Vol. 1040 No. 2
72. Deputy Darren O'Rourke asked the Minister for the Environment, Climate and Communications the action he is taking to ensure savings on the wholesale price of electricity are passed on to customers; the reason that savings have not been passed on to date; the dates on which he has met with energy providers to address this; and if he will make a statement on the matter. [28912/23]
I want to ask the Minister the action he is taking to ensure savings on the wholesale price of electricity are passed on to customers, the reason savings have not been passed on to date, the dates on which he has met energy providers to address this and if he will make a statement on the matter.
My clear message to energy suppliers is that prices for customers should be reduced at the earliest opportunity. Unprecedented increases in energy prices since the outbreak of war in Ukraine have led the Government to take sustained action over the past year to support households and businesses to meet cost-of-living challenges. Direct measures to reduce energy bills included the €800 in total of energy credits between April 2022 and April 2023, reductions in VAT and the temporary business support scheme, TBSS.
Electricity and gas retail markets in Ireland operate within a European regulatory regime wherein these markets are commercial, liberalised and competitive, with the market being overseen by the Commission for the Regulation of Utilities, CRU. As part of its role the CRU is monitoring the implementation of the strengthened consumer protection measures put in place for this winter.
Wholesale energy prices reached peak levels in August of last year, when wholesale gas prices were 706% higher than in January 2021, while wholesale electricity prices increased by 463%. While wholesale gas prices have fallen dramatically and are currently well below the peak values of last year, they are still trading at twice their pre-pandemic levels. Retail gas and electricity prices, based on an estimated annual bill, are 107% higher for gas and 90% for electricity this June compared to June 2021. The difference in the volatility of wholesale and retail prices demonstrates the importance of supplier hedging strategies and the extent to which these strategies shield consumers against the full extent of this unprecedented international energy market volatility.
It is clear the Government has not done enough to protect workers, families or businesses from the high cost of electricity and energy. Wholesale prices have reduced by 57% since last March, but bills increased by 63% in that time and have not reduced since. We have seen the impact of energy costs on businesses. In my county, Meath, Tara Mines issued devastating news for 650 workers earlier this week. Can the Minister tell me what the Government is doing to reduce the energy burden on Tara Mines and other businesses?
There were repeated requests to the Minister to intervene with regard to Tara Mines. A letter from SIPTU was issued to the Minister yesterday, specifically looking for a meeting with him, SIPTU and the Minister for Enterprise, Trade and Employment, Deputy Simon Coveney, early next week. The union will facilitate a group meeting or individual meetings. Has the Minister received that letter? Will he meet the union next week?
I have not received that letter. The Government will approach the issue of Tara Mines in the way that is appropriate, in particular the Ministers for Enterprise, Trade and Employment and Social Protection. We will consider any issue in terms of energy prices. It is not possible for us to intervene directly to change energy price contracts that the company may have. I would like to see the company return to operation. It provides a valuable and important service to the local area, as well as nationally and internationally as one of the largest zinc mines in Europe. We need that material. We will do everything we can to help the company get back to operation and workers to get back to work. The best way of doing that is switching to renewable power, whereby we can bring prices down.
High energy prices in the country are primarily driven by our reliance on fossil fuels. Everything we are doing in government is to switch away from those imported fuels towards the generation of our own power, which will be a lower cost, cleaner and more secure.
In terms of what we are doing, we are working with the European Commission. There is a meeting of the energy Council next week. We need to reform the market and recognise that market structures are not serving their purpose as we switch to a renewable-led world.
I have asked the CRU to review the hedging strategies that apply within the existing Irish market to see whether it is serving us or whether there are other ways in which that can be done so we do not have situations like this. We need to consider whether there are more optimal ways in which such hedging strategies could be deployed.
We see the profits being made by energy companies and the delays time and again in terms of windfall taxes or outright opposition to electricity price caps, and the fact that businesses, workers and families are put to the pin of their collars. Will the Minister meet SIPTU early next week, as it has requested? He has failed to respond to repeated requests. That is a failing on behalf of him and the Government to do everything possible in this case.
Separately, there are reports the Government is looking at a specific intervention, similar to the type of energy support provided for the tech and microchip sectors. I understand in existing schemes there are challenges around the state aid rules. Will the Minister meet SIPTU early next week? Is he looking at a specific scheme to support Tara Mines?
The first thing I have to do early next week is to attend the European Council, which, as I said, is a policy area where we can change, inform and direct the market system and energy prices. I will also work with the Minister, Deputy Coveney, as well as the Minister for Social Protection, because they have a critical role in terms of any supports or other arrangements for any industry. It is something that the Minister for Enterprise, Trade and Employment has a key role in and we will be fully supportive and work in a whole-of-government way to make sure we do everything we can to get those jobs back and the mine back in operation.
73. Deputy Ivana Bacik asked the Minister for the Environment, Climate and Communications the efforts he has made to ensure a reduction in carbon emissions in the residential sector by 40% as outlined in the Climate Action Plan 2023; and if he will make a statement on the matter. [28833/23]
I ask the Minister the efforts he has made to ensure a reduction in carbon emissions in the residential sector by 40%, as outlined in the Climate Action Plan 2023, and if he will make a statement on the matter.
The Climate Action Plan 2023 sets out that emissions from the residential sector must reduce from 7 MtCO2eq in 2018, to 4 MtCO2eq in 2030. The Government plans to achieve this target primarily through the national retrofit plan and the roll-out of renewable heating. The national retrofit plan sets out our target to upgrade the equivalent of 500,000 homes to a building energy rating, BER, of B2 cost-optimal or carbon equivalent, and to install 400,000 heat pumps in existing homes. Good progress is being made. In 2021, we delivered more than 15,000 home energy upgrades. In 2022, it was more than 27,000. This year, the target is over 37,000 home energy upgrades. We are on track to meet this, with more than 18,000 homes upgraded to the end of May.
The Climate Action Plan 2023 also contains a target to deliver up to 2.7 TWh of district heating by 2030. My Department will shortly submit the first report of the district heating steering group to the Government. To accelerate and drive delivery in this key area, a heat and built environment delivery task force has been established. Future high-level actions to be taken in respect of these areas will be set out in subsequent climate action plans.
I thank the Minister for outlining progress. He referred to progress on retrofitting and heat pumps. We need to see more ambition and urgency if we are to meet the target of 500,000 homes retrofitted by 2030. We certainly support that, and we support strenuous efforts being made to reach the target. We are concerned that progress has not been swift enough in this area.
I will focus on the third action outlined in the Climate Action Plan 2023, to which the Minister referred at the end of his response. That is the measure on district heating and the commitment, as the Minister stated, to generate up to 2.7 TWh of district heating by 2030. We have seen really serious delays here. The Minister stated that he will shortly submit the first report of the district heating steering group to the Government. Will he say when exactly that will happen? I have been submitting parliamentary questions on this matter for some months. In November, the Minister cited December 2022 as the date for when the report would be finalised. In February, he stated that it would be brought before the Government by the end of March. In April and May, his response was that the report would be delivered shortly. These delays are distressing for the people who are facing issues with district heating schemes, a matter about which I will speak later, and who need answers. More importantly, they are holding back the progress on district heating that is necessary if we are to reduce residential emissions by 40%.
There is no holding back of progress on the part of our Department. I expect to bring the report before the Government and to publish it this month.
This month.
Yes. It is urgent that we proceed. I was very pleased to launch the first major scheme in Tallaght where excess heat from a data centre is being used to power a lot of public buildings, and that will extend to social housing. I had a very fruitful meeting last week regarding another potential development in Blanchardstown in west Dublin where, again, we will take waste heat from data centres. This has very extensive potential for heating social housing, hospitals and local authority and other offices. There is major potential in this.
Probably the most important project we need to advance is in the constituency the Deputy and I represent. The huge volume of waste heat that is currently being dumped into the River Liffey needs to be redirected very quickly to heat offices and other buildings along the quays. Pipelines are already being introduced to allow this to happen. That could be extended to Pearse Street and other city centre areas where we could make the switch. It is frustrating that the project in question has taken as long as it has, but it needs to be operational as an example of how we can do this. Nothing on my side is delaying that.
I am glad to hear the Minister commit to publishing the report on district heating in the next two weeks. That means it will be published this month, which is very welcome. We have heard really distressing stories from people in our constituency of Dublin Bay South who have been affected by overcharging in respect of district heating schemes. That has to be addressed. More broadly, I agree with the Minister about the immense potential for district heating in terms of emission reductions. The delays have been unconscionable. The Minister spoke about our constituency. The long delay in developing the district heating scheme to draw heat from the Poolbeg incinerator is extraordinary. It has supposedly been coming on stream for years now. I visited the incinerator and saw the infrastructure there that is ready to be expedited. What we are looking for is: the Commission for Regulation of Utilities review of district heating to the expedited; the capping of prices in district heating schemes of domestic rates; the publication of the steering group report that the Minister committed to; and, in particular, greater urgency in the rolling out of schemes. It was very welcome to see the development in Tallaght in April but we need to see that Poolbeg scheme come online very swiftly because it has been so long-awaited and could make such a significant difference to families and households across the community.
We need to be careful as there are very different types of heating systems which may be called district heating. Some are more like communal heating systems where people share a common heating source in an apartment building. The district heating system, the likes of the Poolbeg one, is where we are going. Excess heat from another neighbouring source, or which is generated outside the apartment building and shipped into that building, is where we need to go. I agree with the Deputy that it has been very frustrating that despite the provision of significant funding and finance to Dublin City Council to advance Poolbeg distribution scheme it has not developed as quickly as all of us wanted. As I understand, there was a meeting with Dublin City Council on this issue recently. The scheme is now ready to go to procurement. I told the council it should make sure that process is not so elongated and does not further delay what we need to see happen. I want to see that project and that heat being used by 2025 so that we start to meet our climate targets, lower people's bills, and turn waste into an opportunity. That is the beauty and brilliance of district heating, that it actually creates a circular economy, turns waste into wealth, and that is why we want to see it rolled out not just in Poolbeg but also across the country as fast as we can.
74. Deputy Darren O'Rourke asked the Minister for the Environment, Climate and Communications if he will provide an update on the Government’s energy security review and, separately, the review by a person (details supplied); when he expects both to be published; and if he will make a statement on the matter. [28919/23]
My question is to ask the Minister for the Environment, Climate and Communications if he will provide an update on the Government’s energy security review and, separately the review by Mr. Dermot McCarthy; when he expects both to be published; and if he will make a statement on the matter.
My Department is currently finalising its review of security of energy supply of Ireland’s electricity and natural gas systems. The review is focused on the period to 2030, but in the context of ensuring a sustainable transition to a net zero economy by 2050. The Government’s policy objectives are to ensure energy is affordable, sustainable, and secure, as well as in line with Ireland’s climate targets and statutory carbon budgets. Underpinned by these objectives, the review is considering the risks to both natural gas and electricity supplies, and a range of mitigation measures, including the need for additional capacity of indigenous renewable energy but also energy imports, energy storage, fuel diversification, demand side response and renewable gases such as hydrogen. To support its development, a detailed technical analysis has been published and an extensive consultation process carried out, providing important insights from over 450 individuals and organisations on the range of options that could be implemented to support Ireland’s security of supply framework.
The McCarthy review into security of supply of the electricity system has been a further key input informing the analysis and will be published alongside the completion of the review. The completion of that review is a key priority. Once the review is completed, which I expect to be next month, when it will also be published, I will bring my recommendations to the Government. Subject to Government approval, as I said, it will be published at that time.
There has been a lot of movement in the meantime since the publication of the initial document about the energy security review. There has been jockeying, I think, and public arguments, and some of it represents some of the Minister's own comments at different stages. There are those who have argued for liquefied natural gas, LNG, infrastructure, for example. Does the Minister have a comment regarding that? Similarly, it is welcome that the ESB is looking at Kinsale gas field for potential gas storage. What criteria will apply? We heard from Professor Barry McMullin about the trilemma that exists in terms of sustainability, cost and security. He made the point that it is not a trilemma as they are not equal and not three legs of a stool. The priority has to be the sustainability piece. The Minister has echoed that position. How will he give effect to that, if that is his position?
It is my position. As Minister, I have to look at all three. As policymakers, we must all do so.
Climate must come first because there is the physical reality that we cannot avoid the risk of passing various tipping points. We have to stay within certain limits. Those limits are set by physics and the meteorological system. They cannot vary. There is a real limit on the environmental side. When it comes to providing security or competitiveness, there are always a variety of different ways by which that can be done, for example, by being more efficient, switching to renewables and looking at a range of different strategies. In my mind, it is the case that the sustainability criteria within the trilemma does have pre-eminence.
If you look at what has been done in the past year in response to the energy security problems we did have, you can see that the real benefit is that we are delivering new additional backup power that complements our move towards a zero-carbon system. I refer to power generation at the North Wall, in Aghada, Shannonbridge and Tarbert and by all the projects we legislated for here on an emergency development basis. We are building those and we are delivering them. You do not ignore security; you have to provide for it. That is being done by means of the actions to which I refer.
I thank the Minister for that. It is important to look at the Dermot McCarthy review. What went wrong with the T-4 auction? Are there lessons to be learned to ensure that when capacity is procured, it is delivered? The Minister said that he has the report and that it will be published in line with the energy security review. Is it the case that there will be proposed changes to our auction system, to the capacity or role of the Commission for Regulation of Utilities or to other relevant authorities in terms of the delivery of committed capacity? Also, will recommendations be made around the sanction for companies that do not deliver on committed capacity?
First, it is intended to publish the Dermot McCarthy review in conjunction with the energy security review. It was decided to put back that publication at that time because it is appropriate that his work complements the other work that is being done.
In terms of lessons, there are lessons to be learned from that. One of the things to recognise is that the development of the new capacity auction system was among the first examples of how European legislation approached this. It was only in 2017 and 2018 that the approach that was outlined by Europe was agreed. This was the first iteration. It was useful and we have to learn from that. There are technical examples. A learning may be, for example, how tolerant would one be in the area of security or of a loss of load. Going from memory, our figure was something like eight hours per annum, whereas some other neighbouring jurisdictions had lower. We will look at that as an example of how willing we should be or what sort of parameters we should set in terms of security. The wider sense is that we did not pay sufficient attention to potential security problems. We will have to provide additional investment to make sure that in future we do not see a repeat of that possibility.
75. Deputy Jennifer Whitmore asked the Minister for the Environment, Climate and Communications if the climate action plan will be urgently revised in light of the recent EPA analysis which stated that even in the event that all actions were implemented fully, it would only result in a 29% reduction in emissions; and if he will make a statement on the matter. [28778/23]
I would like to ask the Minister if he will urgently revisit the climate action plan in light of the recent EPA analysis, which stated that even in the event that all the actions of the Government were to be implemented fully, it would only result in a 29% reduction in emissions. Can he make a statement on that?
The recent EPA report makes it clear we have to act now on climate change and reduce emissions. To reverse the trajectory and meet our 2030 climate targets, a significant shift is required in the speed at which we roll out and ramp up the policies and measures that will decarbonise our economy. The Climate Action Plan 2023 sets out our roadmap for systemic changes to reach those objectives. We need to act much faster and with greater ambition and scale to implement the actions set out in the plan.
The recent EPA report has projected that Ireland is on course to reduce emissions by 29% by 2030 under its with-additional-measures scenario. The EPA's projections do not fully reflect the pathway set out in the climate action plan. This is because sufficient data is not yet available to allow all policies and measures in the Climate Action Plan 2023 to be modelled. Policies and measures need to meet strict criteria regarding detail for inclusion in the EPA's with-additional-measures scenario. The EPA's projections report acknowledges that if all of the unmodelled policies and measures and the as yet unallocated emissions savings are included, the reduction in emissions would equate to 42% by 2030.
Further detail on this will be provided through annual updates to the climate action plan. I want to give three significant examples of areas that are not accounted for in the recent EPA projections that will be highly impactful once modelled. First are the diversification measures in agriculture that are capable of delivering significant reductions. Second, in electricity, the EPA’s modelling only considers a reduced level of the total targets for onshore wind and solar photovoltaic. Finally, in industry, measures to reduce embodied carbon in construction materials are not modelled.
In addition, the EPA's modelling cannot include the unallocated emission savings of 26.25 million tonnes of carbon dioxide equivalent, which has been assigned to the second carbon budgetary period of 2026 to 2030.
With all due respect to the Minister, the EPA report did not say that we need to speed up and ramp up, which we obviously do. What it said is that the Government's policies are not enough to meet our 51% target. The Minister is correct that there were certain areas where sufficient data was not provided in the climate action plan for the EPA to undertake their analysis. In itself, that is a huge flaw. If a State entity that is there to oversee what is happening is not being provided with enough information through the climate action plan to actually do its modelling, then surely the plan is not meeting its needs. It is not detailed enough for the EPA to make an assessment.
There are areas that need to be revised. As the Minister stated, the diversification element is one of them. He also stated that if all of that was spelled out properly, we would meet 42%. However, that is still well short of the 51% target that is required in legislation. Will the Minister immediately revisit the climate action plan? It is not due until December, so will he do that now and put in the details that are required for those areas that were not specific enough, as well as any additional measures that need to be taken?
No, I believe we should do the climate action plan at the same time each year. It is an iterative process. It requires a lot of work to be able to come up with real, practical solutions. One of the reasons for that is the whole issue of land use, which is probably one of the areas where there is the greatest shortfall. We have to update the plan to include targets on that. We held back on that last year because the science had changed quite significantly in advance of the drafting of the 2023 plan. A body of work will need to be done for us to be able to do that in December. It is better to take the time to do it and get it right. I mentioned that as one example.
I was not being rude there. I apologise to the Deputy. I was just asking my colleague, the Minister of State, Deputy Ossian Smyth, if we had received an update from Brussels on the EU Parliament vote. To my mind, that is an example of how we can go further, by combining benefits that give us nature-based solutions for biodiversity, as well as reducing emissions. Critically, these should fund farming, foresters and others to be able to make that change. This should not be done in a forced, top-down, punitive way, but in a way that can turn a challenge into an opportunity. That approach will see us going beyond what has been modelled so far. It is the most important change we must make. There is a sense that it is possible, we will pay for it and that it will come from the bottom up, not just the top down.
The fundamental reason to have the climate action plan is to set out that pathway for us to meet our 51% target. That is the fundamental premise of the climate action plan. The Government does not have sufficient policies in place to meet the legally binding target of 51%. That is clear from the EPA's report.
Does the Minister have the information? Is information available on issues such as diversification in the agricultural sector? I ask because if the EPA does not have it, I presume the agricultural sector will not have it either. Does the Minister not see that as a major issue? If we are trying to bring people along, and if the Department and the Government have not specified and detailed how we expect the agricultural sector to meet these targets, that is a major challenge. It will completely undermine the Government's ability to meet the targets set out in the climate action plan.
If the Minister is not going to revise the climate action plan, will he at least put in an addendum to include the details of those issues, such as diversification, that the EPA could not model?
I am sorry. I had asked a colleague whether there had been any update and I have now been informed that the European Parliament committee has just voted in support of the nature restoration law by means of the chair's casting vote. That helps tremendously.
The question was on the climate action plan.
May I explain why it is connected? We will now have to go to a meeting of the European Council next Tuesday, where a similar consensus should and will be arrived at. That will allow us to progress that law, which is good not just for nature but also for climate. To answer the Deputy's question as to the opportunities that arise and the ways in which we could do it-----
No. My question was whether the Minister will put in an addendum to the climate action plan that will specify, in detail, issues like diversification that the EPA could not model because the information was not available.
That is what we need to do. The approach we are taking here is iterative. It changes every year. You learn by doing. You accelerate what is working and, where there is a problem, you look at other solutions to work around it. The land use sector is the most complex. It is complex because you have to prioritise rural development to make sure we have a whole generation of new people coming into farming and forestry, young people who will have a guaranteed livelihood and income so that they will be able to raise families. That is why I just referred to the nature restoration law. If that uncertainty in Brussels is reduced, it will give us much greater confidence and a much greater ability to provide the funding and incomes required to lower carbon emissions while also restoring nature. That is why I believe it is relevant to our debate and discussion here today.
76. Deputy Darren O'Rourke asked the Minister for the Environment, Climate and Communications what, if any, assessments have been made by the Government regarding the best way to implement a windfall tax here in order to capture excess revenues in the energy sector in the year 2022; and if he will make a statement on the matter. [28914/23]
What, if any, assessments have been made by the Government regarding the best way to implement a windfall tax to capture excess revenues in the energy sector in the year 2022? Will the Minister make a statement on that matter?
Council Regulation (EU) 2022/1854 seeks to address windfall gains in the energy sector by collecting excess revenues from those companies that have unexpectedly benefited from high prices and redistributing those revenues to alleviate pressures on affected consumers. As per Article 22(2)(c) of the regulation, a cap on market revenues shall apply from 1 December 2022 to 30 June 2023. In November of last year, the Government decided to approve the implementation of the Council regulation. In March 2023, the Government approved the general scheme of the Energy (Windfall Gains in the Energy Sector) Bill 2023, which will implement the temporary solidarity contribution and the cap on market revenues in line with the regulation.
I received the agreement of the Government this week to advance and present to the Dáil immediate legislation to deal with the contribution from the fossil fuel companies, which we hope will pass all stages in the Houses before the summer recess, and to publish, in a separate Bill, legislation to deliver the market cap which, as I have said, applies from 1 December 2022 to 30 June this year, in this term and before the recess. In that way, we will be able to collect all of the revenues that are due, subject to the Houses' agreement. The legislation for both the solidarity contribution and the market cap will be in line with European law and with the social solidarity that people expect the energy sector to provide in redistributing some of the surplus supernormal profits that have arisen because of the war.
I will specifically ask about two things. With regard to the temporary solidarity contribution and the cap on market revenues, is the Government now committing to using all of the money collected from the windfall tax to protect people who are at risk of fuel and energy poverty? It has been presented in the media as if that commitment is implicit. My understanding is that there is no explicit commitment in respect of both the cap on market revenues and the temporary solidarity contribution. Is the Government making that commitment today?
What are the technical issues that have arisen that have given rise to the splitting of the legislation? With what elements of the cap on market revenues has an issue arisen? What were those technical issues?
In line with the European regulation, it is the Government's intention to use the revenues to support Irish consumers in what is still an environment of very high energy prices. This is a difficult time for many households and businesses. Tara Mines, which we were talking about earlier on, is a perfect example of how challenging things are. The legislation is designed in such a way as to provide further help to Irish households and businesses, along with the other measures we have introduced.
On the technical aspects of the market cap legislation, these reflect the very complex nature of the market itself. It is not just about wind farms and sales of power directed to the household. There are also complex market arrangements. Suppliers might be purchasing power from a wind farm. In such a case, determining where the supernormal profit accrues in the end requires detailed accounting analysis. The very nature of this legislation, in its interaction with tax consolidation law and company law, means that we have to get it right. That is why we felt it better to deliver two separate pieces of legislation, one to be enacted this term and one to be published this term, in order to best set out that technical work.
I specifically asked about 2022 revenues. The Minister will know about this point because I have raised it with him before. The cap on market revenues, which is the important piece in the Irish context given our energy landscape, only applies from 1 December 2022. The Minister will know that other countries have taken specific measures that go beyond the scope of the EU regulation. I give the examples of France, Belgium and Austria. The Minister will also know that the height of the profits and the height of the costs of gas on the international markets occurred between April and August and that the EU regulation does not capture that period. Is the Minister or the Government going to include a proposal in the finance Bill to tackle those supernormal and excess profits in the way that France, Belgium and Austria have done? I presume other countries will follow suit.
We are not going to go outside the EU regulation. We are always best legally and in every which way to work in tandem with EU regulations. On the flexibility allowed under those regulations, can the Deputy show me a country that has put a higher rate on the market cap mechanism?
In France, it is €100.
No. Our rate is significantly higher. It is based on very good analysis. Our wind resource tends to be stronger than that of any other jurisdiction.
It is €100 per megawatt hour.
We have gone further than any other government in looking to derive revenues from this. However, I have to say one thing: we should not have any false expectations as to the scale of the revenues involved or their impact on the overall area of energy policy.
It is the principle.
When this was originally established by decisions in Europe and by our own Government, gas market prices were at a level at which we might have expected much larger revenues. As the Deputy said, since then and in the first six months of this year, the price of gas on the wholesale market has fallen dramatically. That will see a much lower level of revenue from what was always designed as a mechanism to tap profits deriving from higher gas prices. When those prices fall, by definition, the revenue we might expect also falls.
The proposal specifically misses the period at which revenues were at their highest.
We are working under the European regulation.
