Friday 20 September 2019

Greener Ireland on the horizon as focus shifts to renewables

Mike Hayes, KPMG
Mike Hayes, KPMG
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Mike Hayes

There is an ever-growing community in this country that shares a vision for a greener and sustainable Ireland, and who now believe that the transition to a fully green economy is irreversible.

This transition will take many forms, including the development of solar, bioenergy and offshore wind generation to enhance the incredible strides made by the onshore wind industry over the past 20 years. Also, this is fuelled by a growing desire from the Government and consumers to create a decarbonised society.

This is no longer just about climate change, or even the cost of our failure to meet EU targets in 2020 (in excess of €500m a year) and possibly 2030 if we do not become more ambitious in our strategic thinking. The reality is that the transition to a green economy will result in significant economic benefits, particularly in those parts of the country where it is most needed.

As we decrease our dependence on oil in particular, a much greater part of our energy needs will be met from renewable sources, all of which are available locally and at an ever-decreasing cost.

In the past week, we have seen two significant announcements which will accelerate the pace of this revolution.

One is the investment by Parkwind NV into the Oriel wind farm, giving rise to the possibility of a significant large-scale offshore wind farm being constructed over the next few years.

Then there was the announcement by Microsoft that it had entered into an agreement with GE to purchase 100pc of green power from a wind farm based in Co Kerry.

Yesterday's Budget statement fully recognises this transition and a number of measures were announced which will assist in its acceleration and could be described as "green shoots for a greener Ireland", including:

A zero rate of benefits in kind (BIK) on electric cars for a period of at least one year. Also, there is no BIK on employees charging vehicles in the workplace;

CAT agricultural relief and CGT retirement relief on agricultural land used for solar panels;

An allocation of €17m for the roll-out of the Renewable Heat Incentive and to incentivise the uptake of electric vehicles;

Extra funding to facilitate the expansion of energy efficiency programmes;

Extension of accelerated capital allowances for energy efficient equipment.

The focus on electric cars is not surprising, as most major car manufacturers have either confirmed or will shortly confirm a full transition to electric vehicles over the next 10 to 20 years, and national governments are quickly following to bring in regulation to help this.

In itself, the electric car revolution is going to fundamentally change the landscape of the energy market, as it will drive up demand for green power to provide the electricity needed. This will require Government action to ensure that the relevant policies and regulatory framework are in place to deliver the significant green power that will be required.

Given the overall importance of this agenda and as acknowledged by the minister himself during his speech, we can expect to see more significant tax measures in future years to encourage this so-called green revolution.

The changes announced are to be welcomed as a very positive first step. But there needs to be much greater and constructive engagement between the industry and Government, not just on tax policy, but on other fundamental aspects such as planning in order to make this vision a reality for the benefit of all.

Mike Hayes is head of renewable energy at KPMG

Irish Independent

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