Monday 14 October 2019

Colm McCarthy: 'We must face the realities of the climate change fight'

There are serious policy issues to be addressed to meet rising concerns over greenhouse gas emissions, writes Colm McCarthy

Emission statement: Ireland accounts for around 0.13pc of the world total of greenhouse gas emissions, or one tonne in every 770. If the country stopped all its emissions on January 1, China alone would have fully offset the impact on the world by January 3
Emission statement: Ireland accounts for around 0.13pc of the world total of greenhouse gas emissions, or one tonne in every 770. If the country stopped all its emissions on January 1, China alone would have fully offset the impact on the world by January 3
Colm McCarthy

Colm McCarthy

Green parties are set to poll strongly when European Parliament results are revealed this evening, beneficiaries of growing public concern about climate change.

The Green parties can claim to have prioritised the issue longer than others, especially in Europe. It is rather a shame that this public concern seems to be greatest in Europe, responsible for just one-tenth of worldwide greenhouse gas emissions and which has made greater efforts towards decarbonisation in recent times. Emissions continue to rise rapidly in the United States, responsible for one tonne in six, more than all the European countries put together and currently led by Donald Trump, who believes that climate change is a hoax, dreamt up by the Chinese to damage America. China, which is responsible for one tonne in four, has recently begun to make a greater decarbonisation effort but its emissions have accounted for much of the global increase for several decades.

Emissions in Ireland account for about 0.13pc of the world total, or one tonne in every 770. Since the earth has just one atmosphere, the benefit of any effort made in Ireland is by way of being seen to make it. If Ireland switched itself off entirely on January 1, China alone would have fully offset the impact on the world's emissions by January 3. There will be no success for anyone unless every significant country, including the climate-denying Trump's USA, change course soon. Ireland, like all the other EU countries, needs to do whatever it can at reasonable cost, but the problem is global.

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Last year, worldwide emissions rose yet again, by about 1.7pc according to the International Energy Agency. But in Ireland emissions fell, due to the closure for several months of the Moneypoint coal-fired power station. This will prove to be a temporary respite, since the station, the largest in Ireland, is back up and running, and will not close until 2025. The peat-fired power stations in the Midlands produce even more emissions per unit of electricity than Moneypoint (the three together are one-third its size) and are not due to close until 2030. It will be interesting to see if the Government will accelerate these closure dates when the new climate change policy is revealed shortly. If it does, Ireland will have made very substantial progress in decarbonising electricity - large costs have been incurred in subsidising wind farms and Ireland already has high wind-power penetration. Natural gas stations will still be needed to keep the lights on, since wind is weather-dependent and unreliable. The Government could decide to offer subsidies also to solar farms, but they are weather-dependent too. One way or another, there will be a need for gas stations through the energy transition and the Government's target of 70pc renewable electricity has been described by industry experts as ''ambitious'', which is polite of them.

Per unit emissions from gas stations are just half those from coal (peat is even worse) so their replacement with gas is low-hanging fruit. One necessary adjunct is a terminal to import liquefied natural gas, since domestic output from the Corrib field will tail off inside the next five or six years. Eventually it may be possible to substitute with nuclear (not popular with Green parties) but the critical period of transition to a low-carbon power system in Europe will need gas for several decades to come.

Ireland's reliance on coal has been declining but was never Europe's highest, nor is the planned phase-out Europe's slowest. The coal champion is Poland, where 80pc of electricity is generated in coal plants. The government of Poland has just awarded €1.4bn in subsidies to a company which will build, by 2023, the country's largest-ever coal plant at 853 megawatts, almost as big as Moneypoint. The day Moneypoint closes, some smiling politician will be cutting the tape on a new Polish plant of around the same size and with an expected life of 25 or 30 years. Such a shame Ireland does not possess its very own atmosphere.

While politicians wrestle with the phase out of the Irish coal and peat plants, the Industrial Development Authority has been busy attracting data centres to this country. There are now more than 50 and Ireland is set to host about 25pc of the entire European capacity in data centres. Ireland's population share is just over 1pc, so there is something interesting going on. Data centres do not employ very many people and they consume piles of electricity. The company which runs the national grid, and which tries to keep the electricity market in balance, EirGrid, has been forecasting that a very large increase in overall electricity demand will have to be met if the data centre boom is to continue. There are good reasons why data centres might wish to choose Ireland - they save on cooling costs as against more southerly locations and Denmark is popular for the same reason. But 25pc of European capacity looks suspiciously high.

A possible clue is that EirGrid and ESB Networks have been making noises about the need for costly grid reinforcements to meet the extra demand, and it is not clear that the data centres will be picking up the tab. In which case, the costs will be postalised across the general electricity tariff paid by consumers and other businesses. They will also face extra costs to subsidise more renewable electricity. These extra costs will make firms less competitive (electricity prices for Irish firms are already high by European standards) and will inhibit jobs growth. It would be helpful if the Government could commission a cost-benefit analysis on the data centre issue before any further commitments are undertaken - the Department of Public Expenditure has a team of people experienced in this kind of work.

The Government also has ambitious targets for the transport sector, especially for the move to electric cars. There is every reason to expect, eventually, a car fleet with a high percentage of electric vehicles, but there are serious Exchequer implications. Subsidies for electric cars are very generous. This does not matter too much so long as take-up stays low, but they will have to be withdrawn once large numbers of people take the plunge. There is another headache. Fuel tax (petrol and diesel) is a big revenue source and electricity for cars cannot be dyed green, as is the case for non-automotive diesel, taxed at a lower rate. If the car fleet goes electric, fuel tax revenue will take a hit. There will have to be some alternative system of charging for road use, possibly congestion charges.

There is also a challenge for ESB Networks. The distribution network in urban areas is not capable, according to the Irish Academy of Engineering, of supporting widespread overnight charging without costly reinforcement and somebody will have to pay. The problem is apparently less acute in rural Ireland, but there could be costs running into the billions eventually. The EU countries, collectively and individually, have a responsibility to plot a cost-effective course through the transition to a low-carbon economy. It is all very well for Dail Eireann to declare a climate emergency but there are some serious policy issues which have not been addressed.

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