2. GENERAL ENERGY POLICY

The service sector accounted for about 63% of the GDP in 2017, the industry sector accounted for 36% and the agricultural sector for 1%. Yet, the agricultural sector, which is primarily grass based, is crucial to Ireland’s economy. The agri-food sector is the most important indigenous manufacturing sector, accounting for 10.7% of Ireland’s merchandise exports and employing 8.4% of the working population (DAFM, 2018).

Despite its low share of the GDP, the agriculture sector is the largest single contributor to Ireland’s overall greenhouse gas (GHG) emissions, accounting for 33% in 2017. 1 Ireland’s GHG profile is unique among European Union (EU) member states, with the highest national proportion of agriculture emissions. This presents a particular challenge for Ireland in meeting future GHG emissions reductions. However, there are promising pilot projects ongoing in relation to production of biogas (see the chapters on “Natural gas” and “Energy efficiency and residential heating”).

As a small, open economy, Ireland is dependent on international trade and influenced by developments in the global market. Ireland and the United Kingdom are close trading partners. In 2017, 13.4% of overall Irish goods and services exports were destined for Great Britain and Northern Ireland. There is uncertainty how the decision of the United Kingdom to leave the European Union will affect the economy of Ireland, including in the energy sector. Ireland imports about 63% of oil products from the United Kingdom. All of Ireland’s gas and electricity interconnectors are with the United Kingdom. This might raise issues of security and diversity of supply if the energy regulatory and market frameworks between Ireland and the United Kingdom diverge (see the chapters on “Natural gas” and “Electricity and renewable electricity”).

Supply and demand

Ireland’s energy system is characterised by a high share of fossil fuels, despite a rapid increase in renewable energy sources (Figure 2.2). Fossil fuels accounted for 90% of the total primary energy supply (TPES)2 in 2017.

In 2016, the transport sector accounted for 37% of the total final consumption (TFC),3 followed by the industry (25%), residential (24%) and commercial (14%) sectors. Natural gas and electricity are consumed across most sectors, with the largest demand in the commercial sector, whereas oil dominates in the transport sector. Ireland also consumes coal and peat, particularly in residential and industrial sectors.

TPES declined in the aftermath of the global financial crisis in 2008. It dropped from 15 million tonnes of oil equivalent (Mtoe) in 2007 to 12.8 Mtoe in 2014, but has picked up in recent years. In 2017, TPES was 13.7 Mtoe, an 8% decline from 2007 but a 7% increase from 2014 (Figure 2.3).

1The energy sector, which includes transport and energy-related industry emissions, represented 62% of total GHG emissions.

2TPES is made up of: production + imports - exports - international marine and aviation bunkers ± stock changes. This equals the total supply of energy that is consumed domestically, either in transformation (e.g. power generation and refining) or in final use.

3The TFC is the final consumption of energy (electricity, heat and fuels, such as natural gas and oil products) by end users, not including the transformation sector (e.g. power generation and refining).

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Figure 2.2 Overview of Ireland’s energy system by fuel and sector, 2016/17

Low domestic energy production makes Ireland dependent on energy imports.

*Includes international marine and aviation bunker fuel (oil), which is not part of TPES.

**Other renewables includes hydro and solar.

Notes: Consumption data (TFC) are for 2016; supply data for 2017 are provisional. Mtoe = million tonnes of oil equivalent; TFC = total final consumption.

Source: IEA (2018), World Energy Balances 2018, www.iea.org/statistics/.

Figure 2.3 TPES by source, 1973-2017

TPES slightly decreased in 2017 due to the decline of fossil fuel supply in the energy mix, mostly in electricity generation.

* Negligible.

Source: IEA (2018), World Energy Balances 2018, www.iea.org/statistics/.

Oil is the largest energy source in Ireland, accounting for nearly half of TPES. Oil experienced the strongest impact of all fuels from the financial crisis, with a fall of 25% from 2007 to 2014. In recent years, oil supply has recovered slightly, by 7% from 2014 to 2017, due to growing demand in transport. Natural gas is the second-largest energy source, accounting for 32% of TPES. Domestic gas production has increased strongly since the beginning of operations of the Corrib gas field in late 2015. Ireland was nearly 67% self-sufficient in natural gas in 2017. The remaining energy supply came from coal, which accounted for 8% of TPES, peat (5%), biofuels and waste (5%), and wind and other renewables (5%).

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Renewable energy has steadily increased over the last decade. In 2017, biofuels and waste represented the largest share of renewable energy in TPES, with a 5.0% share, just above wind at 4.7%. Biofuels and waste are used in several sectors, with the largest share in the industry and transport sectors, whereas wind power accounts for nearly a quarter of total electricity generation.

Despite the increased share of renewable energy in TPES in recent years, Ireland had the seventh-highest share of fossil fuels in TPES among International Energy Agency (IEA) member countries in 2017 (Figure 2.4). However, while Ireland had the secondhighest share of wind in TPES (after Denmark), it also had the highest share of peat and fourth-largest share of oil in TPES of IEA countries.

Figure 2.4 Breakdown of TPES in IEA countries, 2017

Australia

Netherlands

Japan

Poland

Luxembourg

Mexico

Ireland

Greece

Turkey

Korea

Estonia*

United States

Italy

Germany

United Kingdom

Portugal

Spain

Canada

Czech Republic

Belgium

Hungary

Austria

Slovak Republic

Denmark

New Zealand

Switzerland

Norway

France

Finland

Sweden

Ireland had the seventh-highest share of fossil fuels in TPES among IEA countries, and the second-largest share of wind in 2017.

* Estonia’s coal is represented by oil shale.

Source: IEA (2018), World Energy Balances 2018, www.iea.org/statistics/.

Energy production and self-sufficiency

Ireland’s total domestic energy production reached a new peak of 4.9 Mtoe in 2017 (an increase of 2.5 times since 2015) due to starting new natural gas production. However, Ireland still imports most of its energy needs, as energy production covers only 35% of TPES. The largest indigenous energy source is natural gas, which represented more

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than half (59%) of the total domestic production in 2017. The rest was peat (16%), wind (13%), biofuels and waste (11%), and small shares of hydro (1%) and solar (0.3%).

Ireland has had a low total energy production over the last two decades due to a sharp fall in natural gas production. However, it picked up rapidly in 2016 owing to the opening of the Corrib gas field in December 2015 (Figure 2.5). Consequently, Ireland’s total energy production as a share of TPES4 increased from 15% in 2015 to 35% in 2017, which contributes to Ireland’s energy security.

Peat production varies from year to year, but the 10 year average is around 0.8 Mtoe per year. Ireland has no domestic oil production, and relies completely on imports: crude oil from Norway and oil products from the United Kingdom. Furthermore, since 1995, Ireland’s total annual coal supply of around 1.3 Mtoe has been imported, mainly from Colombia recently.

Figure 2.5 Energy production by source, 1973-2017

Total energy production has increased in the last decade due to growth in renewable energy production and a steep rise in natural gas in 2016.

* Negligible.

Source: IEA (2018), World Energy Balances 2018, www.iea.org/statistics/.

Energy consumption

Ireland’s TFC increased gradually in the 1990s, peaked at 12.8 Mtoe in 2006 and then declined to 10.3 Mtoe in 2012. The decline in energy demand was due to the economic downturn after the financial crisis that commenced in 2008. Since 2013, the TFC has picked up slightly to 10.9 Mtoe in 2016, as a result of higher energy consumption in the transport and industry sectors (Figure 2.6).

The transport sector is the largest energy consuming sector. It had a share of 37% in 2016, and road transport accounted for 97% of this consumption. The shares of the residential and industrial sectors each accounted for around a quarter of the TFC.

4 TPES does not include bunker fuel for international aviation and international navigation.

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As in TPES, oil is the largest energy source in Ireland’s energy demand, at 57% of the TFC in 2016 (Figure 2.7). Most oil was consumed in the transport sector, but it accounted for a 38% share in the residential sector, which was the highest share among IEA member countries. Electricity was the second-largest source, at 21% of the TFC, followed by natural gas at 17%. Electricity and natural gas accounted for a considerable share in all sectors except transport. Coal accounted for 6% and peat for 7% in the residential sector, despite a declining trend.

Figure 2.6 TFC by sector, 1974-2016

Total energy consumption has increased in recent years after a decline due to the financial crisis; the largest growth has been in the transport sector.

*Industry includes non-energy consumption.

**Commercial includes commercial and public services, agriculture and forestry. Source: IEA (2018), World Energy Balances 2018, www.iea.org/statistics/.

Figure 2.7 TFC by source and sector, 2016

Oil dominates Ireland’s TFC, especially in the transport sector; electricity and natural gas account for considerable shares in all other sectors.

*Industry includes non-energy consumption.

**Commercial includes commercial and public services, agriculture and forestry.

***Negligible share in the residential sector.

Source: IEA (2018), World Energy Balances 2018, www.iea.org/statistics/.

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