The carbon budget will test the Coalition’s mettle – so what happens next?

Sectoral ceilings mean good performers and laggards soon become obvious

The carbon tax issue has already shown how contentious penalising people for their emissions can become, especially in heightening political anxiety among rural TDs. Inevitably, the rollout of the first carbon budget is set to greatly add to that strain.

Legally-binding climate pollution targets have now been set in law by this week's Oireachtas votes, which applies an overall limit on the amount of carbon that can be expended in the economy over the next decade.

It was described as “a vital milestone on the road to sustained climate action” as the carbon budgets for 2021-2025 and 2026-2030 were adopted on a cross-party basis, with only eight TDs opposing the motion. That level of consensus may be historic given the scale of ambition, but this is where rubber meets the road and the full implications quickly become clear.

A carbon budget represents the total amount of emissions that may be emitted in the State during a five-year period, measured in tonnes of carbon dioxide equivalent. The hard political reality is overall limits are now locked in, restricting the ability to intervene politically say, for instance, to ease impacts on farmers.


The 2021 Climate Act is clear; revising a budget can in most instances only be done if “there are significant developments in scientific knowledge in relation to climate change” – though there is more manoeuvrability in the second budget, depending on performance.

Moreover, in the first iteration, if one sector fails to deliver in limiting its emissions, others have to make up the difference. Good performers and laggards will soon become obvious.

Carbon maths

The carbon budget up to 2025 requires emissions to reduce by 4.8 per cent on average each year for five years. The budget up to 2030 requires an 8.3 per cent on average cut each year. That adds up to transformational change for the economy and society, though backloading towards the end of the decade is not without risk.

The key figures are a limit on emissions for 2021-2025 of 295 million tonnes of CO2 and a 200-million-tonnes-CO2 limit for 2026-2030, relative to a 2018 baseline. The budgets must be consistent with emissions being cut to 33.5 million tonnes CO2 by 2030.

Sectoral ceilings will be based on these limits recommended by the Climate Change Advisory Council. The electricity sector has to do most by cutting emissions by 70-80 per cent up to 2030, as increased electrification will be the main driver in decarbonising the economy.

Agriculture faces an emissions cut of 21-30 per cent but a Government commitment to reduce levels of “superwarming” methane gas in the sector means the cut will have to be at, or close to, the higher figure.

Transport and housing have been set target ranges of 45-55 per cent, while carbon-intensive industry will need to cut emissions by 40-50 per cent.


Ministers and their departments are already working out how the budget will apply to them; in effect attempting to convert those ranges into a definitive figure, which will have implications for most of their activities and spending. It is understood this will be completed by June, if not by the Dáil’s summer recess.

Within that time, Ministers have to come back to Government with their ceilings, which are then approved by Cabinet. But, significantly, sectoral ceilings do not have to go back before the Oireachtas for approval. They do, however, have to line up with economic “ceilings”, ie agreed spending.

In transport and agriculture (tied into land use) setting a figure is relatively straightforward but, for example, in enterprise and the public sector it will be more challenging because they have a diverse range of activities within their ambit. An added complication is having to factor in ease of implementation; when can momentum be achieved – how long will it take to ramp up actions to cut emissions?

Consideration of human behaviour is also critical. So in transport, for instance, is there an affordable technology available to users – and how do you get people to adapt to a change, say, in how they go about in urban areas? Clearly, switching to public transport or buying an EV is easier than retrofitting a house.

Up-front costs can be substantial, so moves may appear to be prohibitively costly, yet it is a better picture when savings over lifetime or quick payback in terms of reduced energy bills are considered.

The crunch issue in agriculture is indication certain technologies are leading to increased efficiencies and less greenhouse gases but have their limits. What happens beyond that point? To what extent do you continue the current production model? Do you limit food production and/or incentivise farmers to diversify while supporting their contribution in providing carbon sinks through afforestation or rewetting land?

The political stress in trying to reach a specific limit will be a separate issue, especially among parties in the Coalition. Getting the balance right will finally impose national discipline on the country’s emissions. Failing to do so, or not securing agreement on key targets, would make it difficult for the Government to survive.