New supports will be needed for people as annual energy bills remain 90 per cent higher for gas and more than 60 per cent higher for electricity compared with pre-energy crisis prices, Government officials have warned.
People face increased costs in the coming years despite a likely fall in wholesale prices for electricity and gas, with many still wrestling with arrears, according to briefing documents from the Department of Climate and Energy.
The papers were released on Wednesday and are notable as officials predicted a need for targeted support as people will have to pay for the transition to sustainable energy. Increases in charges are set to be associated with security of supply renewable energy subsidies, grid maintenance and expansion, and “market imperfections”.
The documents, provided to Minister for Energy Darragh O’Brien in January, highlight a continuing high level of energy poverty as, officials said, estimated annual bills remain 61 per cent higher for electricity and 90 per cent higher for gas than they were before the steep rise in energy prices that began in December 2020.
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Prices advanced further when Russia invaded of Ukraine, and high prices have persisted. “Weighted market average for estimated annual bills are [at present] €1,779 for electric and €1,503 for gas,” officials noted.
A total of €3.3 billion in credits to ease electricity bills –€1,450 per householder – was paid out, yet “approximately 230,000 electricity customers and 162,000 gas customers are in arrears”. This, the official said, represents 10 per cent and 24 per cent of the electricity and gas markets respectively.
Minister for Public Expenditure Jack Chambers said last month there would be no more energy credits. In a separate briefing document, his department said the credits should be avoided in future budgets despite concerns electricity prices will continue to rise over the next five years.
Department of Energy officials said “targeted supports” will be required to provide for those least able to pay and to reduce the number of customers in arrears”.
“Electricity prices will remain elevated as consumers are funding the transition. Affordability and competitiveness must remain central to the transition,” they advised.
The Republic has the second highest electricity prices in Europe.
The officials said a revised energy poverty campaign and measures encouraging a reduction in demand will be “essential” in supporting households and small and medium enterprises to lower their energy costs, the officials said.
On the Republic’s 2030 commitment to halve carbon emissions, the department said most recent assessments indicate “we are off-track in meeting this target”.
This means sectoral emissions ceilings applying to the 2026-2030 period will “need to be reset this year”.
This will place additional decarbonisation demands on key sectors such as transport, agriculture and energy production, said the department.
This will inform a recasting of legally binding targets and be incorporated into the Government’s 2026 climate plan, it said.
On 2040 targets, a document to party leaders highlights the European Commission’s “non-binding recommendation” of a 90 per cent reduction in greenhouse gases (GHGs), which would place demanding additional requirements on all sectors in Ireland, if adopted.
The document does not outline the State’s position on this revised target, while additional commentary on the issue is redacted. This target was not included in the programme for government.
On agriculture, the country’s largest source of emissions, the department highlighted a “growing scientific consensus for adopting different approaches to classifying methane and all GHGs in international and national accounting of emissions”.
While this may result in less onerous demands on Irish farmers to decarbonise, officials said any new position will “need to be developed carefully” in co-operation with relevant agencies and departments, particularly the Environmental Protection Agency, Department of Agriculture and European Union.
