EPA - Ireland's Environment, An Integrated Assessment - 2020

Ireland’s Environment – An Integrated Assessment 2020 While there has been progress in the decarbonisation of electricity, Ireland remains almost 90 per cent dependent on fossil energy. This dependency is both expensive, with imported fossil energy costing on average €4.8 billion from 2010 to 2018 (CSO, 2020), and environmentally unsustainable (CSO, 2019). Financing the Transition and Fossil Fuel Subsidies Effective frameworks for investment in Ireland’s energy transition are required and redirection of fossil fuel subsidies of over half a billion euros annually can contribute to this process. Parties to the Paris Agreement have agreed to make finance flows consistent with a pathway towards low GHG emissions and climate-resilient development (Chapter 2). This goal is increasingly reflected in EU policy such as the Green Deal (EC, 2019a) and in the mandates of financing institutions and banks such as the European Investment Bank (EIB). Large-scale investment in energy infrastructure will be crucial to decarbonising the energy sector. EirGrid secured €530 million in funding directly from the European Commission to support the Celtic Interconnector project. The EIB has an aim to support €1 trillion of investments in climate action and environmental sustainability from 2021 to 2030 and to gradually increase the share of its financing dedicated to climate action and environmental sustainability to 50 per cent of its operations in 2025. The EIB has already funded energy infrastructure in Ireland and could become a very important supporter of low-carbon transformation in Ireland in the future. The Paris Agreement goal would also envisage the phase out of subsidies for fossil fuel production and use. The EU is committed to phasing out environmentally harmful subsidies (EC, 2019b). These subsidies are diverse and include those provided for the exploration, production, distribution and purchase of fossil fuels, including coal, peat, oil and gas. The International Energy Agency data for 2018 suggest that these subsidies amount to over €339 billion annually at a global level and that these have increased in recent years, with oil being the most heavily subsidised. These are more than double the estimated subsidies for renewable energy sources (Matsumura and Adam, 2019). The Central Statistics Office has applied international standards and methods to provide an analysis of fossil fuel subsidies in Ireland (CSO, 2018). This research paper also covers direct potentially environmentally damaging subsidies, and these are presented in Table 12.3. Table 12.3  Direct potentially environmentally damaging subsidies for 2012-2016, including fossil fuel subsidies (Source: CSO, 2018) FOSSIL FUEL SUPPORTS, MILLION EUROS 2012 2013 2014 2015 2016 PSO Levy: electricity generation from peat 94.2 94.8 119.0 121.9 115.4 PSO Levy: security of electricity supply 42.2 61.0 104.7 47.3 0.0 Petroleum exploration and production promotion 1.3 0.5 1.6 2.2 2.4 Electricity allowance 176.7 161.0 154.6 149.6 150.7 Gas allowance 20.6 16.3 21.8 18.8 19.2 Fuel allowance 211.4 228.1 217.7 214.2 230.9 Other supplements (heating allowance) 11.2 – 8.1 7.4 6.7 Fuel grant for disabled drivers/passengers – – – – 8.6 Total fossil fuel supports 557.6 561.7 627.5 561.4 533.9 Note: PSO is Public Service Obligation. 318