Ireland must hike up carbon taxes on specific sectors, says IEA

The International Energy Agency (IEA) has recommended that Ireland implement automatic upward adjustments of carbon taxes on specific sectors missing carbon emissions reduction targets over the next decade.

The recommendations are in its 2019 evaluation of Ireland’s energy policies, which highlights failures to achieve reductions in the transport, agriculture and heat sectors.

Speaking in Dublin, IEA deputy executive director Paul Simons said carbon tax revenues should be spent on energy efficiency and on climate activities to benefit consumers.

Ireland would remain dependent on natural gas in coming decades, the review concludes, and if no new gas fields are found, the most cost-effective alternatives would have to be identified to maintain security of supply.

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These included use of an interconnector directly to Europe – to avoid reliance on the UK in a post-Brexit scenario – and the deployment of liquefied natural gas (LNG) backed by fixed or floating LNG terminals.

Mr Simons paid tribute to Irish innovations which should be adopted by other IEA members. “Ireland has become a world leader on system integration of renewables thanks in large part to strong policy and commitment to innovation.”

Building on this success, he advised the Government to urgently implement additional climate measures and monitor their progress “to get the country back on track for long-term targets”.

‘Uniform price signal’

Responding to the review, Minister for Climate Action and Environment Richard Bruton said he favoured a uniform price signal for every sector using carbon as a fuel source. But he was open to considering sector-specific carbon taxes increases where targets were not being met as recommended by the IEA.

The review acknowledged notable progress made in recent years in using renewable energy in electricity generation, he noted – Ireland now has the third highest share of wind-generated electricity among all 30 IEA member countries.

Mr Bruton accepted the IEA recommendation that concrete plans and pathways must be developed on carbon emissions reductions, noting that Ireland’s energy system was still heavily reliant on fossil fuels. They had in some ways transformed the economy but it was now locked into their use, and there was “a compelling obligation to reverse that trend”.

“While recovery has seen some improvement in take up of renewables and in energy efficiency, Ireland has not broken the link between economic growth and prosperity and greenhouse gases,” he added.

He confirmed carbon would be set on a rising price trajectory in coming years, and considered for the 2020 budget, but that would be a matter for the Minister for Finance.

‘Policy roadmap’

His all-of-Government plan due to be published in coming weeks would provide “the clear targets and the policy roadmap which we need” and would streamline planning to address uncertainty on investment in projects. This included reform of foreshore legislation to facilitate offshore wind development.

“However, the first challenge is to secure widespread buy-in across our entire community on the vital importance of the journey which we need to go on. This can only be achieved by all sections of our community working together,” he said.

Green Party leader Eamon Ryan said, however, in his view the IEA report did not make sense, as it was calling for major reductions in emissions while advocating fossil fuel extraction, notably of gas. Ireland was not going to meet its obligations on the Paris Agreement, if fossil fuel expansion was allowed go unhindered.