Wednesday 12 December 2018

Richard Curran: State is storing up trouble by being windy on climate change

Gas guzzler: More radical solutions, like reducing the size of the national herd instead of planning to increase it, may be needed to fight climate change. Stock image
Gas guzzler: More radical solutions, like reducing the size of the national herd instead of planning to increase it, may be needed to fight climate change. Stock image
Richard Curran

Richard Curran

Was it the prospect of a general election in the offing that prompted the Government to take a step back from a full suite of climate- change measures that might alter behaviour while also raising funds for the Exchequer?

Perhaps it was the backlash from rural Ireland or the voices of the Independent Alliance TDs which convinced Paschal Donohoe that hiking carbon tax, diesel, and other measures might be election-day lunacy.

Equally, it might have been Brexit. Increases in fuel, heating and transport costs hit businesses as much as they do consumers. As the business community faces Brexit, and the hospitality sector was taking a big hit on Vat, the Minister for Finance may have felt this was not the time to make businesses here less competitive.

Either way the Government needed to raise more money to fund additional budget giveaways. And what better way to do it than under the guise of embracing the climate-change agenda.

The Government even had perfect cover given the publication of a major climate change report earlier in the week highlighting the perils and future cost of inaction. Environmental groups will lament what they will see as a missed opportunity. Mr Donohoe and Taoiseach Leo Varadkar can say that now was not the time.

Businesses and consumers will breathe a sigh of relief. But the climate-change-agenda rumbles on. It is an extremely difficult area in which to make policy. It is all based on paying now to future-proof something down the line. Irish governments are not traditionally run that way.

As things stand however, some tough decisions will have to be made. Hiking up carbon taxes seems like a lazy way of combating climate change. Make people pay more, so they will use the fuel less. It is almost about punishing people for their behaviour while grabbing extra money for the Exchequer.

But how will we feel when the EU hits Ireland with fines for failing to comply with the likes of Green House Gas (GHG) emissions? Ireland is the second-worst performing EU member state in tackling climate change, when it comes to national action and support for greater ambition, according to Climate Action Network Europe, an NGO supported by the European Commission.

This report, called 'Off Target', found that all EU member states are falling short in adopting the Paris Agreement on Climate Change. Yet, how they all tut-tutted when US President Donald Trump said he wouldn't abide by the Paris plan.

He wasn't even going to try.

Lots of EU countries are just not trying hard enough.

And therein lies the real problem for any Irish government in making big steps in this area. It can argue that there are laggards everywhere, including the biggest economy in the world. It can also see that such measures require financial pain now for possible but not definite future gain.

If Ireland busted a gut on climate change and bigger economies didn't, we could hardly save the planet alone.

But Ireland has to live up to its obligations and it could weigh up the other shorter-term financial benefits of showing leadership on the issue. It is one thing to pursue economic growth targets for a particular sector, but entirely different to do that while also signing up to reductions in gases that affect climate change.

Take agriculture, for example. Under the Food Harvest 2020 and now the Food Wise 2025 economic programmes for the sector, the cattle herd is set to increase considerably. The government and the industry have set targets to increase milk production dramatically with the ending of the EU milk quota system.

This will create jobs, exchequer revenues and economic growth into the future for the sector. All good stuff.

But belching and farting cattle are the main contributors to the sector's GHGs. The more cattle, the more GHGs. Together with transport, agriculture is the biggest contributor to GHG emissions.

Industry assessments suggest that, based on a reasonable set of assumptions about how the industry will perform in the years ahead, the cattle population is set to keep growing.

Yet Ireland has signed up to cutting GHGs to 20pc below 2005 levels. We can engage in some emissions trading but the non-trading requirements would see the figure cut to 10pc below 2005 levels under EU targets.

Failure to comply will cost us money - possibly as much as €500m a year. Yet, the economic and environmental targets are not compatible.

There are some solutions. In agriculture there are mitigating measures that could be taken around slurry management, nitrogen use efficiency, fertiliser formulation, etc, but they may not be enough.

According to a paper published in June by Teagasc, called 'Future Scenarios For Irish Agriculture', "without considerable mitigation actions, Irish agricultural emissions of both GHGs and ammonia are set to increase relative to their respective levels of 2005".

The paper went on to say that even when mitigation measures are applied "reaching emissions reduction targets below the 2005 level over the next decade is likely to be very challenging".

It added that its analysis "highlights the continuing dilemma between policy-driven and industry-motivated ambitions to increase agricultural activity levels and commitments to reduce emissions".

If the mitigation measures cannot do enough, more radical solutions might have to be found such as actually reducing the size of the national herd in the years ahead instead of the current plan of increasing it.

That might prove very painful for farmers who have invested heavily in this new post-quotas "liquid Goldrush".

Another way through this dilemma would be to take a more aggressive stance tackling emissions coming from the transport sector.

Incentives to move to electric cars, greater investment in public transport, more efficient vehicles, make it more expensive for people to drive polluting vehicles.

This is where the Budget comes in. The Government is running scared from some of the economic and election consequences of these moves. I am not saying they are wrong, but perhaps they are just postponing the inevitable.

Surely the best way to get businesses and consumers to sign up to higher costs on traditional fuels, is to give them the money back in subsidies for more efficient and environmentally-friendly alternatives?

People in rural Ireland would be rightly ticked off at paying more for their diesel, especially when they have to commute to jobs that are miles away from where they live.

However, if the revenue raised from higher carbon taxes or higher diesel taxes was directly applied to more rural public transport infrastructure, greater home retrofit grants or solar power, it might be more palatable.

But simply sticking it into the general mass of Exchequer funding, implies their money will get swallowed up on health sector waste, financing public sector cock-ups or subsidising people who don't need it.

In the current fragility of Irish politics (and it looks like it will stay that way), surely the best way to take tough long-term decisions is to directly link the cost with the benefits for the future for those who are paying up now.

We do not ring-fence enough public money for specific purposes. At least people can see where their money is going.

In the meantime, the Government may feel that politically it isn't the best time to take tough decisions on these things. Safer to wait. With GDP growing at 9pc and an unexpected extra €1.1bn landing in Corporation Tax receipts, when will there be a better time?

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