Government 'must act' to secure energy supply
Think tank raises concerns over security of gas pipeline and damaging effects of price volatility
Published 26/04/2011 | 05:00
THE Government must take action to secure the nation's energy supplies, a leading think tank warned yesterday.
Ireland currently depends on just one pipeline to import gas from Scotland. That supply could be disrupted if the sometimes temperamental compressors used to push the gas through the pipeline fail, according to a report by the Energy Institute.
"Any major failure in gas supply could have dramatic negative consequences for Ireland's electricity system where over 50pc of electricity is produced from gas," the report warns.
"However, security of supply is not just about physical security; price volatility has detrimental social effects and economic consequences."
The Government should change the law to streamline planning and make it easier for energy companies to exploit future gas finds, it adds.
Shell has run into many planning problems as it attempts to extract gas from the Corrib gas field -- the largest gas field ever discovered in Ireland.
"The lessons of Corrib need to be taken on board. It is broadly accepted that there were mistakes on all sides in the development of the Corrib gas field and it would benefit future energy developments if the lessons from Corrib were understood and widely shared.
"A 'lessons-learned' exercise, similar to that carried out on the Luas light rail system in Dublin, may be useful," the report concludes. Without gas from local gas fields, the country will be vulnerable to "arbitrary decisions" by countries through which our future gas supplies will flow.
These concerns apply not just to countries in Central Europe but also to arrangements in force in the UK. The EU currently has a policy on burden-sharing in case of a major oil shortage but no similar framework exists to deal with any major gas shortages," it adds.
The report also urges the Government to begin consulting with energy suppliers to devise ways of reducing the country's dependence on oil.
The Sustainable Energy White Paper of 2007 committed the Government to a review of energy policy every two years with a public consultation in 2012. Mindful of the government commitment and the changes that have taken place since the White Paper was published, the institute initiated a sponsored process whereby the ESRI undertook a review of aspects of Irish energy policy.
The economy will still depend on oil for 60pc of all energy needs in 2020 despite government efforts to reduce the level of dependence over the past few years.
"This is a grave matter and carries many risks," yesterday's report says. "While this is clearly a global issue, and beyond our power to control, we will not be shielded from its consequences."
Oil prices can only rise over the next few years, the report adds. "Due to continuing growth in the economies of China, India and other newly industrialising economies, there is little prospect of a return to low oil prices, and further upward pressure on prices can be expected in the future in the face of a prolonged world recovery," it adds.
Turning to alternatives, the Energy Institute warns that the collapse in the economy means that capital intensive projects typical in the energy sector will become more expensive as many lenders are reluctant to lend. This means that projects which previously looked attractive may no longer look as desirable.
The report says offshore wind power may not be good value and rejects nuclear energy for the same reasons. The pricing structure for onshore windmills also needs to be changed, it adds. Ireland should not consider building nuclear plants "unless reliable and economic smaller units are developed and convincingly demonstrated over the coming decade", the report adds.