Missing EU climate targets could leave Ireland facing a €26 billion bill
This stark warning about the cost of missing its goals comes via a joint report from the Irish Fiscal Advisory Council (IFAC) and Climate Change Advisory Council (CCAC).
It says the country's government needs to 'act now' or it could be in line to pay significant compliance costs further down the line. Plans to cut emissions that have yet to be enacted could reduce the potential costs by between €3 billion to €12 billion.
Why does Ireland have to pay for missing emissions targets?
The EU's Effort Sharing Regulation sets binding national targets for reducing greenhouse gas emissions.
Member states have to meet climate targets for five key sectors: road transport, buildings, small industry, waste, and agriculture. Each goal is adjusted based on a country's GDP, with wealthier nations having stricter requirements.
Countries that underperform will have to buy 'emissions allocations' – essentially carbon credits – from those that are overperforming in order to bridge the gap.
But the price of these allocations depends on the extent to which other EU member states achieve or overachieve on their targets. A report from Transport & Environment (T&E) last year warned that, with so many countries set to miss their goals, the scarcity of allocations could lead to a bidding war in 2030.
This makes the price of each credit challenging to predict, leading to the massive variation in the predicted cost.
'Ireland can take actions now to offset potential costs down the line,' explains Seamus Coffey, chair of the IFAC, adding that it can do so in a way that 'doesn't threaten the wider sustainability of public finances'.
In the past four years, the report also notes that Ireland has missed out on around €500 million in revenue from carbon credits it is entitled to sell. Two other pieces of national legislation on land use and forestry and the share of energy from renewable sources could also pose smaller yet significant costs.
How far is Ireland from meeting its emissions targets?
The latest data from the country's Environmental Protection Agency projects that Ireland will reduce its greenhouse gas emissions by 29 per cent by 2030. That is a long way off of its agreed target to cut emissions by 51 per cent by 2030.
While we have made some progress in reducing emissions, our pace of change is not enough to meet our national and EU climate targets.
Marie Donnelly
Chair of the Climate Change Advisory Council
It isn't alone, however, with just Luxembourg, Greece, Portugal, Spain and Slovenia overachieving on emissions cuts. Though many other EU member states are also on track to miss targets agreed under the Effort Sharing Regulation, Ireland is among the worst.
The country had the highest emissions gap per capita of any EU state at 8.7 tonnes of CO2 per person. This leaves it as one of the least likely to meet its 2030 emissions reduction target under current climate policies.
'While we have made some progress in reducing emissions, our pace of change is not enough to meet our national and EU climate targets,' says Marie Donnelly, chair of the CCAC.
Can Ireland cut its greenhouse gas emissions in time?
If Ireland's government implements its 'more ambitious' Climate Action Plan by 2030, this course of action could reduce costs by between €3 billion and €12 billion. But, the report warns, this plan is not being delivered at the 'scale of the speed required' and urges officials to 'act now or risk substantial costs later'.
Around a tenth of the country's planned capital spending to 2030 could be enough, it says. This would cover the cost of upgrading Ireland's electricity grid, reducing the cost of 700,000 new electric vehicles to less than €15,000, improving EV charging infrastructure, and supporting forestry initiatives and the rewetting of the country's wetlands.
Not doing so would be a massive missed opportunity to cut emissions, the report's authors say.
'The government must take clear and decisive action now to transition to a climate neutral economy,' Donnelly explains.
'It is better to make the investments into Irish households, communities and businesses now, rather than paying significant compliance costs in the years ahead.'
Taoiseach, Micheál Martin, has defended the government's emissions progress to the Irish press, saying the country has made 'very significant progress' over the last four years, adding that emissions have come down in the last 12 months.
While Martin admitted to not having read the report in its entirety, he pointed to a 'big wave' of upcoming spending on the electricity grid and an upcoming push for offshore wind. He also added that the government was 'determined' to continue progressing on climate.
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