We have potential to be world leaders in the green economy
Published 01/12/2011 | 05:00
THE green economy is happening. It is real. Jobs are being created. But Ireland is again playing catch-up with its competitors.
The fact that Ireland does not feature as investors look elsewhere for "green" investments should be a matter of concern for everyone.
According to Bloomberg New Energy Finance, some $41bn (€30bn) was spent on clean energy investments in the third quarter this year across the globe, despite (or because of, one might argue) the economic downturn.
In addition, $2.2bn was invested in just three months in renewables projects by venture capitalists. The European Commission, the OECD and many developed countries (including the UK, the Scandinavian countries and China) have adopted low carbon strategies that are already resulting in a surge of investment.
Ireland has strategies -- more strategies than it has counties. Some have been on the shelf for years. Very few are being fully implemented. Most have no budget or a detailed implementation plan.
The green/cleantech sector will not lift off and create much-needed employment unless the barriers and obstacles facing many companies are addressed and resolved by government action.
For example, the planning and development legislation for offshore wind is based on antiquated provisions of the Foreshore Acts that never envisaged such projects.
This legislation, which is not "fit for purpose", was a reason why R&D on an Irish ocean energy project was moved to Scotland.
Primary legislation is also needed if Ireland's geothermal resources can be exploited. The absence of a regulatory framework for water and waste is discouraging investors.
The rules by which the Commission on Energy Regulation processes applications for grid connections have also been criticised. Even if projects are approved, grid connections take years to happen.
The limited subsidies to support renewable projects (REFIT) are below those of competitor economies, so limited innovation can be expected in this area.
A significant number of anaerobic digestion waster disposal plants are stalled pending a government decision about the appropriate level of REFIT.
Another complication is that the banks will not lend to potential biomass/CHP project promoters because of the weak balance sheets of start-up companies and what the banks perceive as insufficient guarantees over fuel supply.
Whatever Environment Minister Phil Hogan does, he should not let the much-needed 2050 Low Carbon Plan fall into these same traps. It looks like he has got the message.
Critics of Mr Hogan's apparent U-turn on Ireland's climate change policy would be well advised to read his department's well-written Review of National Climate Policy.
The debate has moved on from one of strict compliance to reduce greenhouse gas emissions and increase the share of renewable energy, to a much more strategic discourse about how Ireland must prepare to become a low-carbon economy.
We need to identify and plot a sustainable and affordable pathway to transition Ireland as a low-carbon country; but even more to be a world leader where we have a natural competitive advantage.
This will not happen unless Mr Hogan and his advisers engage with the private and public investors who have projects in the pipeline but are frustrated at the Government's inability to get its plans to a "shovel ready" state.
Legislation will be needed, but as correctly stated by Mr Hogan, its content must be informed by evidence-based policy research. The National Economic and Social Council (NESC) has been tasked with this job.
The big unknowns are: how the effort to meet the current emissions reduction target of 20pc by 2020 will fall in an equitable manner on households, farmers and businesses; the impacts of the higher targets that will be introduced once international negotiations on climate change are concluded next year; and how to deliver the EU's and Ireland's political commitment to reduce greenhouse gas emissions by 80pc by 2050.
There is more to it for Ireland than reducing emissions, however important that may be. The country has world-class renewable resources in abundance -- wind and water being the two obvious examples -- but has yet to determine how best to develop these assets and the potential scale of the investment.
The projected €80bn in green economy investments already announced could generate upwards of 80,000 jobs. To put it more dramatically, a fifth of the people who are currently unemployed could find jobs in green economy companies if the Government and its agencies got their act together.
Current enterprise policy has not given the green economy sector the same priority or resources as information technology and pharmaceuticals. The state agencies responsible for this sector are not helping Irish indigenous companies target the UK's £325bn (€370bn) investment in their green economy.
Banks are also reluctant to lend in this area because they are not comfortable with the proposed ESCO (energy saving company) model.
Finally, the many promoters of projects need policy certainty. All bottlenecks to deployment must be removed and a comprehensive government approach taken to the twin challenges of climate change and energy security.
While we await the NESC review, Mr Hogan might consider the following options, which are cost-neutral but, if acted upon promptly, could give a significant and short-term boost to Ireland's fledgling green economy sector.
Firstly, concentrate all the State's efforts (including R&D) into one agency. The Sustainable Energy Authority of Ireland (SEAI) is the obvious candidate, given its credentials and reputation as a "can do" organisation.
The now surplus engineers and planners in the National Roads Authority, Railway Procurement Agency and the local authorities should be transferred to this agency to facilitate the construction of the necessary infrastructure and the development of the emerging green technologies.
Secondly, perhaps as much as half of the Exchequer's revenue from carbon taxation and the auctioning of emissions permits should be recycled into potentially commercial and sustainable projects -- at least €1bn in additional "green" revenue will be collected by 2020.
Thirdly, the enterprise agencies should be instructed not to grant aid to companies (other than by way of competitive tendering) but to finance all the sub-sector networks that advise and support innovating "cleantech" and "greentech" companies.
Fourthly, the electricity generators should finally be required to co-finance a nationwide programme of retrofitting in some one million households for energy efficiency.
Finally, Ireland should introduce schemes to support R&D, the wider use of environmental technologies, and ICT convergence with them, of the kind that many of our competitors already have in place.
Dr Peter Brennan is managing director of EPS Consulting and a member of the Public Policy Advisors' Network