Feasta’s submission in November 2002 to Mr. Dermot Ahern, T.D, Department of Communications, Marine and Natural Resources towards a new ‘Statement of Strategy for Energy and Transport’

In a year where the ESB has been rightfully honoured for the Ardnacrusha scheme, which is deemed a milestone in engineering history it is very important that we match the vision of our founding fathers at the beginning of our state. Currently we appear to be following a generic energy policy which could with perhaps the exception of the peat stations be identical to any other developed country. It has nothing to do with Ireland and copies the policies of countries with large existing fossil fuel industries. Ireland is among the few developed countries which are still building its infrastructure and which can produce huge amounts of renewable energy. This confluence of circumstances represents an immense opportunity that must not be missed.

1. The security of Ireland’s energy supply should be the paramount objective of the Department’s strategy. It is certainly more important than achieving the lowest energy prices for the consumer. There are three aspects to achieving supply security:

i) Having a wide range of sources of supply of each type of energy
i) Using a wide range of different types of energy
ii) Obtaining as much energy from Irish sources as possible.

At present, Ireland gets 54% of its energy from oil and 23% from natural gas. While the overall energy mix is relatively balanced it masks major dependencies. The transport sector is the most vulnerable sector with over 98% reliance on oil. The electricity sector is increasingly reliant on Natural gas and if the conversion of Moneypoint to Natural Gas goes ahead the electricity sector will have a dependency of greater than 80% on Natural Gas.

70% of the world’s remaining oil is in the Middle East or the Caspian Basin and the proportion of the world’s oil output that in the hands of the five big OPEC producers in the Middle East, Iraq, Iran, Saudi, Kuwait, and UAE, currently around 35%, is expected to reach 50% by 2010 as oilfields in the rest of the world become exhausted. This will give those countries immense power over oil prices particularly as the global output of conventional oil declines as a result of resource depletion. World oil output is expected to begin to fall between 2008 and 2010. This will increase instability and any flare up in a producing country or any deliberate restriction on oil supply will cause Ireland considerable problems particularly in the transport sector.

The exhaustion of most oilfields outside the Middle East means that it will be impossible for Ireland to develop a range of other oil suppliers to counter balance the dominant ones. The major alternatives to conventional oil i.e. oil sands/ shales and oil from coal have extreme greenhouse gas intensities. The policy has therefore to be to develop other energy sources to reduce the country’s reliance on oil.

With natural gas the situation is little better. The EU’s gas imports are mainly from Russia and Algeria, both of which have to be regarded as unstable. In any event the world’s gas supplies are expected to peak within 15 or 20 years and then decline rapidly. There is therefore no long term security of supply and it would be short-sighted to invest in gas fired power stations as their design life is longer than the expected life of the fuel source.

There are four possible energy sources that Ireland could turn to to reduce its dependency on oil and gas. These are peat, coal, nuclear and renewables. Peat is a very dirty fuel in emission terms, in limited supply and involves the destruction of unique ecosystems. Coal can be dismissed immediately because although it is in abundant supply and Ireland could buy from a variety of sources its use would accelerate global warming. Nuclear energy from fission is attractive to the extent that it can supply baseload electricity with very low greenhouse gas emissions. However there are limited supplies of uranium around the world around 40 years and the problems of risk and waste have not been resolved. Nuclear energy from fusion has come to the fore recently because of its attractiveness as a clean energy solution but the fact remains that power from this source is unlikely to become commercial in time to provide Ireland with a replacement for oil and gas when their supplies begin to decline.

Ireland therefore has no alternative but to develop sources of renewable energy to replace both oil and gas and it is important that the bulk of the transition be made before oil and gas become scarce and expensive. The fact is that it takes energy to develop energy supply systems and it will be easier and cheaper to build renewable energy systems while fossil energy is still abundant. Equally it is important not to waste resources now by building power supply systems for which fuel will not be easily available within a generation.

Security also requires robust systems. These have a large number of small energy suppliers rather than a handful of giant ones – distributed generation. The US military adopted this principle when it built the Arpanet, the precursor of the Internet, with many nodes and many routes between them so that if enemy action damaged some components the rest could still function. Security also requires that the technologies used for energy generation are inherently safe and will not respond catastrophically in the event of a natural disaster or a terrorist attack.

Small safe generators are also better because they can be placed near settlements and the waste heat, which can amount to 60% of the fuel burned, can be used in industry, agriculture and space heating. The policy of the Department should be to foster the development of hundreds of small energy producers rather than a few giant ones by developing the electricity and gas grids to make connections easy as has been done in Denmark and Germany.

2. Greenhouse Gas Emissions and Environment Protection are the next most important issues that should guide Ireland’s energy and transport policy. These issues impact on four sectors; –

i) Agriculture
ii) Energy Generation
iii) Transport
iv) The Built Environment

Coal, oil and peat are major sources of the greenhouse gases (GHG) that Ireland is committed to reduce under the Kyoto agreement. In Europe 94% of the CO2, a GHG, arising from human activities can be attributed to the energy sector. Ireland differs from the EU in that its large agricultural sector including 7 million cattle contributes significantly to our GHG total. There is evidence that high stocking levels have other negative environmental impacts and a reduction in the national herd should be included in Irelands Kyoto strategy. Bio fuels such as Willow and Miscanthus can replace animal husbandry in many farms and provide a secure and environmentally friendly source of income. Biogas digestion has the added benefit of using a potential pollutant, slurry as a fuel with valuable agriculture nutrients and soil conditioners as a bye product. Using digesters to maintain nutrient balance in agriculture is of added importance with the loss of IFI and the need to the import our chemical fertilisers. Wind energy developed privately in partnership or co-operatively has been demonstrated as a realistic option for supplementary incomes to support the traditional family farm. Ireland’s energy strategy can and should have a positive impact on the economic, social and physical rural landscape.

The GHG affects of energy generation using dirty fossils fuels are considerable. Yet Ireland in common with many other EU states give subsidies and grants for locally sourced dirty fuel fired stations for fuel security and social reasons. The fuel security argument has been dealt with in the previous section. The development of sustainable alternatives such as bio fuels that can also provide sustainable employment in the affected regions eliminates the social argument. There are no valid reasons left for the continuance of subsidies for dirty fossil fuel energy generation in an Irish energy policy that is serious about protecting the environment.

Most of Europe’s increase in GHGs in recent years has been due to oil consumption in transport – accounting for 90% of the increase in emissions between 1990 and 2010. A shift from the internal combustion engine using oil to bio fuels will be a necessary first step followed by the more difficult shift to non-combustion engines such as electrically powered automobiles using hydrogen or other biofuel operated cells. These technical improvements should be paralleled by efficiencies in use per trip. Innovative car pooling, leasing and shared ownership schemes can deliver immediate improvements in GHG emissions per head per trip. These should be more fully explored and supported by policy and programmes. The cost benefit equations of public transport including trams, underground systems and railway should be re-evaluated in the light of potential GHG reductions and consequential savings in carbon credits.

Underlying the growth of transport are the conditions that require its use. Ireland’s land use mix, spatial patterns and building densities are predicated on abundant and relatively cheap fuel allowing for increasing distances between home, work, services and recreation. A transformation to clustered rural development, mixed use planning and higher housing densities around public transport nodes is essential to reduce the need for transport and conserve the environment.

The built environment is a large consumer of fossil energy in its own right and thus a generator of GHG emissions both through space heating and in the energy used to make and transport building materials. The latter is more important in Ireland than other EU countries because of our high housing construction projections which sees a 50% increase of existing housing stock over the next 5 years. Concrete / cement is a significant GHG generator and is the dominant Irish construction material. Ireland has the highest level of cement based GHG in Europe. The cement based construction material sector has a large responsibility for meeting Ireland’s Kyoto commitments that must not be shirked or passed unfairly to less culpable sectors or the taxpayer. Advances in timber and other organic materials construction can quickly replace much of cement and concrete in residential building with the removal of regulatory impediments and investment in testing and certification.

3. Energy Efficiency and Reduction is an important part of Ireland’s Energy and Transport Policy as this stratagem offers the best return on investment for the important energy sectors under the headings of:

i) Locational factors
ii) Performance Standards

The type and size of energy generation plants impacts on the potential for combined heat and power generation thus maximising the capture and use of energy generated. Distance from the plant to the heat energy consumer is critical. District energy generation and heating schemes should be integral to all large-scale new housing projects and conversely new energy generation plants should not be considered positively unless their heat energy is fully utilised. This holds true for both urban and rural locations. Energy generation linked to food production such as horticulture and inland fish farms using the waste heat is a viable option for farmers. The locational factors for energy use in transport have been outlined before. The implications for the national spatial strategy and Development and Area Plans are significant and the Department should work immediately for incorporation of this strategy at national and local levels.

Higher energy performance standards for all building construction are exceptionally cost effective. The new Part L Building Regulation standards do not go far enough in the context of potential energy savings per Euro spent. A Factor 4 reduction in space energy use is easily achievable with higher insulation and ventilation standards using timber frame construction. This standard might more difficult to achieve using conventional concrete construction but cement-based materials have other environmental disbenefits, which militates against its continued use. All new buildings should be required to meet these higher standards not only residential buildings. Proper performance testing and evaluation must accompany the standards as studies have shown a large shortfall in energy performance relative to projected results because of poor detailing and workmanship. Voluntary very high standard of a Factor 10 in energy use saving should also be part of the strategy, supported by testing and certification and carry incentives (i.e. extra mortgage interest relief).

The second sound economic argument underpinning the immediate introduction of ambitious energy performance standards is that it will not involve a net extra investment but a diversion of funds from the land element of the completed property into higher specification design, materials and components. This is because of the peculiar logic of the building market – land cost is a residual of the market price less the costs of construction and profit.

4. Mechanisms to Achieve these Aims should not be confused with the aims themselves which appears to be the case for the aim of liberalisation of energy markets in the draft discussion paper. Market reforms such as competition and liberalisation are a means to an end not an end in themselves and monitoring is required to see that they do indeed deliver the democratically agreed objectives. Other mechanisms must be considered also as follows:

i) Investment & Development Partnerships
ii) Fiscal, Regulatory and Planning Reform

ii) Energy Research and Innovation Policy
iii) Market Competition and Consumer Choice

Use the limited time and finance until the oil peak (2008) to switch from coal, oil and peat burning energy generation plants to integrated renewable energy technologies. This investment must be far seeing and not just supply side driven as has happened in the past. For example: the closure of IFI (20% of gas use) and a lesser Irish Steel will have a significant impact on our gas /electricity demand. This fact combined with the recent Marathon and Ramco agreement in regard to the use of the existing infrastructure by the smaller Ballycotton and Four Heads fields means that the Kinsale gas field infrastructure will be available for storage to support demand in the Cork region. This significantly changes the rationale behind the Galway southern ring gas pipeline and the Interconnector 2 under construction. These changes mean that there is little economic justification for bringing the Mayo gas field onshore at the current time.

Redirect funds from the National Pension Reserve Investment Fund from high risk equities to reliable integrated renewable energy generation facilities which are future-proofed in terms of zero emissions and security of fuel supplies. This investment should ideally be through ‘tripartnerships’, Public / Private / community/NGO sector to conform with the principles of sustainable development as outlined by the 1992 Rio agreement and frameworks being developed under the WSSD 2002. The requirement to maximise and prioritise return to investors of corporate structure and law makes most private companies inherently resistant to long term perspectives and triple bottom line accounting. The Irish state sector is handicapped by the urgent and obvious need for energy security, borrowing limits and limited technical expertise which has led to disadvantageous agreements with the private energy sector in the past i.e. Porcupine Basin Gas field. The exploitation of Irish renewable energy ‘commons’ requires checks and balances by all affected groups including the local community and NGOs with interest and expertise. Tripartnership structures and standards developed for Ireland should also apply to contracts by state owned companies such as the ESB International. It is not acceptable under sustainable development principles to insist on rates of returns similar to private businesses that might lead to overlooking negative social and environmental consequences.

Use Clean Development mechanisms (CDMs) to maximise Ireland’s ODA impact. Under the Kyoto agreement developed countries are allowed to offset domestic greenhouse gas emissions with improvements made in the developing world. This includes energy efficiency, renewable energy and sequestration projects. Ireland also has a commitment to increase its overseas aid to .95% of Ireland’s GDP. Ireland’s ODA and development NGOs have a long history of successful practical assistance in the third world. It is important that we build on this legacy. CDMs offer the opportunity to gain real economic advantage in Ireland while assisting our NGOs and development agencies. It also gives the opportunity of developing expertise and incubating businesses in energy planning, small-scale renewable systems and sustainable design.

Remove grants and tax subsidies to non-renewable fuel sources such as peat. The welfare of the economy as a whole is the relevant economic consideration in this case. Make no exemptions to carbon taxes for greenhouse gas producing industries i.e. cement. In any market economy the interests of particular businesses are not necessarily those of the economy as a whole. It would be unjust were certain polluters, by virtue primarily of the size of their emissions to be protected from taxes and market forces which other businesses and indeed consumers are or will be subject to. Appropriate measures should of course be put in place to deal with any social impacts of declines in particular industries/industrial sectors should these arise. End anomalies which support wasteful transport – free parking for civil servants, tax allowance incentives for larger cars.

Use fiscal mechanisms to promote widespread ownership and investment in renewable energy technologies as opposed to those that benefit large companies and wealthy individuals. Support innovative car sharing schemes and public transport, particularly rail systems through the allowable expenses system.

Support passive and active renewable energy systems including CHP district heating, heat recovery, solar thermal and geo-thermal water and space heating, photovoltaics and small-scale wind and hydro through higher interest allowances and higher mortgages for such buildings – where energy savings are confirmed by properly trained professionals. Abolish the hidden subsidies to scattered rural housing and support clustered housing in existing villages and towns through income tax allowances for consultancy work to produce integrated Area Plans, CGT allowances for Community Development Companies and Trusts and prioritised infrastructure investment for community-led development. Promote new low-car-use sustainable settlements in rural areas by not-for-profit developers by eliminating planning obstacles through guidance to local authorities. Consider an annual site value tax to spur development and increase densities in urban areas.

There needs to be greater co-ordination and specific goals set for Irish energy research, development and education. It is important to identify opportunities where Ireland has significant natural resources, i.e. offshore wind, wave and biomass and draw up 10 and 20-year employment targets in the sector. This will require detailed review of the current marketplace and a skills audit. It is critical that we adequately address our weaknesses in this new industry so that we maximise the benefits to Irish Individuals, businesses and financiers. All major infrastructure projects and particularly energy projects need to be covered by an Integrated Energy Plan (IRP). Currently projects are going ahead on the basis of flawed and outdated experience and skills. It is important that infrastructure is not built solely from past experience but which adequately reflects the changing challenges of the energy sector.

Raise regulatory standards, abolish obstacles and support energy efficient design in building by encouraging innovative design and building materials over conventional construction where certified by qualified professionals with appropriate professional insurance. Prioritise funding for an Irish building research, testing and Agreement Certification facility as this lack is seriously impeding progress.

The value of competitive and efficient markets is accepted and enthusiastically supported by Feasta. This requires that there are many energy suppliers using a variety of energy sources competing against each other and offering choice, not only on price but also on environmental and social returns. The market should not be left only to private single-bottom-line business. The state has provided well for Ireland in the past and can do so in the future. It is the monopoly aspect of public services that brought inefficiencies and disbenefits to the public not its ownership structure. The consumer would be badly served by the replacement of a state monopoly with a private cartel of a few large private energy producers. Therefore, positive consideration should be given to the alternative to privatisation – breaking up the ESB into smaller entities perhaps specialising in different energy sources and leaving them to compete with each other still in state ownership. Support should also be given to local co-operatives and not-for-profits companies to develop energy sources for local community consumption and/or linked to in the electricty and gas grids – not least for their wider social benefits.

The model currently being developed by the ESB and Eirgrid will not deliver the enhanced competitiveness and choice described above as it is institutionalising a bias towards large producers. The technical barriers to distributive generation are real but can be overcome as has been proved elsewhere, the bureaucratic barriers are also real and a greater challenge. The ‘bid price’ system is clearly not delivering the expected benefits and it is an obstacle to new producers. An immediate policy change to a stated scale of prices should initiated for both electricity and gas producers. The electricity and gas grids should be upgraded and extended and standards amended to easily accept energy from smaller producers. Choice under deregulation must include choice to produce as well as consume.

Renewable energy gives us a competitive advantage. It will allow industries to be attracted to Ireland when carbon taxes become prevalent. This could give us a similar economic advantage to the current low corporation tax rates. Consideration should be give to establishing one or more ‘green energy zones’ in regions where adequate electricity supplies and natural gas are not available to businesses. There is potential to have these partly funded by the EU under its 100% Renewable Energy Supply Community targets. Such a policy would intrinsically address infrastructure and development imbalance between regions. An opportunity like this will not be available to Ireland for another very long time.


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