Ireland could be forced to pay between €8 billion and €26 billion to its EU partners if it doesn’t step up its efforts on agreed climate action by 2030, a new report by the Irish Fiscal Advisory Council and the Climate Change Advisory Council has suggested.
However, if the Irish government follows through on plans it has still not enacted in its own Climate Action Plan, these penalty costs could be reduced to between €3 billion and €12 billion, the report noted.
A notable ramping up of efforts would reduce the costs further.
Effort Sharing Regulation
The most significant piece of legislation driving these potential costs is the Effort Sharing Regulation, agreed to in 2018, which requires Ireland to limit emissions from transport, buildings, small industry, waste, and agriculture. If emissions exceed the agreed limits, Ireland would be required to purchase allowances from other EU members.
‘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,’ the report states. ‘It will likely be able to offset some costs by using some limited flexibilities permitted by the legislation.’
Additional costs could come from land use and forestry obligations, as well as requirements related to renewable energy adoption.
Transformative climate action
According to the report, less than half the upper-end penalty could be invested in transformative climate action between now and 2030, to reduce Ireland’s exposure to potential penalties – including upgrading the national energy grid (€7 billion), reducing the cost of 700,000 electric vehicles (to less than €15,000 per vehicle) and ramping up the availability of charging networks (€4 billion), and support measures for forestry and the rewetting of peatlands (€1 billion).
‘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,’ the report notes.
‘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.’ Read more here.
