor the magnitude of the expected shortfall. There is also a clear role for enhancing taxation and regulation, and for employing targeted behavioural change measures.

Ireland has a strong track record of developing detailed plans that comprehensively identify and focus on the challenges ahead so that the instruments of policies are finely tuned. However, there appears to be a gap between the elaboration of plans and frameworks and the time-bound implementation of specific measures and continuous monitoring of the progress made.

An example is the transport sector where the highly ambitious objectives for the roll-out of EVs had to be sharply cut back. Even the revised target, which is only 10% of the earlier target, appears difficult to meet. These objectives, together with an array of support programmes for electric cars and vans and the roll-out of charging infrastructure, have helped with a successful first stage of development, with about 6 500 EVs already on the road. The NDP aims at a minimum of 500 000 EVs on the road by 2030 and no new non-zero-emission cars and vans to be sold in Ireland after 2030. The NDP allocates EUR 200 million to this objective. However, limited investment in the roll-out and maintenance of EV charging infrastructure may be a barrier for development of the technology. The gradual increase of the biofuel obligation in transport is likely to remain the main contributor to emissions reductions in the transport sector in the medium term.

The transport sector is not on a low-carbon pathway. Ambition for a modal shift in transport to other modes is not being met with adequate progress. There is no clear policy to facilitate modal shifting and to explore alternative means of transport, especially in urban areas. Enhanced focus on cycling, walking and car sharing (to reduce commuter traffic) should be explored in a comprehensive manner. The structure of the Irish economy and the population growth focused on the greater Dublin area offer an opportunity for an integrated look at transport and on advancing the public transport infrastructure required.

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Progress with decarbonisation of the electricity mix has slowed in recent years, despite the strong development in wind power. The Moneypoint coal power plant is scheduled to close down by 2025 and the remaining peat installations by 2030. However, the administration is still working through the implications of these decisions and the practical steps for taking them forward. The announcement of Bord ma Móna to advance the end of using peat for electricity generation by 2 years is a welcome development.

The possible impact on Ireland’s electricity demand due to potential installation of large data centres in Ireland is unknown. EirGrid has undertaken various impact assessments through its scenario planning. Data centres may put additional stress on decarbonisation of the electricity mix.

Ireland has many success stories, including the carbon tax applicable to all fossil fuels. While the rate of the carbon tax increased from EUR 15 to EUR 20 in 2014, its impact has now dissipated, and it does not unlock significant emissions reductions in non-ETS sectors. A review of the programme took place in 2018, but the government decided against including a carbon tax increase in the 2019 budget. The Department of Finance remains committed to increase the rate of carbon tax in line with Ireland’s climate change policy. A long-term trajectory for the carbon tax to 2030 will be developed during 2019.

The lack of clear signals about future increases of the tax and its long-term target level has failed to induce behavioural changes of investors and stakeholders. Other IEA countries have had encouraging experiences with CO2 tax regimes with automatic upward adjustments when preset sectoral targets are not met. The IEA encourages the government of Ireland to study the applicability of such programmes.

In line with general taxation policy, there is no ring-fencing of revenues from the tax for CO2 emissions reduction or energy efficiency measures. The IEA encourages the government to allocate incremental revenues from any future tax increases back into climate mitigation and energy efficiency measures to gain public support and to promote enhanced investments.

Progress made with climate mitigation at the local level and driven by community and individual business performance is noteworthy. Yet those achievements remain isolated at an accumulated level and do not add up to the large progress that needs to be made to meet the 2020 targets.

Ireland’s continuous population growth and strong economic performance act simultaneously as enablers and hindrances in making progress towards climate goals. Other IEA member countries, notably Switzerland, have shown that even with continuous population growth, a country can decouple economic progress from energy consumption and carbon emissions.

There is a large consensus among citizens and stakeholders in Ireland on the importance of climate action and on the opportunity for Ireland to be a global leader in clean energy transition. This has helped adoption of ambitious objectives and the rapid roll-out of new mitigation measures. The government should leverage this consensus to implement policies more aggressively. The NMP would benefit from being accompanied by a detailed roadmap with specific timelines and milestones for emissions reductions and a close-meshed monitoring framework.

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