Climate change isn't just about tackling the suckler herd
Brexit has garnered many business headlines over the summer. The EU's efforts to combat climate change, by comparison, have slipped somewhat under the radar. Published in July, a new proposal will have profound implications for the Irish economy in the decades ahead.
Following an intense two-year negotiation, the European Commission proposed that Ireland reduce its emissions from buildings, transport and agriculture by 30pc by 2030. The latest EPA data suggests that emissions were only 12pc below the required level, so there is a considerable distance to travel.
Much economic activity in Ireland is tied to fossil fuels, particularly in transportation. Producing beef and dairy products is also very greenhouse gas intensive. Emissions from these sectors will grow as the economy expands unless new approaches can be found. As with all regulations, there will be winners and losers.
The Irish Government will be quietly delighted with what the European Commission has put on the table. This is, firstly, because Ireland's target is significantly lower than comparably wealthy countries such as Denmark, Sweden, Germany, the UK, the Netherlands and Finland. This is in recognition of the high cost of reducing emissions from Ireland's agriculture sector.
A second boost for Ireland is that the Commission is proposing to wipe the slate clean after 2020. Under an existing agreement, between 2012 and 2020 Ireland must achieve a lower emissions target each year. Many, therefore, expected that Ireland's target after 2020 would continue on this trajectory. But in 2021, somewhat bizarrely, Ireland's target will be easier to achieve than in 2020 - perhaps somewhere in the region of 48 million tonnes of CO2 compared to 39 million tonnes or less in 2020.
Thereafter, emissions must decline from this new starting point every year until 2030, until the 30pc reduction level is reached.
There is an explanation for this peculiar proposal.
Government successfully argued that Ireland's previous target was unrealistically demanding. There is evidence to support this perspective - in the form of research undertaken by the Environmental Research Institute of UCC, which was used in negotiations.
The new proposal can be seen as righting a previous error, and in so-doing will save Ireland billions in compliance costs.
A third favourable aspect for Ireland is that forestry can be used to offset some emissions, and some carbon credits can also be purchased from the EU instead of reducing emissions at home. Assuming these two flexibilities are used, our 'real' 2030 target is actually about the same as our 2020 target - 39 million tonnes.
These flexibilities are not free, however - they come at a cost to the taxpayer.
Government will be fighting to ensure these favourable aspects of the proposal are reflected in the final decision, anticipated in 2017. The new target would still pose considerable challenges for the way economic activity is organised in the affected sectors, particularly within the context of a rapidly growing population and economy. These factors set us apart from many of our EU partners.
There will be considerable pressure for innovation and change. What kinds of opportunities might arise as we begin to leave fossil fuels behind?
The agriculture sector is responsible for 40pc of affected emissions and will be increasingly under the spotlight. A recent Institute of International and European Affairs (IIEA) report identified the importance of adopting 'climate-smart' techniques and approaches that increase productive and carbon efficiency on farms.
This includes new types of fertilisers, and uptake of 'precision farming', involving the use of phone apps, GPS, micro-sensors, and satellite imaging, to record and use real time data. There will be opportunities for businesses that provide these products and services to farmers.
Farmers are also in a prime position to benefit from the deployment of distributed renewable technologies, such as wind and solar energy.
These technologies need land, much of which is in the hands of the farming community. Government must find ways to mobilise farmers as investors, and there is a need for new business models to promote partnerships between rural communities and professional project developers. These may include equity partnerships, lease and power purchase agreements, and co-operatives, all common in other countries but not yet in Ireland.
There will also be greater pressure to pursue carbon-neutral farming, particularly within the context of an expanding dairy sector. This means boosting forestry and agro-forestry on farms to suck in the emissions that livestock farming releases into the atmosphere.
Much of Ireland's beef herd - the so-called suckler herd - may come under pressure from more profitable, efficient and less polluting activities, such as dairy-beef enterprises or forestry.
Transport is an equally difficult challenge. Emissions from this sector have consistently tracked economic growth. Underinvestment in public transport as well as an unsustainable approach to spatial development has resulted in a predominance of low-density urban sprawl.
Any yet there is considerable opportunity for rapid decarbonisation. The car fleet will turnover twice in the period to 2030, offering transformative opportunities. It is highly likely that within this time frame a significant share of car fleet will be electric. A whole range of ancillary services will be required to optimise these vehicles with variable renewables on the grid, such as smart charging stations.
Digital technologies are - dramatically altering public and private mobility and transport logistic. App-driven car-sharing services like Uber are eroding the distinction between public and private transport.
Younger urban dwellers think less in terms of car ownership and more about mobility with services such as GoCar catering to this emerging market. These developments all have the potential to optimise the use of transport assets and can be leveraged to reduce emissions.
Within the building sectors, the challenge is to upgrade the existing building stock, much of which has a poor standard of energy efficiency.
Most of the progress up to this point in the residential sector has involved tinkering with low-cost measures, such as attic and cavity wall insulation or lighting. The real challenge is how to incentivise deeper retrofits - how can homeowners be encouraged to spend €20,000 instead of €3,000 on a home retrofit, comprising walls, heating system, lighting, windows and even appliances in one go?
Business models that can minimise hassle and transaction costs for consumers and address up-front investment costs (perhaps through providing State-subsidised finance) are required.
Overall, the Commission's proposal should mark a turning point in Ireland's efforts to tackle climate change. Ireland's relationship with the climate agenda to date has been informed by a somewhat defensive attitude, based around protecting the national interest, in particular agriculture. The Commission's proposal puts to bed the last excuse for inaction and puts the ball firmly in Ireland's court.
The Irish Government looks set to secure a seriously good deal in EU negotiations, now attention must turn inward. There are many opportunities to reduce emissions in a manner compatible with a vibrant economy.
Joseph Curtin is a Research Fellow at University College Cork and the Institute of International and European Affairs and a member of Ireland's Climate Change Advisory Council
Sunday Indo Business