2. General energy policy

Key data

(2017 provisional)

TPES: 13.7 Mtoe (oil 45.7%, natural gas 31.5%, coal 7.8%, peat 5.2%, biofuels and waste 5.0%, wind 4.7%, hydro 0.4%, solar 0.1%, electricity exports -0.4%), -8% since 2007

TPES per capita: 2.9 toe/capita (IEA average 4.1 toe/capita)

TPES per unit of GDP: 43 toe/USD million PPP* (IEA average: 106 toe/USD million PPP)

TPES per unit of GNI*: 67 toe/USD million**

Energy production: 4.9 Mtoe (natural gas 58.7%, peat 15.8%, wind 13.2%, biofuels and waste 10.7%, hydro 1.2%, solar 0.3%), +245% since 2007

*Gross domestic product in USD million in 2010 prices and PPP (power purchasing parity). **Gross national income in USD million in 2017 prices, without PPP.

Country overview

The island of Ireland is shared between Ireland and Northern Ireland, which is part of the United Kingdom. The total land area of Ireland is 70 273 square kilometres. It is bounded in the west and north-west by the Atlantic Ocean, in the south by the Celtic Sea, in the east by the Irish Sea and in the north-east by Northern Ireland. The climate is temperate maritime, strongly influenced by the North Atlantic Current. It consists of mild winters and cool summers, with a high degree of humidity throughout the year (Figure 2.1).

Ireland is a parliamentary democracy; there are 26 county councils, three city councils, and two city and county councils. Local authorities play a key role in meeting Ireland’s energy targets, particularly for climate change and energy efficiency. The government of Ireland is a minority government of Fine Gael and independent members, and has been in place since June 2016. The next election has to be held by February 2021.

Ireland had a population of 4.75 million in 2016, of which slightly more than 1.3 million resided in Dublin city and county. This was an increase of 3.8% for the total population and 5.7% for Dublin city and county above the 2011 level. Other large urban centres include Cork on the southern coast, and Limerick and Galway on the western coast. Ireland is a sparsely populated country, and has the highest percentage of population living in rural areas in the European Union.

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ENERGY INSIGHTS

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2. GENERAL ENERGY POLICY

Figure 2.1 Map of Ireland

UNITED

KINGDOM

Wexford•

• Tralee

This map is without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

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2. GENERAL ENERGY POLICY

Population growth in urban areas was 4.9% over the period 2011-16. This exceeded the national average and was spread out over more urban centres than in earlier periods. The Irish government expects the population to grow by 1 million by 2040.

The Irish economy has recovered rapidly from the consequences of financial crisis, which commenced in 2008. Nominal gross domestic product (GDP) in 2015 exceeded the pre-crisis 2007 peak level. However, this is partly the result of a statistical peculiarity in 2015 (see Box 2.1).

Box 2.1 GDP development and alternative measures of economic growth

Ireland has experienced an exceptionally high growth of the GDP in recent years, resulting from specific features of the country’s economy. The annual growth in the real GDP went from 8.3% in 2014 to a staggering 25.6% in 2015, as several unique events happened simultaneously. One was the relocation of intellectual property assets of a few multinational enterprises to Ireland. This resulted in a substantial increase in the Irish capital stock in 2015, strongly influencing the GDP. Another factor was that Ireland’s aircraft leasing industry, which is of global significance, was not included in the national accounts before 2015.

However, the real economic value from these activities does not (fully) accrue to Irish residents but (mainly) to the foreign owners of capital assets based in Ireland. The GDP methodological concept therefore overstated the living standards of Irish residents and rendered it an impractical indicator for the underlying economic activity in the country. The GDP concept is not useful to guide policy makers in such circumstances.

The high GDP growth in 2015 has implications for the energy sector, even though transfer of intellectual property and aircraft leasing do not affect energy use. Ireland’s energy and carbon intensities measured per unit of GDP dropped markedly in 2015. This was mainly due to rapid GDP growth, rather than improvements in energy efficiency or emissions reductions. The Central Statistics Office of Ireland therefore convened an Economic Statistics Review Group in 2016 to explore an alternative measure for the GDP. The group recommended the use of a modified gross national income (GNI*) indicator to exclude globalisation effects that disproportionally affect measurement of the size of the Irish economy. The comparison of growth in the GDP and the GNI* in Table 2.1 shows the differences.

Table 2.1 Annual percentage growth/decline of GDP and modified gross national income, 2007-17

Note: All in current market prices.

Sources: CSO (2017), National Income and Expenditure 2017, www.cso.ie/en/releasesandpublications/ep/p- nie/nie2017/mgni/; OECD (2018), Economic Survey of Ireland 2018, www.oecd.org/eco/surveys/economic- survey-ireland.htm.

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