Ireland expected to benefit from falling price of carbon credits as EU peers meet targets
about 17 hours ago
Ireland and Luxembourg are the only two EU countries projected to miss both their emissions and renewable energy targets in 2020
The fines hanging over Ireland for missing its EU climate targets in 2020 are likely to be significantly lower than previously thought.
According to climate expert Paul Deane, the Government can expect to be hit with a climate bill of up to €455 million for failing to meet both its emissions and renewable energy targets. That is about 25 per cent lower than the previous projection of €610 million.
The lower number reflects the falling cost of carbon credits, which are typically purchased in lieu of fines. These credits have become cheaper because most EU states are now expected to meet or exceed their climate targets, resulting in a surplus of emission credits. This will effectively allow Ireland and other laggard countries buy their way out of the fines for less.
Ireland and Luxembourg are the only two EU countries projected to miss both their emissions and renewable energy targets in 2020.
Dr Deane, who works with University College Cork’s environmental research institute, estimates the cost of compliance on Ireland for a 14-16 per cent breach of its headline emissions target – what the Environmental Protection Agency (EPA) is predicting – will be €80 million to €140 million.
He based the calculation on the cost of carbon emissions under the current European Emission Trading Scheme and the assumption that prices will not rise because of the high rates of compliance across Europe.
According to Sustainable Energy Authority of Ireland, Ireland is also likely to miss its renewable energy target – which commits the State to generating 16 per cent of its total energy requirements from renewable sources by 2020 – by around 3 per cent.
Luxembourg has already started buying credits to meet its likely liability. Using Luxembourg’s recent co-operation deal with Lithuania and Estonia as a guide – it involved the statistical transfer of renewable energy targets – Dr Deane estimates the cost of compliance to Ireland for breaching this target will be between €68 million and €315 million.
The big offender in the renewable energy sector here is home heating. The State’s heavy reliance on traditional fossil fuels, such as oil, gas and peat, for heating buildings makes it an outlier internationally.
Dr Deane said Ireland was relatively unique in European terms in failing to meet both its emissions and renewable energy targets. He said missing the 2020 targets would also put the State on the back foot in terms of achieving its 2030 targets.
Luxembourg’s decision to buy credits ahead of the 2020 deadline may trigger the Government to follow suit. However, a Department of Communications, Climate Action and Environment spokeswoman said the focus of the department remained firmly on meeting the State’s 2020 target and on implementation of renewable energy measures.
“Nevertheless, contingency planning has commenced in the department to explore the potential extent, mechanisms and cost of addressing our target within the framework of the directive.”
Green Party leader Eamon Ryan said: “The failure with our emissions is costing us not just in fines but also in damage to our international reputation and the missed economic opportunity inherent in not being part of the new clean industrial revolution that is taking hold.”