Hot Under The Collar – The Economics of Climate Change in Ireland

A code red for humanity. This was the warning sounded by The Intergovernmental Panel on Climate Change’s damming report on the extent and widespread effect climate change is currently having on the world. A call for the sustained reduction in carbon emissions, the blame for the ever worsening situation is placed firmly at the feet of “human activity”.

The report contains the starkest warnings yet about the state of the planet and the damage being caused by human activity. The increased incidence rate of extreme temperatures and rainfall over the last 50 years providing the most arrant evidence as hundreds of wildfires burn across Europe, Siberia and parts of the US, China battles unprecedented flooding, and North America records record high temperatures along the Pacific Coast.

If any solace is to be taken from the report, it is that human actions still have the potential to determine the future course of climate.

“Stabilising the climate will require strong, rapid, and sustained reductions in greenhouse gas emissions, and reaching net zero CO2 emissions. Limiting other greenhouse gases and air pollutants, especially methane, could have benefits both for health and the climate,” said co-chair Panmao Zhai.

As a small island nation lacking large scale industry or a source of fossil fuels, Ireland may see its contribution to the ever worsening situation as minimal compared to the large industrial nations such as China or the United States. Despite this, Ireland’s record on carbon emissions compared to its European neighbours is poor and if Ireland is to play its part in tackling the climate emergency, it will require a concerted effort from policy makers and the public alike.

The following article will examine the economic cost climate change will have on Ireland while highlighting the areas which will require the biggest change if Ireland is to fulfill its commitments both to the European Union and the greater global community.

Climate Action Bill 2021

In March 2021, the Irish government introduced The Climate Action Plan representing the most ambitious, and legally binding, legislation produced by the state aimed at tackling Ireland’s poor record on carbon emissions. Setting out the aim of achieving zero carbon emissions by 2050, the bill was heralded by the Minister for Climate and Green Party leader Eamon Ryan as “challenge beyond compare, but one that we’re going to be good at and one that we will show leadership in”.

While the goals laid out in the bill are laudable, particularly in relation to Ireland’s dependency on fossil fuels and the modernising of an inefficient transport system, the greater challenge is convincing a society that the increased cost on the average citizen is merited given the cost that inaction will have on future generations.  

Emissions

Ireland’s climate can be classed as a temperate oceanic climate characterised by mild, humid and changeable weather patterns. There is an abundance of rainfall with areas of the west coast experiencing on average 225 wet days per year along with a modest temperature range and lack of temperature extremes.

With a population close to 5 million, urban populations are centred around the major cities and their surrounding commuter counties. Ireland’s economy ranks as the 4th highest based on GDP and consists of a highly developed, knowledge based economy focused on services in agribusiness, technology, pharmaceuticals and financial services. Ireland lacks major sources of fossil fuel and therefore relies on importations of oil and gas to meet its energy needs.

Despite its relatively small population, Ireland compares poorly to its European counterparts in terms of carbon emissions, seen as the primary factor contributing to the rise in global temperatures, placing in the bottom three of EU countries responsible for the most emissions with an average of 13.3 tonnes of Co2 emitted per year.

Agriculture is responsible for the highest percentage of emissions at 35%, followed by energy production and transport at 20% and 16% respectively. Due to Ireland’s poor record in reducing carbon emissions, it is set to fail to meet its 2020 targets, with emissions projected to be 2% and 4% below 2005 levels in 2020. This compares to the target of 20% below 2005 levels by 2020 as set out by The 2020 EU Effort Sharing Scheme.

Source: EPA.ie

If Ireland is to stand any chance of reducing its emissions and reaching future targets, then government and economic policy related to the industries most responsible for emissions needs to change.

Agriculture

According to Teagasc, the agriculture and food development authority of Ireland, the Irish agricultural sector contributes €24 billion to the national economy annually, accounts for almost 10% of Irish exports and provides 7.7% of national employment. The sector accounts for about 7% of Irish GDP with primary agriculture accounting for 2.5%.

The Food Harvest 2020 policy aims to increase output from the sector including an increase of primary output in the agriculture, fisheries and forestry sector by €1.5 billion to €6.1 billion by 2020. The plan also aims to increase the value added in the agri-food, fisheries and wood products sector by €3 billion representing a 40% increase compared to 2008. Finally, the plan aims of increasing exports by €12 billion amounting to a 42% increase compared to the 2007-2009 average.

The plan demonstrates the importance of the agricultural industry to the Irish economy not only in its contribution to overall GDP, but also employment. Despite this, its role in overall CO2 emissions will require progressive government policy so as to reduce overall emissions by the sector, without affecting its efficacy and value to the Irish economy.

Irish agriculture is a primarily grass-based industry with 4.2 million hectares, or 64%, of Irish land used in primary agricultural production. Approximately 80% of Irish agricultural land is used for grass, 11% is used for rough grazing with the remaining 9% allocated to crop production.

Beef and dairy farming represent the largest percentage of the livestock herd and as of 2019, the number of cattle in Ireland was over 7 million. A Central Statistics Office report indicated a slight decrease in the number of cattle in 2020 but overall, the number remains significantly higher compared to poultry and pig farming.

Methane is the main greenhouse gas produced by Irish agriculture. Methane accounts for nearly 58% of Irish agricultural emissions and almost a fifth of the total national emissions. Methane is produced by livestock with Ireland’s large dairy herd a large contributor to this figure. As set out by the EU emissions targets for 2020, Ireland is to reduce agricultural emissions to between 17.5 and 19.0 million tonnes by 2030.

In line with aims set out in The Climate Action and Low Carbon Development (Amendment) Bill 2021, Ireland’s road to net zero emissions by 2050 requires a 51% reduction in greenhouse gas emissions by 2020 at an aim of 7% per annum. While the bill has not set out specific targets for individual industries, given its prominent role in producing emissions, the agriculture industry will have to make significant changes both to livestock numbers and farming practices. 

The Climate Change Advisory Council, an independent advisory body tasked with assessing and advising on how Ireland can achieve the transition to a low carbon and environmentally sustainable economy, recommended as part of its 2020 annual report that the cattle industries reliance on Common Agricultural Policy payments should be redesigned to encourage more sustainable agriculture and land use practices.

The report also notes how this approach would achieve a reduction in overall herd number, while maintaining and enhancing farm incomes so as to achieve wider rural economic and environmental sustainability. It is also recommended that payments should be tied to the achievement of environmental objectives, providing incentives for farmers to pursue more environmentally sustainable practices.

While still in its infancy and yet to detail industry specific targets, to date The Climate Action Bill represents the most significant and ambitious government policy aimed at reducing Ireland’s overall emissions. Given its role in producing emissions, it is imperative that the agriculture industry works in tandem with government policy if Ireland is to have any chance at reaching its EU mandated targets.

Despite this, representatives of the Irish Farmers Federation spoke with Minister for The Environment Eamonn Ryan in order to express their reservations at the targets set out by the bill and to seek clarity on the issue of methane emissions. What this shows is that a degree of skepticism and dissensus still exists among the farming industry towards climate change policy indicating that the government needs to make a concerted effort to reassure farmers that these policies will both protect, and allow for, a sustainable and profitable farming industry in the future.

Transport 

While the total number of private cars in Ireland is the 10th lowest in the EU per capita, transport accounts for the largest emitter of energy based CO2 in Ireland. Emissions from road transport, which make up 95% of transport emissions, have remained stable over the last 5 years up to 2019 and even saw a reduction in 2020 due in part to the Covid-19 pandemic.

While the number of passenger petrol cars decreased by 1.9%, the number of passenger diesel cars increased by 7.1% in 2019. Figures from the Central Statistics Office show that electric or hybrid vehicles accounted for 10% of Irish car sales as of October 2019 representing a 157% increase on the previous year. By the end of 2020 the Irish government are hoping that 10% of all vehicles on Irish roads are electric.

Source: CSO.ie

Electric cars represent perhaps the best solution to achieving Ireland’s emissions targets in the transport sector but changes and investment in public infrastructure, in particular to facilitate greater use of bicycles and e-scooters, along with an expansion in the public transport system are imperative if Ireland is to reduce its dependency on private vehicles.

According to a report released by The Sustainable Energy Authority of Ireland, electric vehicles offer the prospect of reducing energy consumption in transport, while at the same time reducing the importation of fossil fuels. Investment in wind and ocean energy could see transport fossil fuel imports reduce by up to 50% compared with 2011 equating to a reduction in fossil fuel imports of 800,000 tonnes per annum.

In line with reaching emissions targets, the 2020 Budget stated that the rates of mineral oil tax are set to increase each year for the next 10 years based on a programme of changes in the amount charged for carbon emissions, starting from the current level of €26 per tonne of CO2 and concluding at €100 per tonne of CO2. The 2020 Budget also saw €8 million being allocated to the Department of Communications, Climate Action and Environment to maintain the grants for the purchase of EVs in Ireland such as The Electric Vehicle Grant Scheme and Electric Vehicle Charger Grant for both private homes and public authorities.

A 2018 CSO survey highlighted the poor access a large percentage of the population have to public transport that is not road based. According to the survey, a train station was the closest public transport option for 253,462 people representing just 5.3% of the population. The survey also highlights how as few as 63,133 people commuted to work by rail in 2016, with the national average distance for these commuters to the closest train station being 2.3km.

While there was a slight increase in rail use between 2018 and 2019, Ireland still lags behind its EU neighbours with countries such as Sweden, Portugal and Denmark, whose populations are similar to that of Ireland, placing towards the top in terms of rail passengers within the EU. Since 1990, carbon emissions from transport in Ireland have increased by almost 140% while countries like Denmark have only seen a 20% increase with Sweden registering a net decrease in CO2 emissions during the same time period.

The National Transport Authority has a programme of ambitious infrastructure redevelopment designed to increase access to, and the efficiency of, public transport services including rail, bus and bike. Schemes such as BusConnects, Metro Link and the Greater Dublin Area Cycle Network Plan propose a major overhaul and development of Ireland’s public transport system.

Despite this, access to public transport in rural Ireland remains a long standing issue and while schemes such as the aforementioned will provide welcome changes, they tend to focus on urban areas around major cities along with their satellite, commuter areas. As outlined in the CSO survey, poor access to public transport, in particular railways, is one of the primary reasons why car usership remains high in rural areas.

Fossil Fuel Consumption

Fossil fuel consumption has long been known to be the largest producer of CO2 emissions. Global carbon emissions from fossil fuels have significantly increased during the 20th century and since 1970, CO2 emissions have increased by about 90%, with emissions from fossil fuel combustion and industrial processes contributing about 78% of the total greenhouse gas emissions increase from 1970 to 2011.

The European Union is the third largest emitter of CO2 from fossil fuels with only the United States and China contributing more. Ireland is heavily reliant on fossil fuel importation for energy production, consisting mainly of oil and natural gas amounting to almost 80% of energy production. While energy from renewable sources has increased to 10% of total energy production as of 2019, Ireland continues to fall short of its 2020 target for renewable energy.    

Investment in renewable energy is largely funded through the Public Service Obligation scheme, an EU industry subsidy scheme aimed at supporting development of wind and other domestic power generation. In Ireland, PSO’s are collected via electricity suppliers such as the ESB with the current PSO levy costing €6.52 excl. VAT per month which equates to roughly €88.80 per year inclusive of VAT. Investment in wind energy has seen its output, and importance in terms of emissions reduction, increase exponentially thanks in part to funding from the PSO levy.

Despite this, government subsidies for fossil fuel industries such as peat burning and coal have also benefited from PSO’s and as a result, have incentivised the continued use of fossil fuels. According to data released by the Central Statistics Office, indirect subsidies such as revenue lost due to lower excise duties and exemptions on fuel such as jet kerosene, have also contributed to the continued use of fossil fuels with total subsidies, both direct and indirect,  amounting to €2.4 billion in 2019.

Budget 2021 outlined various measures aimed at increasing funding for projects designed to reduce emissions while transitioning towards a more sustainable and environmentally friendly economy. The most notable change was an increase in the carbon tax. First introduced in 2010, it saw a levy introduced on the purchase of fuel oil, natural gas and solid fuels such as coal and peat.

It was announced in Budget 2021 that the carbon tax on fuel will increase by €7.50 from €26 per tonne to €33.50 per tonne. The revenue generated is seen as a means of funding other aims outlined in the budget such as €222 million capital funding scheme for retrofitting of residential housing so as to make them more energy efficient. It is also seen as a way of funding the €1 billion allocated for sustainable transport projects and investment in infrastructure necessary for the wider use of electric cars. For the owners of cars and homes, it means higher taxes in line with current taxation on income and property.

Scepticism and Political Opposition

While the global community continues in its management of the current Covid-19 health crisis, climate change continues to represent an epochal crisis. While consensus in Ireland, both politically and socially, recognises the need for action to be taken to tackle the issue, a growing dissensus and scepticism has emerged in Irish society as to both the seriousness, and very existence of climate change.

While to date Ireland has escaped the populist denial of climate change as seen in the United States, the increased cost of introducing policies aimed at addressing the issue have been vilified as an attack on the average citizen for something they may not even exist.

Media attention around climate change tends to be infrequent and biased, with more attention given to the issues around the time of important global convergences such as the Kyoto Protocol in 2009. A research paper by Wagner and Payne on how climate change was reported in the Irish media showed that across three primary newspapers, The Irish Times, Irish Independent and The Sunday Business Post, climate change was often framed as “either a policymaking or an economic and energy issue that Ireland must react to by mitigating its greenhouse gas emissions”.

The paper criticises the biased framing of the issue, where prominence is given to a select few opinions whose “narrow ideological worldview is produced and reproduced”. Ultimately the idea presented is that “a restructuring of the political and economic system in response to climate change was not necessary, and that the real challenge that society faced was to eradicate inefficiencies in the production process”

Political opposition to the governments economic plans to tackle Ireland’s emissions record has come in the form of the Rural Independent Group. Compromising several independent TD’s such as the Healy Ray brothers, the group have been vocal in their opposition to government’s plans to increase carbon taxes as they believe it will have a drastic effect on rural Ireland and small communities. The group are also against policies aimed at addressing emissions from agriculture feeling that such measures will lead to the end of family run farms, replaced by large scale agricultural factories.

Members of the group have also expressed their scepticism as to the seriousness of climate change as an issue citing China and other industrial nations as those that should be made to bear the brunt of the responsibility. While a minority voice, the group can be seen to represent a certain scepticism among parts of Irish society as to the need for higher taxation and improved farming practices in dealing with an issues whose effects are yet to be seen.

One of the bigger issues facing the Irish government is the asymmetrical nature of climate change. Existing in a temperate climate defined by cold winters and large amounts of precipitation throughout the year, the idea of a temperature increase, particularly in the summertime, coupled with milder winters is for the average person, a welcome change.

While for the meantime Ireland may escape some of the more dramatic effects of climate change such as intense heatwaves or tropical storms, the effects are already noticeable. Increased rainfall in winter has led to seasonal flooding affecting both urban homeowners and agricultural land owners amounting to millions in damages. According to the Marine Authority of Ireland, increased ocean acidification is having a drastic effects on marine wildlife and the fishing industry while temperature increases are creating water shortages and crop production issues.

Conclusion

Research indicates that climate change alone will lead to a 1% reduction in Ireland’s GDP over the next 40 years and as a result, climate change will have to become a cornerstone of economic policy for successive generations of government. (Kompas, Pham, Nhu Che, 2018).

In terms of agriculture, a reduction in the number of the cattle herd and a move to more sustainable methods of farming will be necessary. As dairy and beef exports count for a large section of the agricultural economy, this will likely be met with opposition, both politically and socially, and could exacerbate the rural urban divide. Investment in the form of grants and subsidies will be necessary to aid in the transition to more sustainable farming methods but this will place further strain on the national exchequer.

For transport, continued investment in electrification of both private and commercial vehicles will be necessary to reduce emissions from transport, but this must be coupled with investment in, and expansion of, the public transport network so as to reduce the reliance individuals have on personal vehicles. The transition to electric cars will require significant investment in infrastructure coupled with government schemes to assist in the purchase of electric vehicles along with the installation of charging points.

Finally, significant investment in renewable energy will be necessary to reduce fossil fuel dependency. With wind energy proving to be the most viable option, a further expansion of the wind farm network, both publicly and privately owned, should be incentivised.

With the cost of climate proofing the economy predicted to cost the taxpayer billions over the next 30 years, it will be necessary to invest in public awareness and educational campaigns so as to better inform the public about climate change and the potential impact it will have on the country. Doing so will provide a justification for the increase in taxes and transition from traditional fuel and energy sources ensuring a homogenous and concerted effort from both the state and society as a whole

Further Reading

Agriculture and Food Development Authority (2020) Available at: https://www.teagasc.ie/ 

Carter, N. and Little, C. (2021) ‘Party competition on climate policy: The roles of interest groups, ideology and challenger parties in the UK and Ireland’, International Political Science Review, 42(1), pp. 16–32. doi: 10.1177/0192512120972582.

Central Statistics Office (2021) Fossil Fuel Subsidies 2009-2019 Available at: https://www.cso.ie/en/releasesandpublications/er/ffes/fossilfuelsubsidies2019/

Central Statistics Office (2021) Measuring Distance to Everyday Services in Ireland Available at: https://www.cso.ie/en/releasesandpublications/ep/p-mdsi/measuringdistancetoeverydayservicesinireland/publictransportservices/

Central Statistics Office (2021) Crops and Livestock Survey June Final Results Available at: https://www.cso.ie/en/releasesandpublications/er/clsjf/cropsandlivestocksurveyjunefinal2019/

Climate Change Advisory Council (2020) Annual Review 2020 Available at: https://www.climatecouncil.ie/media/climatechangeadvisorycouncil/contentassets/publications/CCAC_AnnualReview2020FINAL.pdf

Department of Agriculture, Food and the Marine (2021) Food Harvest 2020  Available at: https://www.gov.ie/en/publication/5a0f2-food-harvest-2020/

Environmental Protection Agency (2021) The impact on 2020 greenhouse gas emissions of COVID-19 restrictions Available at: http://www.epa.ie/pubs/reports/air/airemissions/ghgcv-19/SEAI-EPA%20Bulletin%20v1.7.pdf

Environmental Protection Agency (2016) A Review of Livestock Methane Emission Factors Available at: https://www.epa.ie/pubs/reports/research/climate/Research_Report_288.pdf

Environmental Protection Agency (2021) Environmental Indicators Available at: https://www.epa.ie/ghg/indicatorsprogresstotargets/

European Environment Agency (2020)  Trends and drivers of EU greenhouse gas emissions Available at: file:///C:/Users/corma/Downloads/079%20Trends%20and%20drivers-Ricardo%20TH-AL-20-011-EN-N.pdf

Euro Statistics Explained (2020) Environment and energy Available at: https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Environment_and_energy

European Environment Agency (2021) Greenhouse gas emissions from transport in Europe  Available at: https://www.eea.europa.eu/data-and-maps/indicators/transport-emissions-of-greenhouse-gases/transport-emissions-of-greenhouse-gases-12#:~:text=In%202017%2C%20transport%20(including%20aviation,increased%20by%200.7%20%25%20in%202018.

Fraser, N. (2021) ‘Climates of Capitalism’ New Left Review NLR 127•JAN/FEB 2021 Available at: https://newleftreview.org/issues/ii127/articles/nancy-fraser-climates-of-capital   

Geological Survey Ireland (2021) Effects in Ireland Available at: https://www.gsi.ie/en-ie/geoscience-topics/climate-change/Pages/Effect-in-Ireland.aspx#:~:text=What%20are%20the%20effects%20of,oC%20between%201980%2D2008.

Government of Ireland (2020) Budget 2021 The Use of Carbon Tax Funds 2021 Available at: http://budget.gov.ie/Budgets/2021/Documents/Budget/Carbon%20tax%20document.pdf

Green Match (2021) Mapped: Greenhouse Gas Emissions by EU Country Available at: https://www.greenmatch.co.uk/blog/2019/10/greenhouse-gas-emissions-by-country

International Energy Agency (2021) Renewables Available at: https://www.iea.org/fuels-and-technologies/renewables

Irish Farmers Association (2021) IFA meet Minister Eamon Ryan on Climate Bill Available at: https://www.ifa.ie/campaigns/ifa-meet-minister-eamon-ryan-on-climate-bill/

Kompas T, P Van Ha, T Nhu Che. (2018) ‘The Effects of Climate Change on GDP by Country and the Global Economic Gains From Complying With the Paris Climate Accord’, Earth’s Future, 6,  1153–1173.https://doi.org/10.1029/2018EF000922

Met Eireann (2021) Climate Change Available at : https://www.met.ie/climate/climate-change

Marine Institute (2021) Available at: https://www.marine.ie/Home/site-area/areas-activity/marine-environment/marine-climate-change

National Economic & Social Council (2021) Climate Change Available at: https://www.nesc.ie/work-programme-archive/climate-change/

National Transport Authority (2021) Projects Available at: https://www.nationaltransport.ie/planning-and-investment/transport-investment/projects/

Revenue (2014) The Oil Market in Ireland: Duties, Prices and Consumption Available at: https://www.revenue.ie/en/corporate/documents/research/oil-market-analysis.pdf

Revenue (2021) Budget 2021 – Excise Duty Rates Available at: https://www.revenue.ie/en/tax-professionals/tdm/excise/excise-duty-rates/excise-duty-rates-budget-2021.pdf

Stop Climate Chaos (2013) Projected Economic Impacts of Climate Change on Irish Agriculture Available at: https://www.stopclimatechaos.ie/assets/files/pdf/projected_economic_impacts_of_climate_change_on_irish_agriculture_oct_2013.pdf

Sustainable Energy Authority Ireland (2021) Ireland’s Energy Statistics Available at: https://www.seai.ie/data-and-insights/seai-statistics/

Sustainable Energy Authority Ireland (2021) Electric Vehicles Roadmap Available at: https://www.seai.ie/publications/Electric-Vehicle-Roadmap.pdf Sustainable Energy Authority of Ireland (2020) Renewable Energy in Ireland 2020 Update Available at : https://www.seai.ie/publications/2020-Renewable-Energy-in-Ireland-Report.pdf

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