The energy crisis dominates everything about Budget 2023 along with fears about runaway costs for heating and electricity, as “fossilflation” has become the single biggest factor behind rising inflation.
For some, rising bills inevitably pushes aside the actions needed to address an accelerating climate crisis. Unquestionably, it has heightened concerns that price will over-ride urgent climate actions for the immediate future and will result in increased smoky solid fuel use over the coming winter. Then there is a continuing failure to address Ireland’s persisting carbon emissions problem.
There is, it should be acknowledged, a wide range of climate actions threaded through Budget 2023 – many backed by increased funding; some guaranteed for coming years. Meanwhile, carbon taxes continue to do their thing despite the scepticism of some – they will hit €623 million next year and be channelled into a range of measures including making homes warmer and better insulated.
The big question, however, is are they sufficient to help arrest rapidly quickening climate disruption and to wean the State – one with extremely weak energy security, importing €1 million worth of oil and gas every hour – away from fossil fuels?
The carbon tax increase results in a moderate increase in the price of fossil fuels, just over 2 cents on a litre of petrol and diesel, but in a neat manoeuvre, this will be offset – for a few months at least – by an equal reduction per litre of the National Oil Reserves levy so there will be no increases at the pump.
This year’s €7.50 increase on fossil fuels from €41 to €48.50 per tonne of CO2 equivalent was as anticipated. It is enshrined in law with a view to reaching €100 per tonne by 2030. The Government resisted calls from Sinn Féin and some Opposition TDs to defer the increase this year.
In spite of an acute energy crisis that is set to get worse, the increases can be justified as revenues raised are ring-fenced to protect the poor who are overly dependent on fossil fuels, to retrofit thousands of homes, to extend sustainable travel and to help farmers decarbonise their production systems.
The reality is pricing carbon emissions and penalising people for their emissions is an essential tool for weaning off fossil fuels, though it is never popular politically, and now more so than ever.
A key reason why voters hate carbon pricing is that many believe it does not cut emissions, but the evidence shows the opposite – pricing emissions is effective. It shifts production and consumption away from carbon-intensive goods and services on to low-carbon alternatives, no matter what the naysayers say.
The problem for Ireland, however, is its rising emissions coupled with strong economic growth. Decarbonisation of transport and agriculture is urgently needed as they are the largest sources of carbon dioxide.
Given the scale of the climate challenge, Budget 2023 might be regarded as a holding exercise on the climate front as the immediate consequences of the energy crisis are being addressed.
Budgets are all about getting the balance right. Minister for Climate Eamon Ryan insisted energy supports versus climate action was balanced correctly and “addressing the energy crisis will also accelerate the response on climate”.
Dismissing the view that “the [Ukraine] war distracts us from climate”, he cited investment in public transport and retrofitting houses to end fossil fuel heating of homes.
In addition, he accepted things need to happen quickly, pointing to the need to get consenting, planning and contracting for offshore energy in place within the remaining three years of the Government – a big ask.
Environmental groups including Friends of the Earth welcomed some of the short-term measures but believed the overall package “still lacks the scale and urgency to drive the energy revolution we need to get off unreliable, skyrocketing fossil fuels for good”.
EY Ireland’s head of sustainability, Stephen Prendiville, saw the need for greater urgency too: “The science... says we need to accelerate our climate action and, in light of this, there is more work to do to help increase the pace of our climate or sustainability ambitions. Our climate ambition and sustainability goals require that we adapt and think differently about how we function as an economy.”
The Government is throwing vast sums of money at the energy crisis in the hope it gets the balance right in also ensuring climate action is scaled up and that Ireland halves its emissions by 2030.
If too much money has been spent on the former and not enough on the latter, achieving that target will be cast in doubt – and the ultimate target of net-zero emissions by mid-century risks becoming unachievable.