The goal of halving Ireland’s carbon emissions by 2030 could come with a cumulative cost of at least €6 billion, according to the State’s fiscal watchdog.
The Irish Fiscal Advisory Council (IFAC) said the main expenses in fulfilling Ireland’s climate change target of a 51 per cent reduction in emissions over the next six years would come in three areas. These were a fall in revenue from vehicle and motor taxes due to the electrification of the fleet, the cost of retrofitting of buildings, and the provision of supports to farmers for implementing emission cutting measures.
In a statement sent to the Oireachtas Committee on Budgetary Oversight, IFAC chair Prof Michael McMahon said the Environmental Protection Agency (EPA) has projected that Ireland will reduce greenhouse gas emissions by only 29 per cent in 2030, rather than by 51 per cent. It has been estimated that the cost of non-compliance by 2030 could be up to €3.5 billion cumulatively.
The statement was prepared in advance of IFAC appearing before the committee this week, but the meeting was postponed due to some Oireachtas business being suspended on Wednesday following the death of former taoiseach John Bruton earlier this week.
The research into estimating the fiscal impact of the climate transition was carried out by IFAC’s Killian Carroll and Eddie Casey, but the modelling proved challenging as it was based on policies that have not yet been decided. Therefore, their research explored a number of high cost, and lower cost, scenarios, with the authors pointing out that the expenditure path was uncertain.
It found that the highest outlays would likely occur between 2027 and 2030 and would require public spending of between 0.7 per cent and 1.2 per cent of national income, or €2.6 billion to €4.4 billion. It predicted that costs would fall after that, settling at 0.4 per cent to 0.7 per cent of national income per year.
Retrofitting buildings and farming supports would be responsible for most of the costs, they found. The research also suggested that significant State intervention would be required to retrofit homes and in the “high spend” scenario, this could cost as much as €1.3 billion annually between 2026 and 2030, rising to an average of €1.8 billion annually from 2031-2050.
The statement points out that while the impacts are large, the costs of inaction, particularly if mirrored by other countries, “could be far larger if it means a greater likelihood of more catastrophic outcomes related to climate change”.
“Setting out plans now will make the disruption less pronounced. Introducing changes in a more gradual and phased way rather than waiting too long and having to take more drastic actions is preferable,” IFAC stated.