Ireland’s climate action and the potential costs of missing targets
Following through on plans could reduce potential costs substantially
The state may have to pay out €8 to €26 billion to its EU partners if it does not step up on climate action it has agreed to.
However, if the Government follows through on plans it has still not enacted, it could reduce this risk and potential costs to between €3 and €12 billion.
The Government would need to be even more ambitious to reduce the costs further.
Less than half the upper range of costs could
Upgrade Ireland’s national energy grid
€7 billion
Reduce the cost of 700,000 new Electric Vehicles to under €15,000 and ramp up charging networks
€4 billion
Support forestry and the rewetting of peatlands
€1 billion
Swifter action would do more than just avoid hefty payments
It would transform Ireland into a healthier, more sustainable, and energy-secure society, reducing reliance on imported fossil fuels, while also boosting economic activity and employment in related sectors.
Summary
This report looks at the potential costs Ireland faces if it fails to meet its agreed EU climate commitments. These require domestic reductions in greenhouse gas emissions, an increasing share of renewable energy, and improved energy efficiency. There are of course other costs and benefits to Ireland reducing its emissions and enhancing green energy. However, it is vital to understand costs from missing targets to better understand the trade-offs involved.
Substantial costs
We estimate that Ireland could potentially have to pay out €8 to €26 billion to its EU partners if it does not step up climate action swiftly. If the Government implements the additional measures in its own Climate Action Plan by 2030, it could reduce the range to €3 to €12 billion.
Three key pieces of legislation
There are three key pieces of legislation. The most important is the Effort Sharing Regulation. Ireland and other EU countries agreed to adopt this in 2018. It covers emissions from domestic transport, buildings, small industry, waste, and agriculture. If Ireland emits more than allowed, the state will have to purchase the gap from overperforming countries — those that reduce their emissions more than required. It will likely be able to offset some costs by using some limited flexibilities permitted by the legislation. Two other pieces of legislation could pose smaller yet still significant costs. They cover land use and forestry, and the share of energy coming from renewable sources.
A colossal missed opportunity
The combined costs are substantial. To put them in context, less than half the upper end of those potential costs would cover drastic measures to reduce emissions. As an illustration, €12 billion — just one-tenth of the capital spending planned out to 2030 — could achieve all of the following. It could reduce the costs of buying 700,000 new electric cars to less than €15,000 per vehicle, covering one-in-three households. It would allow the Government ramp up charging infrastructure. It would cover the estimated additional costs of upgrading Ireland’s energy grid. And it would support forestry and the rewetting of peatlands.
By not taking actions like these, Ireland faces a colossal missed opportunity to both reduce emissions in line with its commitments and deliver significant improvements in Irish society.
Swifter action would do more than just avoid hefty payments and meet Ireland’s agreed commitments. It would transform Ireland to a healthier, more sustainable, and more energy secure society.
This report is a collaborative effort between the Irish Fiscal Advisory Council and the Climate Change Advisory Council. The collaboration arose as both institutions saw an urgent need for realistic estimates of the costs faced if Ireland fails to meet its climate commitments.