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Joint Committee on Environment and Climate Action debate -
Tuesday, 22 Feb 2022

Scrutiny of EU Legislative Proposals

We are here to further scrutinise EU legislative proposal COM (2021) 851, which is a directive of the European Parliament and of the Council on the protection of the environment through criminal law and replacing directive 2008/99/EC.

I propose that we give one hour to this discussion and in the latter part of the meeting we will discuss the other legislative proposals. Is that okay with members? Following this discussion, we will need to make a decision on whether it is necessary for a reasoned opinion to be sent to the Dáil on this particular proposal.

I welcome to the meeting officials from the Department of the Environment, Climate and Communications, including Mr. John Finnegan, principal officer. Mr. Aidan Ryan, who is joining us on Microsoft Teams, is the permanent representative of Ireland to the European Union in Brussels. He is very welcome this morning. Both Mr. Finnegan and Mr. Ryan will speak to COM (2021) 851. We are also joined by Mr. Noel Regan and Mr. Kevin Brady, both principal officers in the Department of the Environment, Climate and Communications as well. They are also very welcome this morning.

Before beginning I will read the note on privilege. I remind the witnesses of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity outside the Houses by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. If witnesses' statements are potentially defamatory regarding an identifiable person or entity, they will be directed to discontinue the remarks and it is imperative that they comply with any such direction. For the witness attending remotely and outside Leinster House, there are limitations to parliamentary privilege and as such, he may not benefit from the same level of immunity from legal proceedings as a witness who is physically present does.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. I remind members that they are only allowed to participate in this meeting if they are physically located in the Leinster House complex. I ask all members joining online from within the confines of the Leinster House complex to confirm they are on the campus. I also remind members they can attend the committee meeting in person if they so wish or by dialling in via their offices with Microsoft Teams.

Mr. Finnegan may now provide an opening statement.

Mr. John Finnegan

This statement relates to the proposal on the protection of the environment through criminal law. On 15 December last year, the Commission published a legislative proposal to replace an existing 2008 directive on the protection of the environment through criminal law. The Commission evaluated the 2008 directive during 2019 and 2020 and published the results of the evaluation in October 2020.

The Commission found that the 2008 directive had little effect in practice. The number of environmental crime cases investigated and prosecuted was still very low in the Commission's opinion. Penalties were considered to be too lenient to discourage environmental crimes and there was too little co-operation between member states in enforcing these laws. In addition, the Commission noted very little information on investigations was being gathered.

The Commission proposes to address these issues by introducing a new, expanded and reinforced directive, replacing the 2008 directive, on the protection of the environment through criminal law. This new directive will clarify the definitions of existing criminal offences and define nine new environmental offences. These are: placement on the market of products that cause substantial damage to the environment because of the products' use on larger scale; serious breaches of EU chemicals legislation causing substantial damage to the environment or human health; illegal ship recycling; illegal water abstraction; source discharge of polluting substances from ships; illegal trade in timber; serious breaches of rules on the introduction and spread of invasive alien species within the Union; serious circumvention of requirements to do an environmental impact assessment; and illegal production, placing on the market, import, export, use, emission or release of fluorinated greenhouse gases. The proposal would define sanction types and levels for environmental crimes, improve cross-border co-operation and investigation, ensure better data collection and sharing of statistics and improve the effectiveness of national enforcement chains.

Many of the issues raised by this proposal concern criminal law and the Department of the Environment, Climate and Communications is working closely with the Department of Justice as this proposal is examined by the Council of Ministers. The proposal will be considered by the working party on judicial co-operation in criminal matters, COPEN, formation of the Council, which brings together justice officials from member states. Other Departments will also be concerned with sector-specific matters relating to agriculture, water, industry and transport.

In terms of implications for Ireland, we view the next ten years to be critical if we are to address the climate and biodiversity crises which threaten our safe future on this planet. It is imperative that we protect our biodiversity and natural heritage against deliberate acts of systematic destruction of ecosystems, both nationally and globally. Tackling environmental crime is also a key commitment under the EU's Green Deal. This proposal includes robust measures that will define sanction types and levels for environmental crimes, improve cross-border co-operation, ensure better data collection and sharing of statistics and improve the effectiveness of national enforcement chains, including our own.

I thank Mr. Finnegan for his statement. I invite members to indicate if they wish to ask questions. As we have one hour for this part of the session, time is limited, so perhaps members will limit their questions to two minutes. Some members might like to spend two hours asking questions but we will put the limit at two minutes per question per member. If we have time, we will have a second or third round.

I will get the ball rolling. I might come in for a second round because as members ask questions, we might tease out more what this means and the consequences.

I welcome strengthened directives and legislation around environmental crime and crimes against biodiversity causing habitat loss. Currently it is fair to say that in Ireland we have a weak position and we do not have a very good track record of implementing sanctions against environmental crime or biodiversity loss. Any opportunity we have to strengthen that position is very much welcome.

The witness mentioned extra measures but I did not hear any extra measures around biodiversity and habitat loss. To what degree is that already contained within the original legislation? Is it envisaged that will be enhanced under this new directive? As I said, I welcome greater sanctions but the key question is whether we have the resources in Ireland to stop crimes against wildlife and the environment? Can we catch those perpetrators or do the witnesses feel this is something that must be much more heavily resourced?

Mr. John Finnegan

The existing provisions from the current directive, which are being carried forward, included provisions relating to biodiversity. The new criminal offences defined would criminalise activities in breach of environmental legislation that would harm ecosystems and biodiversity.

With regard to the sanctions and criminalisation, the picture the Commission found was that while authorities were in place in member states to police the existing crimes, this was ineffective because co-operation between them was not effective. Therefore, the view of the Commission is that by improving co-operation between member states, prosecutorial and investigative activity will be much more effective. The Commission draws attention to the fact that the definitions of the crimes before 2008 were different in different member states. Some member states did not define them as crimes. It was found in the evaluation that the directive gave enough discretion such that the definitions were still different, and this caused difficulties, including practical difficulties, in cross-border investigations. Since the definitions and sanctions were different, it was not even possible to use legal machinery such as the European arrest warrant. The reasoning behind what was proposed was that by tightening the definition of the crimes, expanding the list of crimes and harmonising the sanctions, the existing investigative activity would be much more effective. This was because people could co-operate between member states. Obviously, environmental damage does not respect member state borders. In the Commission's view, which seems reasonable, investigations have to cross borders as well.

Mr. Finnegan is saying EU cross-border co-operation will be more effective. However, would he advocate a strengthening of resources in Ireland because our record on environmental crime, wildlife crime, prosecutions and charges is not good?

Mr. John Finnegan

We are at an early stage of scrutiny. This matter relates to one of the complex aspects of this legislation. In our Department, we define the standards but we have to work with the Department of Justice and the enforcement authorities to determine what the real implications of the provisions would be. It is definitely part of our scrutiny to determine the implications regarding our resource needs and ascertain whether the right resources will be in place.

I have just a couple of questions. Mr. Finnegan mentioned better co-operation between national authorities. Domestic co-operation also seems to be key. In that context, Mr. Finnegan mentioned co-operation between the Department of the Environment, Climate and Communications and the Department of Justice. In fairness to the Minister of State responsible for heritage, Deputy Noonan, he has pushed the idea of the wildlife crime unit. The Ministry responsible for heritage would seem to comprise another key point. What are the plans to ensure those elements intersect?

Let me refer to an issue in which I am very interested. I do not believe we need to wait for the directive to come into place to assume there is a problem, that is, the serious circumnavigation of the requirement to make an environmental impact assessment. Ireland has an extremely poor record on conducting environmental impact assessments and constantly seems to be coming up with new reasons as to why we do not need to conduct them.

With regard to resources and capacity, how has the capacity increased over the past year or two? What are the plans to increase it in respect of environmental impact assessments, including in respect of the public's capacity to support them? This has come up in multiple areas, including forestry.

There are two points that I noted. Mr. Finnegan mentioned deliberate acts. I was a little concerned when I heard that. Could Mr. Finnegan clarify that it is not the Irish position that one has to prove bad intent? An act that is the result of negligence still has the same bad environmental impact as a deliberate act. Indeed, the precautionary principle under EU law and practice under the treaties implies it is about due care being taken. Could Mr. Finnegan comment on how the precautionary principle is likely to be reflected in our approach to the directive? Could he clarify that it is not solely deliberate acts but also acts that come about through negligence that he believes might be covered?

I thank the Senator. I will allow her in for a second round later. I believe we will have time.

Mr. John Finnegan

I thank the Senator. She made a very good point on the need for internal co-operation on both scrutiny and execution. This is because each of the nine new offences will require the expertise of other Departments for scrutiny. It is to ensure that the directive reaches its best possible form and that there is co-operation in enforcing it.

The first offence is the placement on the market of products that, in breach of mandatory requirements, cause substantial damage to the environment because of their use on a larger scale. The existing requirements that limit the use of certain materials are the responsibility of the Department of Enterprise, Trade and Employment. They are often enforced by the Health and Safety Authority, so we will have to scrutinise the provision with it. It would have to take a leading role in this. That is a good example of the structure in that the standards are in existing legislation — in this case, in the REACH directives and other measures on the use of chemicals and other raw materials in manufacturing. Certain things are forbidden on a civil or EU law basis. The directive under discussion does not change that standard; it just states certain egregious breaches of the existing standards will become a criminal offence.

The second new offence concerns serious breaches of chemicals legislation. Again, the existing standards, which are just being reinforced, will need to be scrutinised by the Department of Enterprise, Trade and Employment and the other existing stakeholders.

The third offence relates to ship recycling. There is existing legislation setting standards for the recycling of ships. It is the responsibility of my Department. We will have to examine closely the effects of imposing criminal sanctions for serious breaches.

The fourth offence concerns water abstraction and makes abstraction a criminal offence if it causes substantial damage. Again, this would have to be considered by the Department of Housing, Local Government and Heritage, which is responsible for existing legislation related to water and which would have primary responsibility for enforcement.

The fifth new offence, on the discharge of polluting substances from ships, will require scrutiny by the Department of Transport, which would have to be involved in enforcement.

The sixth, on placing illegally harvested timber on the EU market, would obviously require the scrutiny of the Department of Agriculture, Food and the Marine, which would have to take a leading role.

The seventh concerns serious breaches of rules concerning invasive species. This and other biodiversity matters are the responsibility of the Department of Housing, Local Government and Heritage. As the Senator mentioned, there are provisions to criminalise a failure to carry out proper environmental impact assessments in certain circumstances. That is part of our planning system. There are existing standards in this regard that are the responsibility of the Department of Housing, Local Government and Heritage and various bodies under its aegis.

The ninth offence primarily concerns my Department. The change made means that the release of fluoridated greenhouse gases into the atmosphere will become a criminal offence. The Senator made the very good point that this legislation will require whole-of-government scrutiny to ensure it works properly and whole-of-government action to enforce it.

The subject of environmental impact assessments is controversial, as the Senator suggested. We will be discussing with our colleagues who are responsible for that aspect of the planning system the best and most appropriate way to add criminal sanctions in a helpful way. I am afraid I cannot help the Senator very much with the details of the system and how it is currently working, but I am sure we can return to that. Colleagues in the responsible Department can answer specific questions on the current system.

The Senator raised a very interesting question that has been raised by member states. It concerns the distinction between a deliberate act and a negligent act. My colleague the attaché may join in on this. In summary, there have already been two days of discussion on the directive, at the end of last month. The first three articles were gone through. Exactly the kinds of questions being discussed have been raised. For example, is the definition of "unlawful" in the directive appropriate?

Is there a need for mens rea for something to be a criminal act? What should the distinction be between deliberate and negligent acts? What is the standard for negligence? These are very technical and very important legal principles, and we are working with the Department of Justice to ensure that what is implemented works well in our system. Certainly, the intention of the directive as it stands is that it covers deliberate acts and negligent acts. It covers natural persons and legal persons. What is needed now is the technical scrutiny to ensure the directive has its intended effect in a common law jurisdiction.

Does Mr. Ryan wish to come in on this question from Brussels?

Mr. Aidan Ryan

I will add to Mr. Finnegan's comments. This proposal is at a very early stage. It was tabled by the Commission in December. We have had one meeting so far. All there has been time for is to have a first-cut review of articles 1, 2 and 3, which involve the definitions and the offences. As Mr. Finnegan said, the proposal addresses that offences must be unlawful and committed intentionally. There is also a reference to serious negligence. Recognising that the European legal system is slightly different from ours, we have to analyse and study the effects of this. We are not alone here. The member states are also querying exactly what has been proposed in these definitions and are looking for clarity. We expect the Presidency and Commission to listen to the questions that are being raised by the member states and to come back at a later stage with some level of clarity and discussion to try to reach a harmonised view. The text being looked at is at a very early stage and a lot of work needs to happen before it is finalised.

I move to Deputy Cronin who is also joining us online.

I confirm I am in the building. To follow up on Senator Higgins, what has been proposed is critical, but I baulk at the appearance of the word "serious". Who will define the seriousness and what criteria will be used? I ask the same question about the word "systematic". It is all terribly vague really. When we are talking about environmental crime, some people might immediately think about the fossil fuel industry. We always talk about greenwashing. One could say that the planet is more or less a crime scene because of what the fossil fuel industry has inflicted upon it. I know what has been proposed is critical, but will the Department provide any reassurance in that regard?

Mr. John Finnegan

I can only refer back to Mr. Ryan's account of the discussions in Brussels and it appears the Deputy's exact concerns are being raised. It is worth reminding the committee that nothing in this would dilute existing provisions. Something that is already illegal under European law, such as to pollute or to harm a habitat or so on, will remain illegal. The existing sanctions under European law, including the requirement to cease those acts and fines for infringement of existing European law, will remain in place. What we are talking about here is a push to criminalise unlawful acts that are in breach of existing legislation. Deputy Cronin put her finger on the difficulty and what we are working with the Department of Justice on to ensure that the definitions of what is deliberate and what is negligent are clear and workable so that they can work in practice and achieve the desired effect.

May I interject? Will Mr. Finnegan educate us on the timeline for the passage of this proposal? We are hearing that it is at a very early stage. What happens from here?

Mr. John Finnegan

In outline, it is at a very early stage. The next meeting is due to take place tomorrow. The Presidency is going through the directive article by article. It is quite lengthy so there will be a number of meetings. What is Mr. Ryan's sense of how many of these meetings will be involved and how long that might take?

Mr. Aidan Ryan

The next meeting is tomorrow. The first cut of three articles has already taken place over a two-day meeting and that raised more questions than answers. The next meeting is tomorrow. The French Presidency will control the speed at which this will progress. At the moment, we do not expect the Council to be in a position to finalise its position until the very end of the French Presidency and possibly to seek a general approach at the final meeting of the Council of Ministers of Justice towards the end of its Presidency in June and July. After that, it will begin to go into the trilogue process with the European Parliament. We will have some feedback from the European Parliament on its views of the process.

It is great to have the witnesses here and I thank them for their attendance. The concept of environmental crime has not been treated very seriously in this country in recent years and that is why it is so important that directives like this are. This leads into my first question. Does the Department believe, in the context of other European countries, their standard of environmental law is substandard or poor? Is that why a directive like this is needed for member states across the European Continent?

I refer to improving cross-Border co-operation. I come from Dundalk, a Border area. The most significant environmental crimes that I have seen in my eight years of politics is fuel laundering and the dumping of illegal toxic sludge, not only on our roadways but in our rivers and lakes, which I have physically seen, of Border areas. That has actually decreased in recent years because of the dye and other measures we have introduced as a way of combating it. However, it is still an extremely serious issue in the part of the world from where I come. If possible, that is an area we need to focus on. I would love to hear more detail. I know it may be difficult to give details now because it is at an early stage, but it would be important to get more detail on what we can do in terms of cross-Border co-operation, particularly when going from a member state, the Republic of Ireland, into Northern Ireland which is no longer in the European Union.

Who would be the enforcement authority of this? Will it be done on a cross-sectoral basis? Will it be the Environmental Protection Agency or the Department of Justice? Who will be the enforcement people of this?

Finally, I have a quick question, a basic one. Will the Department give a rough outline of the timeframe involved in this directive from start to finish and when can we expect to see it being implemented?

Mr. John Finnegan

I am reluctant to characterise any member state's environmental regime as being substandard. The Commission carefully, in its extensive review, did not criticise any member state's system. The point it made, and it is the basis for all of this, is that they differ. We are in a situation where if the system differs in its definition of crimes or even in its sanctions, it is operationally very difficult for people to co-operate. One can imagine the sort of co-operation involved. The Senator raised a very good local example of it. The Commission is aiming to create that standardisation whereby, operationally, everybody is aiming for the same thing and that the legal mechanisms that already exist for arrest warrants and searches and so on can be triggered.

It is also worth saying that although the Commission does not criticise any individual member state, it has said that harmonisation does not just allow co-operation. It said that where there are differences in levels of criminal enforcement and definitions of crime, there is a danger of creating safe havens. It does not name names. This is theoretical. There is, at least in theory, a danger of areas of lesser enforcement, thereby creating safe havens, unfair competition, distorting trade, and penalising the good actors who, in good faith, try to follow these regulations and rules.

On the co-operation issue, our understanding of this proposal at this stage is that it is the type of measure that is intended to deal with that. Washing diesel and dumping the residue breaches any number of existing rules and there are a similar number of civil penalties. People can be forced to stop doing that and clean it up. This would go further in providing that, in certain circumstances, that becomes a crime. What we need to do in the scrutiny of this proposal is to set out what happens in our jurisdiction and produce a workable set of definitions and language for this directive that criminalises that practice.

To respond to the remarks on cross-sectoral enforcement, many Departments and agencies specialise in this issue. The Health and Safety Authority is involved, as is the National Parks and Wildlife Service, the Irish Coast Guard and agencies involving ships. It will be a case of giving additional powers to existing agencies which are the experts in these areas. One of the issues will obviously be that if they are enforcing criminal law, co-operation may be required from other agencies. I cannot speak to that because we are at an early stage. I have to repeat that a bit. Those are the sort of complex issues which have to be considered. I can tell the committee that the 2008 directive was very complex to transpose for exactly that reason because it involved changing the legislation governing many existing Departments and agencies.

Enforcement could be made more difficult in some areas because responsibility rests with so many different Departments. Perhaps it would be useful to have a lead organisation or Department with overall responsibility.

As no other members are indicating, we will have a second round of questions. Senator Higgins will be first.

Senator McGahon’s point on having a lead agency is a good one. I was wondering which body would have primary responsibility.

I want to follow up on two or three words. Mr. Finnegan referred to the idea of tightening the offences. While he said the offences will still be unlawful, I am a little concerned that the tightening of offences might mean excluding certain things that would be considered unlawful now from the new definition of a crime.

I raise again the issue of "serious" or "systematic". I am worried that we are creating new loopholes or defences. For example, with the idea of mens rea, we know that intention is extraordinarily hard to prove in the law. It is almost impossible do so and, in fact, the Government recently introduced legislation on the argument that intention is too hard to prove. In that context, it would be useful to know what Ireland is doing at the Council meetings. Are we being clear around the idea of negligence in the discussion of such matters as “serious” or “systematic”? What is our position in those discussions?

I mentioned the precautionary principle. Serious negligence is one thing but the precautionary principle is a little different. It is an obligation to take appropriate measures and steps. For example, if a company has an incident in Lithuania and then allows another incident to take place in another country, surely at that point it has failed to apply a precautionary principle. I want to get a sense of where the Department stands on these issues.

Mr. Finnegan indicated he may be able to follow up around environmental impact assessments, which will obviously be key to this. If the Department could follow up, it would useful to know what public resources - staffing, financial and other - are available to support environmental impact assessments, how that has changed in the past year or two and what the plan is for the following number of years. It is clear that this is a tool that we will need more and earlier in processes. I am a bit concerned that we might take the approach we have taken in the past, namely, one where we try to apply it in fewer and fewer cases rather than trying to resource it in a better way. If Mr. Finnegan does not have the information to hand, perhaps he will provide some written answers.

Mr. John Finnegan

I thank the Senator very much. The points she makes are very valid and I would take them nearly as advice. She is right that a lead agency can be very useful. We are at a very early stage here and when we are thinking about transposing this directive when it takes its final form, establishing lead responsibility, if it is possible, could be a very valuable thing to do.

The Senator also made a very good point on another issue. Expressly, the Commission has said it is tightening the definitions so that they are harmonised. At the moment, with what one might call looser definitions, different member states have ended up with different interpretations. There is obviously a risk that tightening something also narrows it, which may exclude something one wanted to include. That is exactly the sort of scrutiny that will be needed as we follow this through the Council, and as the Dáil and Seanad continue to follow this also, in order that we do not have unintended effects as we try to tighten and refine our definitions.

The questions the Senator is raising are powerful and go to the heart of what will have to be decided in Council. It is the interaction between this legislation and our criminal law because the ideas of mens rea, negligence and criminalising, as the Senator stated, a breach of the precautionary principle would represent a change in our criminal law. That is exactly the sort of issue we are at the start of addressing with the Department of Justice.

It is worth noting that we are in a particular position as a member state because with the exit of the United Kingdom, Ireland, unlike just about any other member state, has a common law system. This means there is a significant difference between our criminal justice system and those of other member states. In recognition of this, Articles 1, 2 and 4a of Protocol 21 on the position of what was then the United Kingdom and Ireland in respect of the area of freedom, justice and security, which is annexed to the Treaty on European Union and the Treaty on the Functioning of the European Union, states that we actually have an option not to take part in this measure, if it proves impossible to reconcile that with our common law criminal justice system. All I can say on that is that the full implications of the measure are still being considered. Necessary legal advice will be obtained from the Attorney General’s office in due course. That will give us a clear sense as to whether Ireland will be able to participate and how we can participate in it. If it is proposed to participate, it is a matter that will be formally considered by Government and thereafter by both Houses of the Oireachtas.

We made a declaration at the time of that protocol indicating that we intended to opt in to this type of area to the maximum extent possible. That approach will be adopted here. However, the Senator raises very difficult and important issues, including that something drafted and legislated for in a system in another member state does not automatically work here. We need to ensure the language has the intended effect. More work will be done on that and we will return to the Government and Oireachtas on that question.

I thank Mr. Finnegan. I will add to Senator Higgins’s question on the timeframe for this discussion. Mr. Finnegan stressed that we are at a very early stage, and I appreciate that a great deal of work needs to be done. There is perhaps a conflict across member states with regard to how they deal with wildlife and environmental crime and so on. What is the thinking in the Department in respect of the fact that this EU legislation could be coming down the tracks and it may or may not go anywhere? Is there a view in the Department that this is a parallel process which will not influence reforms nationally? Are we going to get on with improving our legislation on environmental crime? I am concerned that the signalling of this legislation from Europe could put a stay on improving the situation here at home.

Mr. John Finnegan

This is one of the areas where we have to work in co-operation with another sectoral department because the National Parks and Wildlife Service is under the aegis of the Department of Housing, Local Government and Heritage. It retains responsibility for biodiversity and wildlife issues. We are working with it on the scrutiny of this, but I do not yet know what its thinking is.

I thank Mr. Finnegan. We should perhaps find that out ourselves. Does Senator Higgins have a question on this particular issue?

I want to confirm that we can get a little more information in writing around environmental impact assessment resources. It would probably be a very poor mark for Ireland if we tried to opt out of progress on environmental legislation, whatever about the UK. I do not think we should use any threat of that to dilute ambition collectively in Europe. That would certainly not be something we would want to do.

The opt-out option is not something we want to use, but if I heard Mr. Finnegan correctly, we will hold that option if what is coming from Europe is of lesser effect than what we have here in Ireland.

Mr. John Finnegan

We hold that option. The risk is exactly as the Chair has said, namely that something might dilute what we already have. In a clash of systems, it can cause confusion and make things unworkable. The intention declared at the time of the protocol, as is the intention here, is very much to make this work and participate in its development.

To make it better.

Mr. John Finnegan


To be clear, I was not saying that it might be deleted. My concern is that we might seek to dilute it. We should be part of it. In further, we have committed to being part of improving standards. I do not want to delay things further, but I ask for clarification in writing.

Mr. John Finnegan

To be clear, we raised the question of criminal sanctions for breach of EIA requirements. The Senator asked for more details on the existing resources to enforce the requirement to carry out EIAs.

I asked for details on how to support EIAs. When the absence of them becomes a criminal penalty, we will of course need to make sure we know about the public resources to support EIAs, how they have changed in the past year or two and how it is planned that they will change in the future.

Mr. Finnegan mentioned a ten-year timeframe. Given the urgency of the climate emergency we are facing, it seems somewhat lax and optimistic, if he does not mind the irony. It is too late for window dressing. What are Mr. Finnegan's feelings on a ten-year timeframe?

Mr. John Finnegan

The ten-year period is not intended to be our ambition for this piece of legislation. The significance of the ten-year period at the time of the announcement was that it involved the period up to 2030. A lot of important work, including this Bill and work on climate change, will take place over the next ten years. It is certainly not our ambition for this individual piece. As my colleague, Mr. Ryan said, the presidency is pushing this very hard and it appears it will reach its next big milestone in Europe by the middle of this year.

I thank Mr. Finnegan. Mr. Ryan should feel free to come in at any point. Are there any more questions from members? We have concluded that element of our hearing today. We will not adjourn because the officials who are due to speak to the other legislative proposals are with us already.

Mr. Regan and Mr. Brady are very welcome. I do not need to read the note on privilege again. We have just about two hours from now to conclude the meeting. If we stick to the two-minute rule we should have plenty of time for a back and forth discussion with the officials. Is that agreed? Agreed.

COM (2021) 803 is a proposal for a directive of the European Parliament and Council on common rules for the internal markets in renewable and natural gases and hydrogen. COM (2021) 804 is a proposal for a regulation of the European Parliament and Council on the internal markets for renewable and natural gases and hydrogen. COM (2021) 805 is a proposal for a regulation of the European Parliament and Council on methane emissions reduction in the energy sector and amending regulation. Following the engagement of this committee, this committee will make a decision on whether it is necessary that a reasoned opinion is sent to the Dáil on these particular proposals. Mr. Regan has an opening statement.

Mr. Noel Regan

I welcome the opportunity to discuss with the committee the Commission’s proposals for the hydrogen and decarbonised gas market package and the regulation of methane emissions. On 15 December 2021, the European Commission published two legislative proposals revising the 2009 gas directive and gas regulation, with the aim of decarbonising the EU gas market by facilitating the uptake of renewable and low-carbon gases, including hydrogen.

The underlying aim of the proposals is to create the conditions for a shift from fossil natural gas to renewable and low-carbon gases, in particular biomethane and hydrogen. They seek to establish a market for hydrogen by creating the right environment for investment and enabling the development of dedicated infrastructure. The proposed new market rules will cover access to hydrogen infrastructure, separation of hydrogen production and transport activities and tariff setting. The intention is that they will be applied in two phases, before and after 2030.

There will be a flexible regulatory regime up to 2030. However, after 2030 it is clearly signalled that the rules will be similar to the current rules for natural gas, for example, that hydrogen network operators must be fully ownership-unbundled and regulated tariffs and open access to networks will apply. The new rules are intended to make it easier for renewable and low-carbon gases to access the existing gas grid by removing tariffs for cross-border interconnections and lowering tariffs at injection points.

Another priority of the package is consumer empowerment and protection. Similar to the provisions already applicable in the electricity market, the package provides for consumers to switch suppliers more easily, use effective price comparison tools, get accurate, fair and transparent billing information, and have better access to data and new smart technology.

In regard to the matter of security of energy supply, under the proposals for gas regulation amendments are also proposed to strengthen the resilience of the gas system, with a particular focus on the role of gas storage. On 15 December 2021, the European Commission also published its proposals for a regulation on methane emissions. The legislative proposal on methane emissions reduction in the energy sector would establish a new EU legal framework that requires oil, gas and coal companies within the EU to measure, report and verify their methane emissions. It also proposes that importers of fossil fuels would be required to submit information about how their suppliers perform measurement, reporting and verification of their emissions and how they mitigate those emissions with a view to the Commission introducing more stringent measures on fossil fuel imports by 2025.

The aim of decarbonising the EU gas market by facilitating the uptake of renewable and low carbon gases is in line with the EU’s climate targets and will help to support the delivery of Ireland’s ambition set out under last year's climate action plan. The proposals for hydrogen in regard to market access, a transitionary approach to regulation and arrangements to move from a natural gas system are considered to be positive proposals, although they need detailed consideration.

Similarly, the proposals on gas security and integrated planning across electricity, natural gas and hydrogen should help support a planned approach to the energy transition. However, all of the proposals need to be carefully assessed in the context of Ireland no longer being directly connected to the EU market, now that the UK has left the European Union. The provisions to mirror consumer rights in the electricity market to those in the gas market, such as improving the ease of switching supplier, greater transparency in billing information and more effective price comparison tools, are positive developments. The proposed regulation on methane includes key transparency measures that are an important first step in addressing the methane associated with natural gas imported into the EU. However, the proposals do not go as far as national policy envisages. In particular, the Policy Statement on the Importation of Fracked Gas, published in May 2021, sets out that the Government will work with like-minded European states to promote and support changes to European energy laws in order to allow the importation of fracked gas to be restricted.

On Friday, 18 February, the Department launched a consultation to gather the views of stakeholders and interested parties on this package, which will inform the further development of Ireland's position on the proposals. The closing date is Friday, 15 April.

I thank Mr. Regan. If I may, I will go first this time. I have a considerable concern about these proposals, and I believe it is reflected in Mr. Regan's opening statement, which is that there is no distinction being made between green hydrogen, which is something that we would pursue probably quite vigorously in Ireland because we have the renewable energy resource, and other forms of hydrogen, particularly those that are created using fossil fuels. If we, as the continent of the EU, go down the road here with hydrogen we must be very careful that we do not save the fossil fuel industry by giving it a route via generating hydrogen using processes other than electrolysis of renewable electricity. This is a serious concern I have about these.

My other concern is about how we use hydrogen and how we will use hydrogen. It seems to me that these proposals suggest that hydrogen would be mixed with natural gas to lower its carbon intensity. That is just about the worst use of hydrogen we can have. That is locking in gas use for a long time, for decades to come. If we go down the road of saying that this is how we use hydrogen, it is a very inefficient use by the time the renewable electricity has been converted to hydrogen. One is injecting it into the grid for burning a boiler in somebody's home, which may only be 80% or 90% efficient. There are very significant losses there. We should directly electrify as much of our economy as possible, but where we are using hydrogen it should be where we have to use it. If we are burning hydrogen in gas boilers and transporting hydrogen via the natural gas network, there are colossal losses in that. It is not the best use of energy that we are going to create in the development of a scaled up renewable energy sector. There are different ways to use it. I have concerns that some of these directives are sending us down a path that is not the best use of the resources we have. Perhaps Mr. Regan would care to comment.

Mr. Noel Regan

The legislation has created two distinct types of renewable and low-carbon hydrogens. There is pure renewable hydrogen, which is referred to as green hydrogen, and which Ireland supports. They have created a second category called low-carbon hydrogen. The test is that there must be 70% emissions reduction versus current levels. There are a couple of points on that. First of all, there are a limited amount of ways in which one can make hydrogen: renewable hydrogen and electricity from the grid. If one is not located directly beside the renewable power station then one might take electricity with some level of carbon. That is the question. Low carbon gases would seem to fall into this category. Nevertheless, there is still the ability to create hydrogen from fossil fuels, for example, without carbon capture and storage, CCS, which would not even fall in that category. As the Chairman has said, one is simply replacing one fossil fuel with another form of fossil fuels. That does seem to be an issue that needs to be addressed. The Commission has not addressed it in a way that stops it, essentially. Rather, it has addressed it in a way to incentivise the other two of renewable hydrogen and low-carbon hydrogen. That issue is going to have to be resolved. Where we are today is that the hydrogen in Europe is largely made of natural gas and it is done without carbon capture and storage, so it is not a good process, and I would certainly not want to see an extension of that process.

On the use of hydrogen, yes we absolutely want to see a focus on where the use of hydrogen in Ireland should be. We intend to do a consultation on that very question during the year leading up to the next climate action plan. In the positive sense, we have some good signals. We will be developing offshore renewable electricity, which could be a good source for hydrogen. With hydrogen use in Ireland we know that heating will focus on energy efficiency, district heating and electric heat pumps. It is not an obvious place for hydrogen to be used in Ireland. Similarly, with transport it is about public transport and electric vehicles. The likely home for this in transport, if it is to be used in transport, would be for heavy duty vehicles, maritime and possibly aviation somewhat further down the line.

I echo what the Chairman has said, that this should be used after energy efficiency and after electrification. The benefit is that it can find to those difficult to decarbonise places, for example high-temperature heating in industry, which is proving very difficult to decarbonise.

That would be Ireland's approach as is set out in the climate action plan. Through our scrutiny of this legislation we must assess whether the gate is too open and that we do not go in the direction of the fossil fuels. We must also recognise that each member state will need some differences. For example, Ireland is not a heavy industry country compared with others, so they might put more of their hydrogen there versus our use. There will be some changes but ideally not enough that fossil fuels would be the answer.

I am very happy to hear that answer on Ireland's position. It sounds at odds with one of the major suppliers of energy, which I believe does want to go down the low-carbon gas route. Is that the position of the Department now, that we do not see hydrogen in the natural gas grid in the way we are going?

Mr. Noel Regan

The Commission rules are that they have limited cross-border trade of hydrogen to 5%, so there is a natural restriction put in the legislation. That will be there. What we must work out, through our consultations, is the transition period. Essentially, Ireland has no market and if there is a role for the natural gas grid, it must be asked whether it is injection or for a period where it is put in and used for specific customer uses such as high-temperature heating. There may be value there. For example, those customers who use high-temperature heating in Ireland would typically use natural gas and they are connected to the gas grid. There may be such cases that makes sense. With the package, over time the idea is to transfer completely to hydrogen and with the transition there may be some scenarios where it would make sense, but possibly not for heating homes and other certain areas like that.

I am not sure how that would be done technically. If one injects hydrogen into the grid then one has no control after that.

Mr. Noel Regan

Technically it would have to be directed through the accreditation scheme and it would have to be a transfer swap. There are limits to how much hydrogen one can actually physically put into the natural gas grid, because the end-users' systems may not be able to use it.

I thank Mr. Regan for his presentation. One of the areas that interests me is what Mr. Regan had to say about consumer protection. The Commission for Regulation of Utilities was before the committee last week and we discovered that of the 72,000 premises that now have smart meters only 44,000 of those have been offered the opportunity to switch to cheaper off-peak or renewable electricity.

This directive is designed to respond to that. Why is it so low in Ireland? Will it take this directive to change behaviour? Is there capacity to anticipate some of the expectations of this legislation? The officials might tell us exactly what requirements will be placed on companies to ensure smart meters are used.

We do not have what Mr. Regan described as useful advanced information about customers' bills being presented in a timely way which would facilitate ease of switching. We have completely the opposite, with maximum friction put in and minimum information to allow customers to avoid much higher charges than are necessary. What protections and obligations are going to be placed on companies and how soon are we likely to see them in Ireland? Could we move ahead of the legislation to introduce such protections? A lot of consumers are under considerable pressure at the moment.

Mr. Noel Regan

There are proposals in the directive for smart metering. The case for smart metering in gas is slightly weaker than electricity given that gas can be balanced over a longer period. Essentially it is not real-time balanced by the grid operator. The pricing signal is daily, essentially, not half hourly like the electricity. This is recognised in the legislation which provides that each member state must do a mandatory cost-benefit assessment, CBA, as to whether smart meters for electricity and gas make sense. However, Article 19 of the directive provides that the customer be given the right to get one anyway. There is a CBA basis for each member state to do it if it makes sense in their countries. Even if that is negative, the customer has a right to a smart meter. That is enshrined in the legislation. Before I turn to Deputy Bruton's second question, on what the Commission proposed in respect of hydrogen, there is an opportunity here to set up the hydrogen market learning from the lessons of the gas and electricity market. They are saying that from day one, every meter for hydrogen is to be smart. There will be no old-fashioned meters, as it were.

There are several articles pertaining to consumer empowerment. There are basic contractual rights, including to transparent information on prices and tariffs, a wide choice of payment methods and plain and unambiguous language. There is also a right to switch within no more than three weeks. If the Deputy wanted to switch today, the switch would be complete within three weeks. There is also a mandatory comparison tool. Each member state must have an easily usable comparison tool that customers can access free of charge to understand their different products.

Finally, something new in gas that will probably follow electricity is the right to be an "active customer". In electricity that mean a solar panel on one's roof that connects to the grid. There is work to be done in gas but it could be small bio-methane on a farm, for example. There will be a right to get to the grid and access one's renewable gas into the system. There is a suite of measures in this legislation for gas which mirror those in electricity.

The Deputy asked if it is possible to do these. The answer is "Yes". It is something we can discuss with the Commission for Regulation of Utilities, CRU, in terms of examining the provisions and assessing which of them could be brought forward ahead of the legislation. We do not expect the legislation to be dealt with in this Presidency but most likely in the next Presidency, that of Czechia, in the latter part of the year.

Could the officials seek to include a requirement that when a customer makes contact about switching they get a rapid response? At the weekend it emerged that half the calls made to some banks are abandoned because no one answers. Could legislation like this make it a requirement that companies report on their responses to calls and have a minimum requirement that customers can contact them and avail of all the wonderful protections Mr. Regan has outlined? If they cannot make contact with their provider it is all set at naught.

Mr. Noel Regan

The legislation comes at it by addressing specific issues in switching such as timing and switching fees. While there is no reference to the point the Deputy raises, it is certainly something we can take away and consider. The timing provision is in respect of the time to switch when someone has made the decision and confirmed it. There is no timing restriction on the point at which a person is trying to access their current provider. That is something we can take away and seek to raise through the legislation. This legislation will apply to gas specifically. There is an opportunity here in the switching articles, and there are several of them, to get it right.

I thank the officials for their presentation. I have a bit of a problem with using hydrogen on its own. We should be more specific about bringing in hydrogen. I was delighted to introduce a Bill on green hydrogen strategy a couple of weeks ago with Sinn Féin's climate spokesperson, Deputy Darren O'Rourke. We are really going to need a key fuel source if we are going to meet our commitments under the Paris Agreement. Green hydrogen has really good potential not just for heating homes but also for transport. I am a Deputy for North Kildare, which has turned into something of a logistics hub for heavy goods vehicles. Electricity is not going to be able to meet that. We are on the western edge of Europe. We have an abundance of offshore wind and we are ready to harness that potential. Despite the millions spent on consultants and advisors, Ireland does not even have a green hydrogen strategy. Scotland had one in 2015 and the European Commission had one in 2020. We cannot just depend on the private sector to be able to meet our climate targets. Do the officials have any comment on that? Do they have any comments on the fact that we do not have a green hydrogen strategy in Ireland yet?

Mr. Noel Regan

In response to the Deputy's first question, this legislation does two things. It creates the market for hydrogen and the network access for that market. It is facilitative. It still allows Ireland to make its own choices as to how it creates the hydrogen and where it is used. We operate within the market but we are allowed that choice. Our intention is to have a hydrogen strategy within the climate action plan for 2022. The timing is quite opportune in terms of where we are today. The 2021 climate action plan sets out those points I made earlier as to where the hydrogen opportunities will largely be in Ireland, given that we are making developments in offshore wind, for example. There are a lot of actions relating to hydrogen within the climate action plan 2021. There is research going on within Government Departments. The SEAI also has a programme of research. I assure the Deputy that there is work going on from the last climate action plan and many actions that will feed in to where we are. In terms of stepping forward now to our own hydrogen strategy, on top of the climate action plan we now also have this legislation, which is really important because it sets the market and arrangements that the strategy will be based on. It is a key piece.

Our intention is to consult on the strategy in the coming months and the summer in order that we are then ready to have the hydrogen strategy as part of the climate action plan for 2022. I agree that this is an opportune moment. We now have the basis for our actions in the climate action plan for 2021. This is not agreed legislation but at least it shows clearly the pathway for the market and we can now prepare our strategy on that basis.

Does Mr. Regan have any comment to make on our not being completely dependent on the private sector or on how governments could be proactive on this and not just dependent on the private sector to fill a gap? As for our energy supply, we know what it going on globally. Our trucks need to be able to move and our homes need to be heated.

Mr. Noel Regan

Obviously, there is a role for the public sector. I mentioned the SEAI. It has a research role. Looking at the legislation, there will be roles for others. We need competent authorities to set up and to regulate the market. Our Department will have to prepare a strategy and identify how that will develop. There is a significant need for investment and innovation in hydrogen. Currently, the scale of hydrogen production by renewable means is quite small, so fostering research and development and working with our agencies on that will probably be one of the key things we can do to instigate this market. Working with our European partners and fellow member states will be fundamental too, as will having a market and European access to that research and sharing. I think there will be both, as Deputy Cronin said. We need private investment, but Departments and Government agencies will have a key role.

I am conscious that we are here to speak to the EU element of this but we are hearing very interesting answers from you, Mr. Regan, so I will interrogate you a little. I will understand if this question might be deferred to the strategy, but are subsidies for hydrogen seen as part of enabling the market and the sector in this country? Is that the thinking in the Department?

Mr. Noel Regan

We are certainly not there yet. The strategy will be developed. We will consult on the different options. I think we will look at other member states and see what they are doing. We have a renewable heat obligation in the current climate action plan, so there will be an obligation on heat and we will see how that could work. We have some schemes that may be adaptable to hydrogen. As for the scale and extent of that, frankly, there is more work to do through the year.

Thank you for that, Mr. Regan. The committee has agreed to do a significant piece of work in the next five weeks on that bigger ambition, that is, the west coast offshore potential of 30 GW as opposed to 5 GW. That is very much coupled with green hydrogen. We intend to bring in a series of stakeholders to discuss that and we may reach out to the Department again during that series of sessions we will do.

Senator Higgins is waiting to speak.

You are right, Chair, that there are so many interesting questions arising from this discussion already. Deputy Cronin's framing of this is really useful, and I think it would be useful if that were the framing at EU level. We should start mentioning green hydrogen every time we mention hydrogen. One of my concerns relates to the issue of green hydrogen and the important role hydrogen can plan as a supplement and a support to electrification. The area that electrification may not be able to reach through green hydrogen has been muddied a little by placing it in the hydrogen strategy. As for the proposed new body, the European network of network operators for hydrogen, ENNOH, the concern is that green hydrogen may end up being a smaller player within that new network and that many of the oil and gas representative organisations will still be there. I am interested in that push towards the Beyond Oil & Gas Alliance, to which Ireland has signed up, and the EU and US methane pledge. Those are two really significant signals that Ireland sent as to where we stand on an exit from gas, recognising it as a fossil fuel. How are those commitments Ireland has made factoring into the positions we are taking in the negotiations on these matters?

Could the witnesses comment on the infrastructure surrounding gas? I am concerned that the EU directives as shaped at present still prolong that infrastructure. Could the witnesses comment on such ideas as the banning of venting and flaring, which has been proposed, mandatory leak detection and repair and some of the other mitigation measures surrounding gas? The problem is that when that infrastructure is kept in place, there is the challenge of decommissioning it.

Could the witnesses comment on the Energy Charter Treaty? The European Parliament, I think just last week, produced yet another really strong opinion expressing concern about the treaty. The concern is that if, in full knowledge of climate impacts and of what the United Nations Framework Convention on Climate Change, UNFCCC, is telling us, that is, that we need to have exited from gas as a fossil fuel totally by 2035, if not 2030, we will create new strategies that will still lock that in and create hostages to fortune under the Energy Charter Treaty at the exact same time as Europe is trying to lessen the impact of the treaty. We have had environmental policies come up against the treaty, and I am worried that if we create new environmental policies that embed the use of gas, we will make it extremely hard for countries to then exit from gas.

Could the witnesses comment on those matters? I referred to the Beyond Oil & Gas Alliance, the EU-US methane pledge, the Energy Charter Treaty and the dangers of a lock-in of gas there that would make policy choices down the line harder. I also asked a question about the mechanics, the decommissioning, the fluting and all those damaging aspects of the infrastructure.

Mr. Noel Regan

I will try to address the Senator's queries. She is quite right that the Energy Charter Treaty is a moving field. I think there was a case at the start of the month in Belgium, and it is very much moving. Our Department is engaging with other member states and the Commission on that and on where it is at. There is a review ongoing, so it is a relevant topic.

As for fossil fuels and fossil fuel infrastructure, if I may deal with those in one response, the package has some interesting proposals on fossil fuels and their reduction over time. I will focus on just a couple of them. First, it now includes an express requirement for planning of gas infrastructure and its decommissioning in the plans of infrastructure companies, so decommissioning is an actual requirement to be addressed. The second thing it does is allow for a transfer of assets from a natural gas pipeline to a hydrogen pipeline. As Senator Higgins said, there will be hydrogen grid operators and natural gas grid operators, and the legislation allows, quite simply, for a pipeline to move from one asset base of natural gas to hydrogen. It is essentially a roadway away from fossil fuels. Third, there is an express provision in the legislation that member states cannot enter long-term contracts for natural gas beyond 2049. A long-term contract for gas is a one-year contract. This is the first time we have seen an actual obligation that member states simply cannot buy long-term contracts beyond that period.

As for the methane pledge, this legislative proposal goes part of the way towards it. The methane regulation covers energy methane. I will focus on emissions outside EU borders rather than inside them because the majority of methane from fossil fuel use in Europe occurs outside our borders, so it is a matter of importation. The legislation will now require importers to provide information on those methane emissions upstream. The Commission has signalled that, with that information, and by no later than the end of 2025, it will consider if further obligations are required. I think this is a world first in that the Commission is looking at methane production beyond the borders of where it is used.

That is going to be a very key piece of the methane pledge.

The whole purpose of this legislation is to facilitate renewable and low-carbon gases. I want to signal with regard to low-carbon gases and the definition I mentioned earlier of a 70% reduction in greenhouse gas emissions, the details of that will be done through a delegated Act, to be done by 2024. In initial discussions I have heard it raised that people would like certainty on that earlier rather than waiting three years. That is something we will also need to consider. Do we need three years to settle that discussion?

Members of this committee will probably be interested in making a political contribution to that discussion formally because we are very concerned that if we open the gate to low-carbon gas, it may lead to the locking in of fossil fuel infrastructure.

I believe we should be giving a political contribution in relation to this matter because alarm bells are ringing around 2049. If we are signing contracts on fossil fuels up until the year before we are meant to be at net zero, it could be seen as very bad faith. We have seen rapid changes in ambition over the last few years and we would effectively be in a situation where we have contracts which mean we cannot meet net zero in advance of 2050. The reference to 2049 was not something of which I was aware of and I just wanted to signal my concern. I agree with the Chairman's comments on low-carbon gases. Rather than having a plan for low-carbon gases by 2024 or strategies for integrating them into our system, we should be looking to exit low-carbon gases closer to that point.

Mr. Regan, do you want to respond?

Mr. Noel Regan

All I would say on the first one is that it is a proposal. The contracts have to end, essentially, by 2049. On the second question around low-carbon gases, we must take it away and consider it more too. There are circumstances where we might have an electrolyzer using electricity from the grid. Ireland is going to be at 80% renewables by 2030 so it may make sense to use that electricity. It might not be located right beside a wind farm, for example. While the principles should be fairly straightforward, there are some details to be worked out in terms of making sure that the rules allow for different credible and reasonable scenarios.

I echo the concerns expressed by other members and the Chairman on the gate being left open on grey hydrogen, particularly as low-carbon hydrogen has not been defined yet. The fear is that the roll-out of our own green hydrogen, offshore wind and floating offshore wind will be delayed if we leave the door open to the development of grey hydrogen which would be sourced from fossil fuels. We have to stress those concerns. I also echo the Chairman's point about the importance of this committee feeding in to the proposals and strategy going forward.

My fear is that we are potentially leaving two gates open, the first one being to grey hydrogen and the second to the importation of fracked gas through LNG infrastructure, in general. In his opening statement, Mr. Regan referred to the importance of gas storage in the context of energy security. There certainly has to be a place for gas storage in terms of a backup energy supply but one would hope that in the Irish scenario that would be done using the existing interconnectors. I am fearful, not just in an Irish context but also in a European context, that this type of proposal and the encouragement of gas storage would potentially lead to the proliferation of LNG terminals. Ireland has made quite a strong statement with its resistance to future LNG terminals being built but it is important that such an approach is Europe wide.

At the end of his statement, Mr. Regan said that the proposals do not go as far as national policy envisages around the importation of fracked gas. I am concerned that this represents another opportunity for the fossil fuel industry to delay the inevitable. Mr. Regan referred to the definition of low-carbon energy or hydrogen energy coming forward in 2024 but we need to start getting these things defined now and proposals set out on moving away from fossil fuels all together.

Mr. Noel Regan

In response to the Deputy's question on gas storage, I will try to clarify what is in the legislation on that. It is not seeking new investment in gas storage; rather the legislation provides that member states have the right to ask their gas pipeline operator to ensure that there is a certain level of gas in the storage reservoir that is currently there. Gas storage levels have been decreasing in recent years which means that when we hit winter, and if the weather is particularly cold, it puts the system under stress with price rises. There is nothing in the package to facilitate new investment in storage. Rather it provides that during the winter, if there are concerns, there is enough gas in storage to manage the peak essentially.

In terms of what is proposed in the legislation versus Ireland's position, which the Deputy correctly described, the approach lends itself to that in the sense that it seeks to gather data on the full life-cycle emissions of gas imports. The Commission has raised the flag that before 2025, once it has that data and evidence, it will look to strengthen the position. Step A is to get the data and evidence and step B is to act. This means that essentially with high-emission gas like fracked gas, for example, steps can be taken to reduce its use. It will lend itself to the discussion and to the Irish position. We will have to consider how we build it into the discussion but it is certainly very helpful for opening that debate.

Another proposal from the Commission, which is also new, is to set up a system of global monitoring of methane. The Commission will be able to see where methane emissions are occurring across the globe and then, using diplomatic language, it will let countries know, in the first instance, that there is a methane issue. That is a positive proposal.

Finally, on hydrogen, the package is designed with a lot of incentives for renewable and low-carbon hydrogen. It is designed around a suite of incentives for them. It is also designed to reduce fossil fuel use. Frankly, we need to do more scrutiny to see how it all knits together because while this is a gas package, it also involves the electricity system, the natural gas system and the hydrogen system. We are working through it to understand the implications. While not wanting to complicate matters too much, it is also very much linked to the renewable energy directive, the definitions therein and how it all knits together. The Deputy's points are well made and we are trying to understand the implications for different sectors.

I wish to make a couple of points related to Deputy O'Sullivan's question on storage. I read an article this morning which suggested that the European Union may require member states to have a minimum level of storage in advance of the winter. Is that related to these proposals?

Mr. Noel Regan

Yes, it is related to these proposals.

Is Mr. Regan saying that the requirement is actually on gas suppliers as opposed to member states?

Mr. Noel Regan

It is the member states who can make the decision to impose the rule for the gas. The member states would not contract it but would make rules so that there are certain levels of storage in the reservoirs. We do not have a gas storage reservoir in Ireland. We used to have one in south-west Kinsale but that has been decommissioned. There are rules to allow member states to hold that storage in other member states but that is somewhat complicated for us, obviously, now that the UK has left the EU.

We still have the interconnectors with the UK and hopefully relations will remain friendly so that if required, we can rely on its reserves and will not need to build anything here.

We can rely on their reserves and then we do not need to build anything here. All members of this committee are clear that we do not want any new LNG infrastructure in Ireland. I note other news from the past 24 hours. The Shell oil company expects a doubling of the LNG market by 2040. Members can see where this is going. This is not a quick exit from fossil fuels. In many respects, we see them being locked in. I welcome the proposal to look at methane leakage outside the EU, because that is largely the problem with fracked gas. There is research to suggest that there is significant methane leakage from fracking operations, especially in North America, and that it has a substantial contributory effect to increasing global temperatures. It is important that we get this right. As Mr. Regan said, it is a world first. It is critical that we do not rely on fracked LNG, whatever about LNG from conventional sources.

Mr. Noel Regan

The principle is to reduce fossil fuel production. We can reduce the demand. There is a suite of proposals in the climate action plan for 2021. I know the retrofit plan was launched just a couple of weeks ago. Reducing the energy we use is the first and probably the best tool that we have. We need more renewable sources for the energy we use. Every wind turbine built means a bit less natural gas or oil will be used. Electrification of transport also helps. Implementation of the policies now set out is the key tool.

It seems that Ireland will probably go down a positive path. The concern is Europe and countries that may not have the renewable resources that we have. They may rely on fossil fuels, albeit cleaner fossil fuels. Maybe the path for Ireland is to say that we are not just going to supply clean energy to our own market but also to Europe too, to make it easier for Europe to get to net-zero emissions.

Mr. Noel Regan

The benefit of the European market for renewable sources is that countries with good resources, such as Ireland when offshore wind is developed, can export them. Other European countries can take advantage of the countries with better resources for renewable energy. For example, solar energy is better in southern Europe. Maybe this is not a matter for me to comment on, but those countries are more exposed to natural gas supply issues than Ireland, because Ireland is connected to the UK, which has a diverse source of gases, whereas countries in eastern Europe are more exposed. The appetite for action will be strong among member states.

I am joining late. I am sorry that I did not get in earlier in the first round. The heat study announced today showed that Ireland is doing poorly when it comes to renewable energy and heat. That is concerning, especially when the climate action plan was just laid down. As the Chair said, there will be a greater reliance on LNG globally. The programme for Government states that the Government will not invest in more LNG. We need to ensure that we do not go down the wrong route as we deal with these crises. We can clearly see that Ireland has the natural resources. Will the witnesses comment on what we can do with regard to the heat study and how these regulations will help us to get to where we need to be? We have a concern about the EU taxonomy, which we have raised with the Minister for Finance. We are concerned that it may benefit those investing in fossil fuel industries and create a relatively difficult financial situation for those involved in renewable sources. We may be getting further away from our targets.

Mr. Kevin Brady

I will address the heat study first. It is true that Ireland has a low level of renewable heat. We are at about the European average for renewable electricity and for renewable energy in transport. We are at about one third of the European average for renewable heat. The European percentage is in the high teens and we are at 6% or 7%. The main purpose of the heat study was to look at how we get out of this. It does not just look at 2030 but also at 2050. It looks at how Ireland's heat sector should be to have net-zero emissions by 2050. 2030 is a milestone but the question is about how we get to net zero. It was only published today, so I accept the Senator will not have the details. There are a few key answers. Mr. Regan mentioned them earlier. Electrification of heat, both direct electrification and via heat pumps, is a substantial factor in heat in buildings. Another matter is district heating in denser areas. The report highlights the need to address higher temperature heat and for another zero-carbon energy carrier besides electricity, which is where green hydrogen comes in, particularly in higher-temperature industries. That ties back into the package that we are talking about.

The heat study adds to Ireland's journey or pathway. It shows that we have a specific issue and what different things we need to do. The study fits neatly into recent Government policies, such as the retrofit scheme, with the idea of electrifying the heat in our residential building stock. It identifies gaps, such as the heat in our commercial building stock, and how we use higher temperature heat for industry. Mr. Regan mentioned the idea of a renewable heat obligation. One can look at how we are doing so well compared with the European average for electricity or renewable energy for transport. Schemes in both of those sectors socialise the cost across all consumers. The public service obligation, PSO, in our electricity bills pays for wind energy and will soon also cover solar energy. The biofuels obligation scheme in the transport sector requires a certain proportion of the energy used in the transport sector to be renewable. Fuel pump handles are marked with either B7 or E5, which means up to 5% of petrol or 7% of diesel is renewable. The Minister for Transport has published a policy statement and increased the biofuels obligation rate for this year again. That is increasing, but the cost is socialised.

There was a consultation before Christmas on a renewable heat obligation. It is a similar scheme to the biofuels obligation. That consultation was extended, because there were concerns about the cost, which we would share. When we talk about socialising costs, that means that energy prices might increase for consumers. We are acutely aware of that when examining how we decarbonise heat and pay for it. That is a challenge we are looking at. The Senator made a point on the heat study. We view the study as a blueprint of what 2050 should look like. The policies and measures that we put in place now should be in keeping with that.

Issues relating to investment include measures for socialisation of the cost and another key element, which is how investment is supported in some types of fuel but not in others.

That goes back to the point I made about EU taxonomy, which while not directly related, is an example of how we can move away from promoting renewables over something else, from an investment point of view.

Mr. Kevin Brady

I might move that back and use hydrogen as an example. Most people will agree that the use of hydrogen in the high-temperature heat sector is something Ireland should pursue. The renewable heat obligation consultation proposed giving a higher weighting to certain fuels, such as green hydrogen. It was proposed that if a unit of green hydrogen was used instead of a unit of biofuels or bioliquid for heat, it would have a multiplier effect. That would bridge the cost gap so that a greater weighting value could be placed on certain types of development technologies or fuels that we want to incentivise. There are ways and means of doing that as the policies and measures are developed. Again, I suppose it is about having a view of the outcome that we see and need. I agree that we cannot just have a market; there certainly need to be incentivisations. If we look back at the gas regulation and directive that has been proposed by the EU Commission, we can see these tariff reductions. The regulation and directive do not contain everything on hydrogen, but there are significant reductions in entry tariffs of putting hyrdogen into the grid, etc. That is a way of promoting it above other fuels. There are definitely ways and means of doing it. That is what we need to focus on.

Mr. Brady will be glad to know that when we conclude our series on offshore wind and hydrogen, we are going to get into renewable heat, probably in April or May. We are going to do a series of sessions on that, and building energy as it extends to the policies that have been launched in the past few weeks, including those on the retrofitting scheme and so on. Does Senator Higgins want to come in again?

The Chairman and Senator O'Reilly covered a few of the points I was hoping to raise. One relates to LNG. It is positive that there is an inquiry and a focus on emissions at production point, as the witnesses mentioned. It is in line with some of the scoped rethinking around emissions captures. There is huge concern around methane emissions from fracking, in particular. It is the question on the locking-in of imports. A previous regime in the US was looking at withdrawing from the Paris Agreement. There is a concern - and perhaps the witnesses might comment on it - about how we would basically insulate if, for example, infrastructure around the importation of LNG was put in place, contracts associated with that infrastructure were concluded, and subsequently, we found ourselves in a position where a country, such as the US, decided to roll back on any monitoring or proper engagement on methane.

I will ask two or three specific questions. Perhaps the witnesses could comment on the European Network of Network Operators for Hydrogen, ENNOH, which is a new body that has been proposed to regulate the hydrogen market, and the concern that at the moment there does not seem to be a requirement for unbundling. Oil and gas producers could effectively play a key role in that new regulation of hydrogen space if they also have a hydrogen division. Again, I highlight the importance of separating that. Of course, it does create a tension and a conflict of interest if major gas companies are playing a key role in hydrogen. That, of course, pushes us towards green hydrogen again.

The Chairman asked a question on the grid. Is the vision electrification with support for electrification from green hydrogen or a new version of gas infrastructure with perhaps a little more green hydrogen in there? They are almost different visions for what comes next in Europe. They are major questions regarding investment. That is why Ireland really should champion the fight against the dilution of the taxonomy. Ireland is in a position to paint that picture of green hydrogen as a supplement to electrification image and, indeed, to support that across Europe. In respect of the taxonomy piece, if there is dilution, it will not only mean investment going in to gas, gas infrastructure and the prolongation of gas infrastructure, but it is also investment that will go against the truly sustainable future in terms of green hydrogen. There is a tension. I ask the witnesses to comment on whether Ireland is really championing that alternative vision. Do we see that there is a conflict? Is it the case that the interests of green hydrogen not necessarily being fully represented within the gas infrastructure narrative, and in fact, may be at odds with it in that sense? While it can be a part of gas infrastructure, it is always going to be downstream in terms of investment, particularly when we see developments like the Nordstream 2 pipeline. In terms of security for the long term, we know there is greater security in a truly renewable source.

Mr. Noel Regan

In the first instance, the ENNOH acronym is quite difficult. It is a European hydrogen network operator. The principle behind that is there is an existing network for electricity and for gas. It basically makes the transmission system operators co-operate to facilitate a European market. Largely, the network is born out of a previous gas crisis where it was found that the grids could transfer gas around Europe, but the rules and the market conditions were not there to facilitate it. It was imposed on the gas network operators for that purpose. It has proven to work very well. Hence, we have a proposal for a new network for hydrogen. It is important to note that the hydrogen network is separate from the electricity grid operator network and the gas operator network. Co-ordinated plans must be made at member state level for all three - hydrogen, electricity and natural gas - so that we avoid having plans that essentially do not talk to each other and the line. There are unbundling rules within this package for hydrogen. Essentially, there is some flexibility up to 2030. It is expected that as hydrogen develops, there will essentially be small clusters in member states, which over time will develop into a full hydrogen market. I think the Commissioner is saying that investors can have some flexibility this decade in that investment and in creating hydrogen networks. However, the Commission has been very clear from the outset that there is unbundling of operators and transmissions from 2030. It is a good signal from the Commission. It has been challenging, as I am sure Deputies and Senators will be aware, in gas and electricity. The advantage here is that we have a clean slate almost. The Commission is clear on the rules.

On the question of the vision, I look on this proposal quite positively in the overall sense, in that it creates a market for renewable gases and low-carbon gases. It is very good. It is a separate market to the current natural gas market. It is a very complex package and there are levers in there. We need to carefully consider and understand what the effect of those levers would be. In terms of the overall vision, the focus is towards a net-zero 2050. There will be a pathway to that objective, depending on different roads, such as blending and transitioning. Currently, 10% of natural gas in Europe is used for hydrogen. If that could be switched to renewable gas, that would be quite a dramatic change in Europe's gas imports and Ireland's. The vision of the climate action plan is clear on energy efficiency, and electrification. Hydrogen will also have a key role in those hard to abate sectors.

That concludes the questions for the witnesses today. I thank them for attending. It was a most interesting session. We covered quite a lot. It is probably only the beginning of a series of sessions in which we will try to tackle some of these very important issues and opportunities. We should acknowledge that there is a significant opportunity for Ireland here. We need to go into private session to discuss whether these proposals warrant further scrutiny. Is that agreed? Agreed.

The joint committee went into private session at 1 p.m. and adjourned at 1.13 p.m. until 11 a.m. on Tuesday, 1 March 2022.