Joint Committee on Environment and Climate Action debate -
Tuesday, 13 Jun 2023

Decarbonisation of the Heat Sector: Discussion

An Cathaoirleach

I have received apologies from Senator Higgins.

The purpose of today's meeting is to discuss the decarbonisation of the heat sector in our country and, if we have time, to discuss the rising cost of district heating systems. On behalf of the committee, I welcome the following representatives from eHeat Ireland: Mr. Samuel Geraghty, project manager of Astatine; Dr. James Browne; Mr. Ronan Coffey; Mr. Sergio Contreras; and Mr. Tom Marren. You are all very welcome this morning.

Before we begin, I will read out the note on privilege. Witnesses are reminded of the long-standing parliamentary practice to the effect that they should not criticise or make charges against any person or entity 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 their statements are potentially defamatory in relation to an identifiable person or entity, I will direct them to discontinue their remarks and it is imperative that they comply with any such direction. Witnesses who are attending remotely from outside the Leinster House campus should note that there are limitations to parliamentary privilege and as such, they may not benefit from the same level of immunity from legal proceedings as a witness who is physically present on the campus.

As such, they may not benefit from the same level of immunity from legal proceedings as a witness who is physically present on the campus does.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, 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 allowed to participate in the meeting only if they are physically located in the Leinster House complex. I ask those members who are joining the meeting online that, prior to making their contributions, they confirm they are on the grounds of the Leinster House campus.

I now call Mr. Geraghty to make his opening statement.

Mr. Samuel Geraghty

I thank the committee for the privileged invitation to speak today. EHeat Ireland, EHI, is an industry-led member trade association established in 2021 to promote the acceleration of decarbonisation of heat through electrification. The association is an all-Ireland body led by industry experts committed to promoting the utilisation of renewable electricity to generate decarbonised heat as an economically viable alternative to fossil fuels and to lead to a significant overall reduction in total energy usage through the utilisation of highly efficient technologies.

To put it in context, Ireland is a world leader in the deployment of renewable electricity, with a sixfold increase in the share of renewable electricity generation seen between 2005 and 2020, from 7% to 39.1%, and with ambitious targets to increase renewable electricity share to 80% by 2030. Regrettably, this is currently not the case for renewable heat, with Ireland’s current renewable share in the heat sector at 6.8% in 2021 in comparison with the European Union average of 22%. Citing the Sustainable Energy Authority of Ireland, SEAI, national heat study commissioned in 2022, Ireland’s industrial heat demand is 40% of Ireland’s total heat demand at 17.5 TWh and is estimated to be responsible for nearly 5 million tonnes of CO2 emissions annually. Industry emissions accounted for 10.2% of Ireland’s total emissions in 2021. This is steadily increasing in line with economic trends and has grown annually since 2012.

EHI welcomes the recognition in the climate action plan 2023 of the role greater electrification of industrial heat combined with energy efficiency measures can contribute to carbon abatement, noting the requirement of policies and appropriate supports to facilitate industry investment in low-carbon processes. Specifically, the goal of electrifying 55% of low to medium grade heat in industry is a clear and realistic target to decarbonise industrial heat. Electrification of industrial heat is a vital underexploited tool in our decarbonisation efforts. The national heat study commissioned by SEAI looked at a variety of scenarios as to how to achieve net zero by 2050. The report notes:

Net-zero emission pathways with the lowest cumulative emissions use more electric heating technologies. Scenarios focused on a hydrogen gas grid have more cumulative emissions.

Therefore, EHI believes that focusing on the immediate opportunity of electrifying heat will give Ireland the most realistic pathway of staying within our legally mandated carbon budgets. The report also notes that approximately 50% of all industrial heat demand is low to medium grade, below 150C and identifies electrification and industrial-scale heat pumps as key technologies to achieve net zero for this heat demand. Additionally, the report identifies decarbonisation of the industrial sector as the most effective in terms of emissions impact and cost effectiveness, in comparison with the residential and commercial sectors. Thus, there is a concrete evidence base support the electrification of industrial heat in the context of technical suitability and emissions impact for investment employed. However, there are numerous barriers facing the sector in accelerating decarbonisation of heat through electrification.

Electrification and heat pump technology are an attractive option for industry heating in scenarios where the electricity price is low relative to the price of fossil fuels. In a European context, this price ratio varies significantly. In countries such as Norway, Finland and Sweden where there is a large uptake in electric heating technology this ratio is less than 2:1, while in Ireland it is typically above 4:1. This variation in electricity and gas prices can be a significant barrier to investment in these technologies.

For instance, applications which have a payback period of one year in Norway may have a payback period which exceeds five years in Ireland at current utility rates, noting that payback periods demanded by industry are typically in the range of three years. We welcome the recent update to the SEAI support scheme for renewable heat, SSRH, in March of this year, which offers an installation grant of up to 40%, up to a maximum of €1 million, linked to the efficiency of a given installation. Our members see this as a positive step forward to accelerating decarbonisation of industrial heat and hope to see this expanded in the future. We note that there is an existing mechanism for ongoing support for biomass and anaerobic digestion-based renewable heating, with a 15-year tariff. We feel that expanding this scheme to include a tariff for industrial heat has the potential to accelerate this decarbonisation effort and to increase uptake of this grant scheme by guaranteeing industry long-term support in its decarbonisation efforts.

Another barrier to industry uptake of electrified heat is the connections policy administered by ESB Networks. The installation of electrification technologies, in some instances, requires an increase in the maximum electricity demand level, known as maximum import capacity, MIC, to a given industrial facility. This process involves considerable negotiation with ESB Networks and requires considerable investment from the industrial user. It leads to an increase in the payback period of electrification applications and decreases the attractiveness of the uptake of this technology. One advantage of heat electrification technology, in comparison to traditional fossil fuel-based heating, is its flexibility in operation. There is potential to develop a flexible connections policy with ESB Networks where an operation can be scheduled in accordance with grid supply and demand, which will enable greater utilisation of intermittent renewable electricity at times of surplus generation and decreased stress on the electricity grid at times of high demand. This policy would lead to direct benefits in the context of carbon emissions related to industry and increased renewable electricity utilisation. We note the potential of this technology to abate 3 metric tonnes of carbon dioxide annually, avoiding up to €300 million in annual carbon taxes, decreasing annual fossil fuel imports by €470 million, increasing the utilisation of surplus renewable electricity, delivering an economic benefit of up to €200 million a year and greater utilisation of the electricity network, and generating an additional €50 million in revenue. These benefits, in tandem, could create an estimated 10,000 local jobs, increase air quality, health and well-being and decrease electricity costs for consumers through more efficient use of the electricity grid.

In summary, the acceleration of electrified heat for industrial users has several benefits in the context of economic development and mitigation of climate change. Accelerated adoption of this technology through a supportive policy framework will enable utilisation of indigenous renewable energy, facilitate the security of Ireland’s heat supply, increase the competitiveness of Irish industry in a global market, generate employment locally and make a sizeable contribution to Ireland’s decarbonisation efforts through lower emissions.

An Cathaoirleach

I thank Mr. Geraghty for his opening statement. I invite members to indicate to ask questions. While we take note of members' hands raised, I will summarise the statement. Mr. Geraghty or his colleagues may wish to contribute. There are two principal asks, I think. The first is that e-heat is treated in a similar way to biomass and anaerobic digestion, with the 15-year tariff, and the second is that there should be a flexible connections policy with ESB Networks. Is that fair?

Mr. Samuel Geraghty

Yes.

An Cathaoirleach

Those are the two principal asks.

Mr. Samuel Geraghty

Yes, unless my colleagues have any comments on that.

An Cathaoirleach

Will Mr. Geraghty outline what other countries are doing? Who can we emulate in that regard? Are these approaches adopted across the European Union or are they specific to the Irish context?

Mr. Tom Marren

In relation to the support mechanism, we see from the industry here that operating these plants in Ireland is substantially more expensive than operating them in other European countries.

The reason is the differential between the costs of electrical power and fossil fuel power. We may not need a 15-year support mechanism. I do not believe we will because there will be a natural migration as we bring in more renewable energy. This does not have any additional operational cost to generate. It may be a shorter term requirement but there is definitely a cost-support mechanism required.

If we look to Europe, we see many examples. Germany has just announced a €50 billion package to support its industries in decarbonising the heat sector. Its approach is based on carbon because it has many more in the ETS. Many European countries are taking the same approach. It is a matter of how we accelerate the electrification of industrial heat, a key achievable target, within a short period. I am sure industry representatives will explain the cost differential between operating a plant in Ireland and operating a plant in Finland with the same technology.

Mr. Ronan Coffey

I am the global energy manager with Boston Scientific. I can certainly give an industry perspective on this. The operational costs of the electrification of heat are a major concern for our manufacturing plants. The solution in question is very deployable to decarbonising our energy streams and one to which Boston Scientific is committed. However, there is a challenge concerning the additional burden of operational costs as we move from natural gas-based heating infrastructure to electricity-based infrastructure. At our plants in other parts of the world, the gap between the cost per kilowatt hour of electricity and that of natural gas is much narrower, and therefore deploying these solutions does not add as much of a burden to the business. In Ireland, the gap is quite significant and does present a challenge.

An Cathaoirleach

Are there jurisdictions that are somewhat like Ireland, with higher unit costs and where the authorities may be addressing these to stimulate and grow e-heat? Is there special consideration in some countries, notwithstanding the higher unit costs, to support the sector?

Mr. Ronan Coffey

Not in Boston Scientific’s footprint, but Mr. Marren might refer to the Nordic scenario or what has been happening recently in Germany.

Mr. Tom Marren

As part of this, we are studying some of the other mechanisms being put in place. More and more countries are introducing what we are talking about. The golden ratio is 2:1. Therefore, if the cost of electrical power is twice the cost of fossil fuel power, heat pump technology is a good investment, does not add substantial operational costs and allows for the recovery of the asset. From a capital expenditure point of view, the technology typically costs at least ten times what boiler technology costs. Many European and global studies show that the target is 2:1. Members will probably hear from some industry members that we are seeing a ratio of 4:1 at the moment. Therefore, the proportion of electrical costs to gas costs is 4:1, which causes substantial operational risk. We can send to the committee numerous European studies that show 2:1 is the golden ratio and what it will accelerate by way of reducing carbon in the heat network if achieved.

An Cathaoirleach

I thank Mr. Marren for that. Are supports generally related to the operational costs - the unit costs - of electricity or do they tend to relate to both the capital outlay and the operational costs?

Mr. Tom Marren

They tend to be both. One of the reasons is a substantial cost differential in the installation and integration of the equipment. Even when that investment is made, an operational support is needed. This is the thing we need to drive home. Unlike anaerobic digestion and biomass, which may require 15 years of support, we do not see heat pumps and e-heat for industry needing long-term supports because there will be a migration towards this gap in the future. It is just that if we wait for that migration to happen, which might be five to ten years away, it will not be adapted to these technologies.

An Cathaoirleach

The second part of my question relates to the flexible connections policy. Is it that ESB Networks simply is not there with respect to how it would enable connections and it is quite unwieldy for Mr. Marren and the members of Astatine to get connected? What do they propose? Is there a flexible connections policy in development? Are there particular elements to that we should know about?

Mr. Tom Marren

A firm-non-firm process already in the system allows companies to switch off at certain times. In order to reduce the overall costs of energy, we can utilise the existing network more efficiently. I often give an example about the M50, which is full in the morning and evening, but for much of the rest of the day there is considerable capacity. The networks are the same. We have even had this discussion with EirGrid and ESB Networks and we feel we can utilise the existing capacity on the grid for the vast majority of the time. It has considerable advantages in using curtailment on wind and utilising more of the indigenous energy we generate, which we have spent the money to generate and is now being switched off. The mechanisms are there, but focus and drive are needed to bring this firm-non-firm connection process in. The committee will hear from the e-heat members with regard to substantial infrastructure investments for electrification. At a very high level, we typically use two to three times the amount of kilowatt hours of heat as we do electrical power in industry. As we electrify that heat, it means we may double the amount of capacity we need. Thus, we need considerable infrastructure. However, most of the time, our feeling is there is considerable spare infrastructure we can utilise, if there was some sort of way we could switch off when there is no wind or any of these other heat demands. What is great about this industry is that we can switch off for a week or a day, but we need to agree some sort of guidelines, because many of our members have climate reduction targets they have to hit and need to plan accordingly. Perhaps Mr. Coffey or Dr. Browne would like to come in on that.

Dr. James Browne

I will outline to the committee some of the practical realities when one goes down the decarbonisation route. It is very important to understand that when we talk about electrification, we are talking about very high energy-efficiency technologies such as industrial heat pumps and mechanical vapour compression technologies that look to recycle heat within processes. From an energy-efficiency point of view, it is very good because one is taking the overall energy usage down by several factors. There are a couple of problems in Ireland. First, the cost differential between electricity and natural gases is considerable by comparison with many European countries.

One point to note is that the infrastructure upgrades required are significant and industry is having to bear the full cost of those upgrades. For example, Irish Distillers and Midleton Distillery now have to pay for an upgrade to our electrical supply from 10 KV to 38 KV. The cost of that infrastructure is in the tens of millions with long lead times. All the effort is having to be put in by the industry and all the costs borne by industry, yet we are trying to decarbonise our processes not only for our internal goals and targets but also as part of the national effort to decarbonise the industry.

Deputy Christopher O'Sullivan

I thank the witnesses. They have already touched on many of the questions. Dr. Browne answered my first question on what type of technology we are talking about when we talk about electrification of industry. It is mainly heat pumps. Following on from that, when we talk about electrification of heat in industry, is it heating of the buildings or the heat used in processing? For heat pumps in houses, one of the first necessities is to have an airtight and well-insulated home. Does that apply to industry as well?

Dr. James Browne

The straightforward answer is it is very much related to the processes. In manufacturing and industry, it is all about heating up water. To give the example of the brewing and distilling sector, we heat water for processing, brewing and cleaning and we produce steam to distil. It is all about the process and providing heat for the process. With the technologies we are talking about that use electricity, the electricity usage is to recover heat and boost the temperature in the system so additional fossil fuels do not have to be burned for hot water or steam production. It is focused on providing a clean manufacturing system whereby the heat is largely recycled and reused within the system. It is focused on hot water and steam for production of whatever. It could be applied to brewing, distilling, milk processing, pharmaceuticals or any process that uses heat.

Deputy Christopher O'Sullivan

That answers the question perfectly. Again, I will use the home heat pump as a comparison. It is what we have discussed more in the committee so we are more aware of it. A criticism, and maybe a deterrent to people taking up heat pumps, is the belief they will not get the same level of heat they are accustomed to from a kerosene oil boiler, for example. It is more a stable, steady heat. I imagine it is fantastic when you get used to it and have a well-insulated house. Is getting to that heat level an issue eHeat Ireland is confronted with in relation to heat pumps in industry and processing or is that not an issue with the types of heat pumps used in industry?

Dr. James Browne

It is different in that, with manufacturing processes, the temperature control is very precise. Once you get up to the desired temperature, thereafter you can continue to run at that temperature. You are trying to quickly get up to, let us say, 100°C and maintain that temperature. It is a very controlled system.

Deputy Christopher O'Sullivan

Perfect. I come back to the Chair’s question on the cost per unit. Again, I will use the home parallel.

I was talking to a lady in a social housing estate in my local area. She felt the heating in her house was not reaching the point she wanted so she was cranking up the temperature. Perhaps she should not have been doing that. There is an ESB bill to be paid afterwards and she said her bill was huge. She was attributing it to the heat pump and the use of electricity. Mr. Geraghty described the challenge of a five-year payback compared to a one to two year payback in other countries. What can we do to address that, and to incentivise industry to go down the cleaner, more sustainable, climate friendly electrification of the heating process?

Mr. Ronan Coffey

We have touched on this already. The issue is twofold. Capital supports are necessary initially for the outlay on the technology and the retrofitting of it. That also goes into the electrical infrastructure costs that may be at play. It also touches on the capacity planning aspect. There are also costs on the operational side. We have to somehow design support to take some of the burden of the additional operational costs that result from moving to electrified heating systems.

Deputy Christopher O'Sullivan

We have talked about grant supports, etc. Are heat pumps covered under the SEAI support scheme for renewable energy?

Mr. Samuel Geraghty

Yes, the grant for installation was updated in March this year. It is linked to the energy efficiency and can be up to 40%, with a maximum of €1 million.

Deputy Christopher O'Sullivan

Under that scheme, with certain technologies there is a tariff for excess, is there not? Would that apply here?

Mr. Samuel Geraghty

It would apply for anaerobic digestion and the biomass pellets but not in the context of electric heat.

Deputy Christopher O'Sullivan

I thank the witnesses for a very interesting discussion.

Mr. Ronan Coffey

If Deputy O'Sullivan does not mind, I want to go back to a previous question around the controllability of this heat. We can point to an example in our Galway plant where we built a 40,000 sq. ft controlled environment for medical device manufacturing. This was our first heat pump-fed, clean room environment in Ireland. It has been operational for two years now and working very efficiently and effectively. It is very much a proven, low-risk technology. I know there is debate about controllability when it is retrofitted to domestic houses. However, that is a totally separate discussion. In industry, in the qualified environmental control realm of medical device manufacturing, we find that this technology has proven itself.

Deputy Christopher O'Sullivan

Is it as good or even better than fossil fuel heating?

Mr. Ronan Coffey

It is as effective. It delivers the same control requirements that we are bound to, in our quality system, so it is 100% effective.

Deputy Christopher O'Sullivan

That is good to hear.

An Cathaoirleach

I want to jump in on that last point regarding the project in the Boston Scientific plant. Has an analysis been done of the emissions that have been displaced because of the investment in that system in the last two years? It is probably very obvious that there is a benefit from an emissions point of view, but a rigorous analysis of that, if Mr. Coffey has it, would be very helpful to the committee from the point of view of emissions and also cost. I have no doubt the cost was significant and that is a leap the company took. Insight on these two factors would help us if we are to produce a report that would recommend some kind of supports for this sector.

Mr. Ronan Coffey

I do not have the figure for the actual quantity of emissions avoided to hand, but we certainly can provide that information. I can say that from a capital cost, it was only a marginal increase on the standard construction because we were able to design it from scratch, rather than it being a retrofit scenario.

It was modelled to be 40% of the energy footprint of a conventional design. The operational data we have seen so far are backing that up.

An Cathaoirleach

Will Mr. Coffey talk about the motivation for that investment? Was the existing plant at the end of its life and did a decision have to be made about what kind of new plant would be constructed? Was there a desire to get ahead of the game here a little? I am interested in hearing comments about these aspects from a representative of a company that has gone down this route already because the experience might be instructive.

Mr. Ronan Coffey

To give some context, this is a building that had not been occupied for some time. It was a retrofitted project to create a new, controlled environment in an existing shell. It was done against the backdrop of the commitments we had made in 2017 to achieve carbon neutrality by 2030. More significantly, we had also committed to using 90% renewable energy by 2027. Around 2020 or 2021, those undertakings distilled into a decision not to add any more gas-consuming equipment to our network. We had settled on our strategy for achieving our target of 90% of renewable energy in respect of the electrification of heat, backed up by renewable electricity. All new construction projects must now meet these criteria. We do not add any more gas-consuming equipment to new projects.

An Cathaoirleach

That is very interesting. It is fantastic to hear that a large company like Mr. Coffey's has that kind of ambition and is realising it. It is not just an ambition because there has been investment and results are now being seen. Many of Mr. Coffey's peers across the industry will be watching this endeavour and this committee is also very interested in what has been achieved.

Deputy Darren O'Rourke

I thank Mr. Coffey for the presentation and for being here. We are an outlier when compared with the European average. I would like to hear Mr. Coffey's reflections on that and why it might be the case. Is it to do with a particular profile, policy environment and-or culture? I ask Mr. Coffey to speak to this point. His answer might highlight where we may need to address our support.

Related to this point is the issue Mr. Coffey highlighted concerning the price ratio. Interventions have been made in the past in respect of the use of the public service obligation. Does Mr. Coffey and EHI have proposals or propositions or has there been engagement with the Government on trying to address this issue? I presume it is a significant impediment to encouraging people to go down this road.

Mr. Geraghty mentioned the opportunity to use surplus renewable electricity. I ask him to comment on the mechanism that would be used to do that. The potential for this technology's use in an Irish industrial context has been highlighted. What awareness is there of it? Are businesses eager to adopt it? As was said, there are trends and also obligations on all of us. Is there an appetite to employ this approach?

Mr. Samuel Geraghty

I thank the Deputy for his questions. Taking the first question as to why Ireland is an outlier in the use of renewable heat, the biggest driver of that is the price ratio. In the Nordic countries, which have had the highest uptake of this technology for the last 30 or 40 years, the price ratio has always been low. This has been for security reasons to ensure there is no reliance on gas. In Ireland, however, we have relied on gas and fossil fuels for a long time. They have been abundant and cheap.

That has been one of the big drivers behind it. To address the second question, which was about surplus renewables, it is a question of ramping systems up and down in response to supply and demand on the grid. When surplus renewable electricity is generated, the machines can be turned up to make greater use of it. That is the mechanism we are talking about.

On the appetite within industry, we see massive appetite in the food and beverage, dairy and manufacturing industries. I am sure my colleagues can give a better answer to that third question.

Mr. Tom Marren

There is a lot of knowledge among our European partners that we need to bring in so that people understand that these heat pumps can produce temperatures in the higher ranges. We recently commissioned a new distillery in which the heat pumps are operating at 120°C. It is the first time a distillery that does not use fossil fuels has been built. It is also the first time that these heat pumps have been operated at 120°C in Ireland or the UK. The dairy sector is another really practical industry for us. We are involved in a project with a dairy processor that dries milk. We are going to reduce its gas consumption by nearly 60%. The interesting thing is that, when we consider its utility bills for the past three years, the payback period varies from just under three years to just over seven years. In terms of risk, this is now really practical. We have designed it and know what the capital costs are. This calculation, based on its actual utility bills, is now going to the board. It is a reduction of nearly 60% in the processor's gas consumption. That equates to 12,500 tonnes of a carbon offset a year, which is huge. However, we need to assist industry to take that risk. How can we go in front of boards and say that the payback period is two years, two and a half years or seven years? I do not know whether that provides any insight into the matter. There is great appetite but a significant programme of education is also required, as is consideration of how we can help industry to de-risk this operational cost.

Deputy Richard Bruton

I thank the witnesses for the presentation. It was really interesting. I have a few questions. The opening statement mentions a hydrogen pathway and says that the electrification pathway is superior. Are these two choices that we face? Is it the case that Ireland Inc. has to take a punt on one or the other or is it the case that they are essentially complementary and it is a question of timing?

To move to my second question, if I was sitting in the Minister's position and assessing the witnesses' ask, I would ask whether this form of carbon abatement is very expensive in the short term when compared to other options Government might have. It seems we are different from Scandinavian countries in that we have not onboarded the same volume of renewable energy to our system. Is it a question of timing? Do the grant levels need to be upped now to get early movement in this area or is this a relatively more expensive type of abatement measure that will probably be appropriate in three, four or five years? I do not know. Allied to that, from a Government point of view, how is the question of the appropriate rate of subsidy for this activity to be answered? That is a question that has to be answered. It may be done by asking other consumers to pay under a levy system or by asking the Government to stump up the money itself. Can the witnesses shed light on those sorts of practical choices? If we were to recommend a higher level of subsidy to get this going more quickly, that is the question that would need to be answered.

I will refer to the CAP, by which I mean the climate action plan as opposed to the Common Agricultural Policy.

There are measures here but they seem to be more tentative than the witnesses are suggesting. The measures talk about a green transition fund. It is not a commitment to a particular rate of compensation. The measures talk about reviewing the support scheme for renewable heat but do not say what that ought to be. They talk about a task force to accelerate the update of the transformation of heat. Will the witnesses comment about how they regard the existing measures in the climate action plan as meeting their ambition or do the measures fall short of their ambition?

Mr. Tom Marren

I will address the hydrogen question and someone else can answer about the other issues. We are not trying to compete against hydrogen. That is another technology. What I will say is that I am not aware of any report in the world that says hydrogen is a superior technology to address temperatures that are below 120° or 130°, which is industrial heat. This technology is just so efficient. It is like when we were all doing our intermediate certificate many years ago. I am sure Deputy Bruton did the intermediate certificate rather than the junior certificate. Energy goes in and does not go anywhere. Typically, with gas boilers, we put energy in and then we dump that energy somewhere else through cooling towers, chillers or something else. This technology just recycles the energy. Very often, we can achieve hundreds of percent efficiency. It is called coefficient of performance, COP. Typically, our systems will be 300% to 400% efficient. We reuse that energy all the time.

All the reports say this is a technology for heat, including industrial heat. When we get higher temperatures, maybe above 200° or even a bit lower, that is reaching hydrogen territory. Our industrial heat is 40% of all the energy used for heating in Ireland. Just over 50% of that is the lower-grade heat, which is heat pump technology. It does not need hydrogen. It is much more efficient to use heat pumps and address this imbalance in the operational cost.

Someone else will pick up on the cost but the other thing is that this is deliverable in a short period of time. We can deliver 2 million tonnes of carbon reduction because we are going after quite a small target area. It also gives our industries competitiveness. It achieves our climate target reductions on the heat side and it will assist our industry. That is the first part, regarding hydrogen. I do not know whether the Deputy is happy with that. Maybe someone else would like to take up the question of whether now is the right time but I do not think time will change this. The technology is not getting any more efficient. It is all based on the Carnot cycle.

Mr. Ronan Coffey

I can add a Boston Scientific perspective. I described our renewable energy goals. We sat around figuring out how we were going to achieve those. We looked at all the available technologies and what was coming. We are aware, too, that half our kilowatt hours are natural gas and half are electricity. It is a big decision. Deciding how we are going to decarbonise that natural gas is an important strategy. It was clear to us that solutions such as hydrogen or renewable gas, while certainly attractive, would not be available to us on the scale that we needed them in the timeframe that we needed them, and certainly not at a cost which would make them in any way viable. For our industry and type of heat profile, electrification of heat was a clear winner.

Deputy Richard Bruton

On the issue of cost, to a layman, it sounds like quite a substantial matter to reduce the cost of electricity and achieve the viability that the witnesses are talking about. What sort of money does that represent in abating the 2 million tonnes of carbon that the witnesses say is the potential? What bill are we asking the Government to foot to achieve that?

The corollary is whether it is an effective use of the Government's money to get to 2 million tonnes of abatement. That is the sort of issue we will need to probe if we are to make a recommendation in favour of the sort of approach eHeat Ireland is suggesting.

Mr. Tom Marren

It is a very good question because there are limited resources, including our capital. SEAI will say that the bang for our investment in terms of grants etc. is probably a factor of between five and eight. Industrial heat really comes on top of everything else - deep retrofits, domestic heat pumps, across the board - because it does not need the same level of support. I have seen ratios showing that support of €1 billion in this area would deliver twice as much carbon as €8 billion in support in the domestic area. As I said, that was hearsay but I think it is a good question to put back to SEAI. Our European partners are seeing that industrial heat is an area to tackle now. It requires the lowest support mechanisms and it will deliver within the 20230 framework. Bringing the level of urgency we need in order to reduce our footprint is the only game in town. I would be very interested to hear the SEAI's approach on that as well.

Deputy Richard Bruton

Perhaps the committee could take that up with the SEAI. It would be relevant information. Regarding Mr. Marren's last comment, is the climate action plan, as set out in the document in front of me, is less ambitious than it ought to be?

Mr. Tom Marren

I do not know whether I am qualified to say that. We looked at industry and when we took into account the amount of heat that it uses in the temperature range we are discussing, we know we can achieve this. If we could achieve that carbon reduction, it would assist us a great deal in achieving our overall carbon goals. Maybe that needs a little more focus because industrial heat is the area we need to be driving. As we are all aware, there are many challenges in many of the other areas. They will all ultimately have to be done in the next 20, 30 or 50 years. There is a sense of urgency about what can we do to deliver between now and 2030? In our view, this is achievable. It will have many other advantages for the country, including utilising indigenous renewable energy, delivering security of supply and reducing the infrastructural cost in electricity, which will ultimately reduce cost for end users. This ticks boxes in many areas. People are advocating for district heating but, having been in the energy game for 30 years, my view is that this is a target we can achieve at the lowest cost.

An Cathaoirleach

Do the witnesses have a view on district heating? Do they see it as part of eHeat's remit? When they talk about the 2 megatonnes that might be displaced by supporting what eHeat is proposing, I do not think they are talking about the potential of district heating. Have they looked at that or is that issue more for the Irish District Energy Association, which we hope to have before the committee next week? If the witnesses have a comment on that, I would be interested in hearing it.

Mr. Tom Marren

We work on industrial heat. District heating is more an issue for the residential sector, so we probably do not have a comment to make on it. Again-----

An Cathaoirleach

There is a crossover, however, between district heating and the waste heat from industry.

Even if it is not waste heat from industry, we could have an industrial set-up essentially, so that while it is residential it would be of the scale of some of the company's industrial members.

Mr. Tom Marren

In terms of the point on urgency and what we can achieve, while I do not know much about district heating, although I have been involved in it in the past, it is not achievable within this timeframe. Some of the countries that are deploying this started 50 years ago, so there is a real culture of that. In these countries when they build roads this heating goes in. This is achievable now in our timeframe, and it also costs substantially less than district heating. We could argue that without getting into district heating, there are different grades of district heating. There is third generation and fourth generation. It is constantly improving.

An Cathaoirleach

I would argue that it is certainly not one or the other.

Mr. Tom Marren

I agree.

An Cathaoirleach

I was just wondering if Mr. Marren had a view on district heating or if he saw that as part of his remit, as given the scale of projects they might get close to the industrial scale.

Mr. Ronan Coffey

I will add to that. On the electrification of heat, we now have a cohort of industry that is effectively a captive audience. Organisations similar to Boston Scientific have started to make net zero or carbon neutrality commitments and are now looking for solutions to turn those goals into reality. This is not district heating or eheat, but it is one of the distinctions that we now have industry that is ready to jump on this if the correct mechanisms and structures are put in place.

An Cathaoirleach

I accept that. It is important to understand. The point is well made and clear that this is something the witnesses feel can be advanced quite quickly while district heating is a slower option. I agree that it is important not to conflate them.

What the witnesses ask makes a lot of sense to me. It will be up to the Minister and the Department to dig into it and to look at how the witnesses can be supported more. If it is the case that this is a reasonably quick win, then it makes sense to explore it as much as possible. In that regard, I wonder about the challenges to the grid, in that probably for a lot of the witnesses' members, they have to upgrade transformers and electrical systems in their plant. There is a whole infrastructural piece there. Perhaps Mr. Coffey experienced that already in the project he had in Galway. I am interested to know more about that because it is very tantalising that this sector would be supported in order to get the 2 Mt or 3 Mt or whatever it was. Are we going to hit problems straight away with respect to the robustness of our grid?

Mr. Ronan Coffey

Mr. Browne talked already about the infrastructural changes they are making in his organisation, and we are faced with similar challenges at our sites due to the current nature of the capacity allocation across the grid. Significant investment in electrical infrastructure is currently needed. Looking at that in terms of opportunities to take a flexible approach on capacity allocation could be very impactful here.

An Cathaoirleach

Has eHeat Ireland done any analysis? I presume most of the members of eHeat Ireland have already identified that there is potential. Are there members who would go down this road but they see that grid reinforcement is required? It would be great to see it if there is any analysis.

I am sure the Department would be interested in seeing it as well. If we are talking to the likes of EirGrid or ESB Networks, we would be able to say that we actually spoke to eHeat Ireland and that there are gaps here, there and wherever. Is there an analysis like that which might help those like ourselves, but more so EirGrid and ESB Networks?

Mr. Tom Marren

We are currently working on that. It is one of the streams that we are working on in terms of firm service and non-firm service, and how we would integrate that for eHeat customers. It is a block of work that is ongoing. The great thing about-----

An Cathaoirleach

I am sorry to cut across you. Does eHeat Ireland have regular engagement with EirGrid and ESB Networks?

Mr. Tom Marren

No. We have had engagement with them but we are also working internally with some of our members to pull together a paper on that. The engagement to date has been very positive and they understand that this is a different way of utilising the grid. That firm-non-firm process is already in place for the wind generators and it was also recently brought into the data centres.

If we look at it very practically, a lot of the customers will be retrofitting in, so we already have boilers and all of our infrastructure in place. This can be a very viable, flexible demand on the network, and we have estimated it is potentially about 1,000 MW of flexible demand if we get the industrial heat. Therefore, we could switch off for an hour at peak or switch off for a week, which is very difficult to do for other forms of storage, such as battery storage and all of that. This is potentially a real area that networks like EirGrid, eHeat Ireland and other departments need to work on in order to avoid as much as possible the level of infrastructure that Irish Distillers and Boston Scientific are currently incurring. Other companies just cannot incur that.

We should also remember our dairy sector along the west coast, where there is a lot of renewable energy. There is a lot of industry there, which means we could potentially bring this in very quickly. As members are aware, a lot of these constraints and curtailments are more on the east coast.

An Cathaoirleach

That is a very interesting point. It seems we are not talking about this enough. If we do chase the potential that is there, it offers huge benefits to the transmission system operator, especially if the heat demand of all of those industries that would be connected was flexible, as Mr. Marren suggests it might be in a lot of cases.

Mr. Tom Marren

I am talking about industry and I will take the dairy sector as an example. I know that on the Saturday and the Sunday, we are turning off turbines on the coast, and they are running 20 MW or 30 MW boilers. We could even bring it in now very quickly. It really is this concept of bringing all of the different strings together and ensuring smarter use of this. Again, we are not trying to do this in millions of different places; it is a relatively small number, somewhere between 2,000 and 10,000, or that is what that industry thinks. Therefore, relatively, it is something that both ESB Networks and EirGrid are quite used to, so they are able to dispatch on and dispatch off, and it will assist us as we bring on more wind.

An Cathaoirleach

Yes, they are certainly used to it and they are very good at it, but I think it would be even more helpful if there were more players in the system as that would give more flexibility. I have not thought about this too much in the past and it does not seem that there are enough conversations about it. However, it does seem that this is a big step in electrifying our economy. It seems to offer very significant benefits and that then merits detailed analysis, which I just have not seen. It would be interesting if we could put some of these questions to EirGrid and ESB Networks, which we will have in front of the committee at a future date.

It would be interesting to put some of these questions to representatives of EirGrid and ESB Networks, who will be appearing before the committee on a future date. Did Deputy Bruton want to come in?

Deputy Richard Bruton

No, I just had a question on flexibility.

An Cathaoirleach

Do any other members have questions? No. I see Senator Boylan and Deputy Whitmore are online. If they want to come in, they can indicate. Do our guests want to make any other points?

Mr. Samuel Geraghty

I thank the committee for having us in and for giving us the opportunity to communicate these policy asks and to discuss the potential economic and carbon emission benefits of electrifying heat.

An Cathaoirleach

That was a very interesting session. We are going to have another one next week, focusing more on district heating, which we have touched on briefly today. We will look to doing a report that tries to capture some of the major points from these sessions. The idea is that if we agree a report as a cross-party committee, it will then go to Government with recommendations. I must say that what I am hearing is very interesting. The idea that there are a few megatonnes of carbon that can be chased down very quickly is something that we need to take very seriously and act on. There is a bit more digging to be done, perhaps, but we can do that in time. As I said, it would be interesting to get the view of the distribution system operator and the transmission system operator on this as well. With that, I thank our guests for joining us today. It was certainly a very worthwhile engagement. I thank the members for their contributions.

The joint committee adjourned at 12.12 p.m. sine die.