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Joint Committee on Environment and Climate Action debate -
Thursday, 7 Dec 2023

Review of the Climate Action Plan 2023: Minister for Enterprise, Trade and Employment

The purpose of the meeting is to discuss the review of the Climate Action Plan 2023 with the Minister for Enterprise, Trade and Employment, Deputy Coveney.

On behalf of the committee, I welcome the Minister and his officials to the meeting this afternoon.

Before we start, I will read out the note on privilege. I remind the witnesses of the long-standing parliamentary practice that witnesses 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 witnesses statements are potentially defamatory in respect of an identifiable person or entity, I will direct them to discontinue their remarks. It is imperative they comply with any such direction.

Members of the committee 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 only allowed to participate in the meeting if they are physically located on the Leinster House complex. In this regard, I ask all members prior to making their contribution to the meeting, if they are joining online, that they confirm that they are, indeed, on the grounds of Leinster House.

I invite the Minister to make his opening statement.

I thank the Chair and members for the invitation here to speak. I am accompanied by Mr. Joseph Cummins and Mr. Alan Dempsey from the climate action and energy policy unit in my Department. I am looking forward to engaging with the members and discussing the role of my Department in accelerating the sustainable transition of our economy and, ultimately, our society.

As the committee will be aware, the White Paper on Enterprise is our strategy document, setting out the future direction for Irish enterprise policy. It firmly establishes decarbonisation as a core pillar of the Department's work. We will measure ourselves going forward against carbon abatement objectives, alongside employment and productivity.

Climate change, and the transition to renewable energy, continue to shape the environment in which businesses operate. The transition is under way and irreversible. My Department and our enterprise agencies are there to help businesses prepare to thrive in a low-carbon economy in the future.

I recognise that urgent additional action is needed from my Department, its agencies, across government and our enterprise sector, to ensure we are on a viable path to meet the targets we have set on carbon abatement and renewable energy.

As members know, my Department leads on addressing emissions from our manufacturing industry, and on the commercial built environment, as well as enterprise policy broadly. My Department will shortly publish two decarbonisation roadmaps, under the heat and built environment task force. An industrial emissions decarbonisation roadmap will set the trajectory to reducing emissions associated with heat used in manufacturing processes. The commercial buildings decarbonisation roadmap will set out how we will achieve the emissions reductions from the buildings in which enterprises operate. Both roadmaps will demonstrate the trajectory and ambition required to decarbonise these cohorts of emissions, and the actions that businesses and policymakers need to take to deliver them. This is not an easy journey, but having a roadmap will be helpful in getting us there.

I am aware that many businesses have yet to embark on their sustainability journey. I am very conscious that businesses, particularly SMEs, have many competing priorities. I have been focusing on engaging businesses wherever they are currently on their journey, and demonstrating that there are simple, cost-effective things every company can do to get started. The Climate Toolkit 4 Business is the obvious starting place where people can get clear direction online on how they do their sustainability audit to effectively get started with their climate response.

This year, my Department and I have run eight Building Better Business events throughout the country to promote the climate action and digitalisation agendas, with a final event in the Convention Centre Dublin a few hours ago. The response has been extremely positive, with a willingness in our enterprise sector to seize the opportunity and challenges of the twin transitions of digitalisation and decarbonisation. Enterprise Ireland, IDA Ireland, local enterprise offices, LEOs, and other State agencies such as SEAI and SkillNet Ireland, have significantly stepped up efforts to bring advisory and funding programmes to the attention of businesses.

Government does not expect businesses to act alone, we are mobilising significant support for decarbonisation. Grant support is already available for companies to invest in technologies to decarbonise their manufacturing processes and their space heating. I am encouraging all businesses to engage with Enterprise Ireland, IDA Ireland, LEOs or the SEAI to start implementing a real programme of decarbonisation solutions. Business can address both onsite and supply-chain emissions, with the food waste charter being a great example of the latter.

I thank the members for the committee’s engagement following the Climate Change Advisory Council’s report and recommendations during the summer. They will have seen my written response to those recommendations. My Department and I are actively progressing a number of the council’s key recommendations, such as those on the public procurement of lower carbon cement - as members know the cement industry is a big part of the challenge for industry - modern methods of construction in our housing sector which is progressing and energy efficiency for SMEs.

I reiterate how central I believe the decarbonisation agenda is to enterprise policy and Ireland’s future competitiveness. The green transition will occasionally be difficult, but it will certainly be worth it. It is necessary to protect Ireland's competitiveness into the future as well as meeting our climate targets. Policies we are implementing today, will make Ireland a greener, more sustainable, more prosperous country tomorrow, improving the resilience of our economy. I again thank the members of committee for the opportunity to discuss these topics with them. I am happy to take any questions members might have.

I thank the Minister for his opening statement. I invite members to indicate if they wish to ask questions. We have a further hour and 45 minutes and must conclude by 3.30 p.m. Therefore, I ask members to be succinct in their questions and the Minister to be as brief as possible in his replies.

On the two big proposals, will the Minister provide timelines for the industrial emissions decarbonisation roadmap and the commercial buildings roadmap and perhaps more detail as to what these will entail? What are we likely to see in the climate action plan that will be published in the next week or two? Will there be new measures on top of last year's climate action plan? Last week, the Minister, Deputy Ryan, appeared before the committee and he indicated that it would not be so much about new measures but more about the implementation in his portfolio. I have the same question for the Minister, Deputy Coveney. Is it new measures or is it a case of doubling down on the existing measures, making them work and having them implemented?

If I need some more detailed notes on it, I will read them out in a second. My understanding is that we are close to finalising both these roadmaps. Some of them are linked to work other Departments are doing, including the Minister, Deputy Ryan's. The essence of our industrial heat roadmap is to break it up into three different areas. One is to deal with low-temperature heat to try to shift away from using bulk carbon-based fuels to using electricity that ultimately in the future will be generated through renewable sources. Another is to replace over time the high-temperature heat industries with alternative fuels that are biofuels rather than carbon-based fuels. Certainly, developing a hydrogen industry may be relevant in that regard cars also, but also other biofuels like methane and so on.

We will examine how we can use new and other technologies such as carbon capture and storage, particularly in the cement sector. Obviously, we need to reduce the volume of cement we are using. We need to use a different type of cement that is lower carbon in its production. That is happening. We can give leadership through State procurement by insisting that the building projects the State funds use either low-carbon cement or other building materials, in particular wood-based laminate materials. We can do much more in the new built environment without using cement or concrete at all. There is quite a lot happening there. For example, we are working with the Department of the Minister, Deputy Ryan, on the potential of carbon capture and storage. I do not want to give the impression that that is the solution to everything because it is not. The solution is to move away from the use of carbon-based fuels where possible. In sectors that do not have the potential to do that in the short to medium term, we need to look at other ways in which we can capture and prevent those emissions going into the atmosphere. There is a role for carbon capture and storage. I do not want to sell that as some kind of silver bullet; I do not think it is. However, it may have a very useful application in the medium term in the cement sector in particular.

The roadmap on the built environment is very much about driving the implementation of modern methods of construction, MMC. My Department has done a lot on that through funding projects. There is a demonstrator site in Mount Lucas, County Offaly. It is essentially a physical demonstration site of MMC, and many developers and builders have gone to see it. We are already increasingly seeing a very different type of construction on building sites. A lot of off-site infrastructure is being brought on site and assembled with a lower carbon footprint linked to it.

Of course, the materials we are using are changing too. That is not only about the carbon footprint of building a house or industrial building, it is also about the energy management of it afterwards.

When I have conversations with companies that want to build and grow businesses in Ireland, decarbonisation, climate and energy management are now a big part of the discussion, whereas five or ten years ago, they simply were not. Most, if not all, of these companies have targets to reach net zero at some point, probably ahead of where Ireland has set that target in 2050, and that goes for companies that rely on data centres and so on as well, on which I am sure we will have a discussion in a while. We want to get these roadmaps concluded. Obviously, they will have to be supported by other Departments as well, given multiple Departments are involved here, but both those roadmaps will be published in the first quarter of next year. We are pretty close to completing one of them, but there is a reason we will probably look to publish it in January rather than before the end of the year. Even though we have set a target of publishing it in quarter 4 of this year, it might be a couple of weeks late, but that is all it will be.

Next year’s climate action plan is probably drafted and ready to go. Can we expect to see anything new in there or will it be a case of doubling down on last year's plan and getting it right?

It will be both. To confirm, the note I have states that the publication will be in the next few weeks, probably in the first few weeks of January. We are planning to translate the climate action plan to being a useful guide for businesses in the relevant sectors where we are looking for change. We want to set out a clear trajectory for meeting targets in a way that is practical, and that will include supports, regulation, enabling measures, grid investment and so on. From a targets and climate perspective, it is going to be about a lot more than publishing new plans at this stage. We have to implement them too, which is why we are spending quite a lot of money on, for example, a green transition fund. We launched a new solar panel grant aid programme that is considerably more generous than the previous one, which really did not work. A lot of things are happening on the ground, but that needs to happen and accelerate.

In terms of meeting our targets, the biggest change we will see next year and into the following year will be both IDA Ireland and Enterprise Ireland targeting the cohort within their stable of companies that produce most emissions. Ten per cent of IDA Ireland's clients produce 85% of the emissions, so it makes sense to focus on that 10%. Every business has an obligation to decarbonise, but as for meeting 2025 targets, which are very difficult for us to meet, we will see both Enterprise Ireland and IDA Ireland focus intensively on their top 10% of emission-producing companies because that represents the vast majority of the challenge. Obviously, in the industrial sector as a whole, the cement and concrete sector represents close to 45% of the emissions coming from the industrial sector, so that is a sector within the economy that we will have to work with to decarbonise or to at least capture some of that emission challenge by looking to alternatives in construction. All those things will be happening from next year.

To clarify, I said the meeting will finish at 3.30 p.m. but it will be at 3 p.m., so we have only slightly more than an hour.

I will try to be briefer in my answers.

I thank the Minister for his opening statement. He mentioned that 45% of the emissions in the industrial sector come from concrete, construction and that whole area-----

Yes, the cement industry in particular.

There is an opportunity to pivot away from that, and we need to examine that more and more. While concrete will always be required for some part of the building materials we use, the difficulty is that a lot of the alternatives are also oil-based or industry-based products that are coming forward and that is an issue as well. Many years ago, I worked on a number of eco-projects and we used timber frame construction and hemp and lime as the infill. One of the problems we had at the time was that the hemp chips had to be imported from France, which is still the case. In the case of projects we do not want to talk about anymore, such as Bord na Móna, it was the State that did it, and when the project was well established, it was able to get legs. The forestry industry is an example of that, where Coillte developed a forestry model that has now become a private model in a lot of cases. There needs to be an emphasis on this, with Government recognition. To have carbon capture with whatever products are needed, whether forestry, hemp or something else, it will have to be grown, with the carbon taken in, captured and held in the building. To get farmers to buy in to that, they will have to be certain there will be a market and a long-term future in it. To make that happen-----

Yes, and they have been let down in the past.

They have been let down badly in the past and they are very nervous about it. I think the only way that can be resolved is if the State takes a lead role whereby people will have confidence, given it has deep pockets, that it will be able to establish a sector, which is what we are talking about here. It is not just about establishing something that is small or niche but rather a new sector of agriculture that can deliver and that will have an opportunity to replace a lot of the cement build we use in a lot of our construction.

I might give a slightly more detailed answer on cement because it is important to read it into the record of this committee, given that it is one of the major problem areas. There are other areas too, which I know people will want to talk about, but I might just focus for a moment on the cement side. The cement and construction sectors are separate activities but are highly independent. The cement sector constitutes 41% of industrial emissions in Ireland and, therefore, close to 5.5% of total national emissions, both in thermal heating and process emissions released in clinker formation. These emissions are recognised as very hard to rebate due to the requirements for high-temperature heating and the industrial process emissions released during the manufacture of industry-standard Portland cement. Reducing emissions will require limiting demand for cement and investing in alternative methods of production. The construction sector has a broad emissions footprint with substantial impacts on emissions in manufacturing, combustion, transport, the built environment and energy systems. The key objective of Climate Action Plan 2023 is the reduction of embodied carbon in construction materials for industry and, obviously, cement is a big part of that.

As to the Deputy's question on what we can do about it, my Department has established a cross-departmental cement and construction sector decarbonisation working group, which happened last year, and through the working group members work collaboratively on the following policy areas. The first, green public procurement, relates to designing an approach to ensure public sector purchasing power plays a significant role in sending market signals aimed at decarbonising the cement sector, that is, trying to build that into our procurement processes for the materials we are asking to be used in State contracts. Other areas include the work of Enterprise Ireland in enabling the implementation of detailed decarbonisation implementation strategies by client companies in high-impact sectors including cement manufacturing, and taking a national approach to whole-life cycle carbon assessment in the development by the Department of housing and the SEAI to implement the energy performance of buildings directive. To promote widespread adoption, my Department is leading a cross-departmental and cross-agency modern methods of construction leadership and integration group. This has the potential to dramatically improve construction sector productivity, innovation, speed of delivery, sustainability and, ultimately, cost.

The Department of Agriculture, Food and the Marine and the Department of the Environment, Climate and Communications are leading the work of the timber working group, which will focus on the area of timber in construction projects, including the use of the regulatory framework for cross-laminated timber. At the moment, the problem is that it is only permitted to use cross-laminated timber for four-storey buildings so its use is limited, for example, for apartments. In most other European cities we see cross-laminated timber being used in much higher buildings so we know it is possible. We are looking at whether it is appropriate to change the certification and so on. I think it is.

These are the kinds of practical things we can do to change what a building site looks like and to change the materials being used. It would be naive to say we will not need any cement or concrete in the next decade, but we can certainly move away from it, where possible, try to change the industry over time and support the industry in the changes that are needed to reduce carbon released by the cement process. We also want to look seriously at carbon capture and storage to avoid the release of carbon. There are things we can do. If we can make a big impact on the cement industry, it could have a dramatic impact on the overall challenge of meeting the targets for the industrial sector. It is not the only area. We also need to work in a whole range of other areas, but the cement sector is a relatively small sector as regards the number of people who work in it and there should be a big focus on it in the next few years.

The other side of that, which the Minister mentioned, is working with Skillnet and other organisations on the issue of skilled labour as we move to alternative methods of doing things. Many of the skills and methods of construction that have been developed in the past may not be appropriate in the future. How much emphasis is being placed on that by the Department and agencies to ensure we have a skilled workforce in the future?

The honest answer to that is that there is a lot of focus on it, but it is not the primary role of my Department. It is also under the Minister, Deputy Harris's, Department. However, for example, through our agencies, the IDA and Enterprise Ireland, we can and do provide significant grant aid to their client base for upskilling and training. I have just come from the launch of a knowledge transfer boost programme, which will spend €32 million in the next few years, predominantly getting the skills we need into our universities to turn academic research into commercialisation in some of the new technologies we need to develop. There is also a dramatic increase in the number of apprentices coming out of our third level system. We are still not where we need to be, but there will be an additional 9,000 this year. The retrofitting programme challenge that is under way needs thousands of skilled workers to deliver its ambition. That is happening and my Department is part of the discussion. Skills are essential to everything in the economy and if we are going to decarbonise, we need the skills to do so.

My first question is about the carbon budget allocated to the industrial sector. How much of it has been used up? Will the roadmaps the Government will publish get us back on track? That is the fundamental question.

My second question relates to the poor take-up of green initiatives by enterprise generally. The local enterprise offices, LEOs, Enterprise Ireland, EI, Skillnet and so on were before the enterprise committee. Typically, approximately 1% of their company base is engaging with their different programmes. If they are all different companies, it probably comes to 3% when they are totted up across the agencies, but plainly, as the Minister acknowledged in his statement, the idea that becoming sustainable is the key to long-term competitiveness is not getting through. These companies will be left behind in addition to the country failing to meet its climate targets. How will the Minister kick-start change in that area? Will he use conditionality? More is needed than what is happening now. Some kind of institutional shift is probably needed.

My third question is perhaps part of a solution to the second. I have long advocated for circular compacts, especially in the food and construction sectors, which would allow us to address issues in design, choice of materials, process and power, packaging and plastic, retail, presentation, consumption patterns, repair opportunities and recovery for reuse. It goes the whole nine yards, whereas typically the Department only looks at the emissions from manufacturing. In reality, the enterprise sector has a massive footprint throughout the supply chain on emissions patterns and opportunities to avoid emissions. Would the Minister be willing to commit to developing such a compact in the food and construction sectors? The Department of the Environment, Climate and Communications is open to it. It seems to be a real opportunity to shift the ground and it also aligns with the new European obligation to report on supply chain impact. The Government will have a series of opportunities to sustain the interest of people in the sector so they make these shifts. Those are my three questions.

They are pretty big questions. Will the roadmaps get us back on track? They need to. That is why it has taken a while to put them together. In truth, we are not where we need to be, as the Deputy will be aware, to be able to meet the targets we set for 2025. The targets for 2030 are another matter. We need to accelerate delivery next year in getting buy-in from businesses of all shapes and sizes to the targets we have set. The Deputy will see us placing a big emphasis on the big emitters, as I said earlier. That is where we can make the biggest reductions in a short time. The Deputy will also see some big projects by some large companies that are on their own pathways to reduce emissions and get to net zero at some point in the future, kicking in over the next few years. We will see big chunks of reduction as some of the big emitters take actions they are planning at the moment, effectively shifting to renewables. Many of the onshore wind energy projects today are being funded by companies that use a lot of energy and use carbon-based fuels to do their work. They have given commitments to change that and some of those will kick in over the next few years.

Why is the take-up so low? That is one of the reasons we went on the road this year to hold building better business conferences around the country. We have been to all nine of the regional enterprise areas and our main focus has been on trying to get businesses thinking about decarbonisation for the first time. Many small business owners say they have not had the time, they have been through a series of challenges and they will get to decarbonisation, but not yet. We are trying to get buy-in.

I have a list of the green transition fund supports and figures. The numbers of approvals are as follows: 110 under the GreenStart programme; 22 under the GreenPlus programme; 74 under climate action vouchers; only five under strategic consultancy grants; and 210 under the climate planning fund for business.

These are small numbers. Even though, combined, we are spending nearly €8.5 million on interventionist grant aid to try to change practices, we are still talking about companies in the hundreds, not the thousands, never mind tens of thousands. We will probably see a much bigger figure for those accessing the climate toolkit, which does not cost anything. There is a significant increase in the usage of that. However, as regards LEOs, for example, for the year to date up to 31 October, there were only 24 applications for the energy efficiency grant. There were just under 500 applications for the green for business programme but still nothing like what is needed for buy-in.

There are two issues in that regard. First, there is a relatively low take-up and, second, if we are to have a massive ratcheting up of the numbers, we also need to match that with significant funding. At present, the funding we have is being used but the numbers are relatively small. We launched this new grant aid for solar panels in the summer and that money has already been used up. We are now under pressure to find more money to extend it. We put €13 million in place for the second half of the year and that money is nearly gone. We are seeing hundreds of businesses applying for that fund.

This is accelerating but there is still a huge amount of work to do, from a communications point of view, to get businesses to tap into the resources, grant aid, advice and mentoring that is there for this decarbonisation challenge. That is why, for example, the Minister, Deputy Eamon Ryan, has access to a significant climate fund, which will be used for many of these programmes in future. I suspect that my Department and his will make a strong case to significantly ratchet up the available resources for adaptation within industry to decarbonise. That needs to get under way next year. We have many programmes that are happening but the widespread adoption of them, which will need more money and more communications, is what we are focusing on now.

The Deputy is somebody who has advocated for the circular economy and a circular approach to economic development for quite a number of years now. As he knows, the whole-of-government circular economy strategy committed to developing over time a series of sectoral roadmaps for resource-intensive sectors of the economy. That includes construction and demolition, which is a major part of our waste problem, and other areas. I am very open to the approach the Deputy talked about. I would like to explore it in a little more detail. I am happy to do so through the committee or elsewhere. On the idea of circular compacts in areas such as packaging, processing and power, and recovery and reuse, we are putting sectoral roadmaps in place for some of these areas anyway, but if there is a more comprehensive way of doing it through a public-private compact, I would be very open to it.

I have just been given a note on that; maybe we are doing more than I think. CIRCULÉIRE is a public-private partnership cocreated by Irish Manufacturing Research and three strategic partners, namely, the Department of the Environment, Climate and Communications, the EPA, and the European Institute of Innovation and Technology, EIT, Climate-KIC. Together with industry partners, CIRCULÉIRE aims to assist manufacturers and their supply chains-----

I know others want to get in. I will take the Minister up on his offer to consider it and-----

What I am saying is a bit is happening in this space, but if the Deputy thinks we can go further, we are all ears.

I thought Deputy Bruton would relish the opportunity to explore this further at the committee. As we come to discuss our work programme for next year, perhaps it is something we could look at in the earlier part of the year and-----

I am happy to come in with our key officials in the area, if that is helpful. Our Department does not control all the levers in respect of waste, in particular, but we can certainly be helpful from an industry and enterprise point of view.

Very good. We have made Deputy Bruton our committee rapporteur in the area of the circular economy.

I certainly will not be off the hook.

You definitely will not be.

I thank the Minister for the presentation. I will raise the issue of data centres. Our position is that the Government has not been strategic enough in how they have been managed to date or will be in future. The impact of that is we have not conditioned data centres enough to play a role that is in any way sustainable in our economy or society. There has been an open door for them regardless of the kind of data centres they are and the impact they can have. Being strategic in this policy is very important.

We know some facts about data centres. In 2015, they accounted for 5% of our electricity use. That is now nearly 20%, which is pretty much the same amount of electricity use as all rural homes in the country. That is projected to increase to 30% by 2030. We have seen incredible growth in the electricity use of data centres. We have also seen the impact of that, when it comes to the security issues they have caused on our grid and our ability to meet our climate emissions targets. Data centres have been identified as a key challenge in that regard. We know a number of facts about data centres but there is an awful lot we do not know.

The Government's policy states: "Data centres are core digital infrastructure and play an indispensable role in our economy and society." I question that statement. I am interested in digging a little into how the Government has come up with that analysis. If it is okay, I will go backwards and forwards with questions. One of the things the Government states is that strong employment should be associated with them. Can the Minister tell me how many people are directly employed, that is, are on site, in data centres in Ireland?

No, but I can say that the value of data centres is not the people who are employed in them. There is no digital economy without data centres. All sectors of the economy are moving onto digital platforms. If we want to develop a resilient economy in the future that can protect the quality of life we have in Ireland, that can provide the kind of employment and career opportunities that many young people now have and so on, and if we want to attract the best companies in the world to come to Ireland to develop new products here, whether it is in pharma, tech or medical technology, then data is central to everything.

Let me answer the question because it is important. To measure the benefit of data centres by the number of people who are employed in them completely misses the point. Although I understand the question, the value of data centres is much broader than that in terms of how Ireland remains and continues to be a world leader in a digital economy, and how we regulate and grow that economy.

That said, Ireland does not have an open door to new data centre development without any restrictions or limitations. Of course we do not. The energy use of data centres is a very serious issue that we need to overcome. That is why the Government statement on data centres is very clear that any new data centre development has to show sustainability in how it can be powered in future.

One of the reasons I think our offshore and onshore wind targets and commitments are so exciting is that not only are we decarbonising our electricity grid, but we are also producing significantly more energy through clean resources, that is, wind and solar. That can allow us to be able to develop a data-based economy with data centres that are powered by wind in the future. Our challenge for the next four to five years or so is how to decarbonise data centres and how to allow for the development of sustainable data centres in the right places where the grid is strong enough in a way that does not undermine energy security and also builds in a plan for the future for those data centres to be powered by renewable sources only. We spend much time thinking about that in the Department and I spend quite a bit of time speaking to the Minister, Deputy Ryan, about getting that balance right as well.

The Deputy is correct in that if we were to keep building data centres and powering them by electricity generated by carbon-based fuels, by gas power generation on site or diesel generators, that would not be a sustainable proposition. So-----

Okay. Can I come in?

I just wanted to give the Deputy our perspective on data centres. We think they are an important part of the twin transition of decarbonisation and green transition. They need to be sustainable. We do not have an open door policy towards data centres at all. As the Deputy knows, very few data centres got the connection they have been looking for in recent years. Some have gotten grid connection in the past number of weeks. However, it is not by any means at all straightforward to get permission to build a data centre in Ireland.

I do not think that is correct. We have seen many data centres getting permission and being built. I think it has been relatively easy.

I do not agree with that. It has not been.

We can disagree on that. The Minister said they are trying to get the balance right but I would argue that they are not getting the balance right. He talked about the Government statement on the role of data centres but there are no definitive measures in it. It stated, “The Government has a preference for data centre developments in locations" and “The Government has a preference for data centre developments that can demonstrate a clear pathway to decarbonise".

When it comes to data centres being powered by wind generation, on Wednesday the CRU approved grid connection for a wind farm off Wicklow. That wind farm will be off Arklow and it will be for a data centre in Arklow. There has been an agreement between the data centre and the wind farm. When that wind farm was first spoken about a number of years ago, they were marketing it by saying it would provide enough electricity or energy for 830,000 homes - I think that was the figure they gave. Now, it will provide enough energy for one data centre where probably 30 or 40 people are employed.

I get the Minister’s point that it is not just the people employed directly in data centres and that there is obviously a wider indirect benefit, but the question is whether we have enough of the right kind of data centres, and I do not think we do. If I was to ask the Minister where the data centres are, what data they are collecting and who owns them, I doubt he would know any of the answers. I know there are commercial issues, but there needs to be an entity within the Government that knows exactly where all these data centres are, who owns them, how they are run and what is collated and stored in them. Unless you know that information, you cannot figure out how to manage them properly. The fact that a cohesive approach has not been taken by the Government means we are seeing many more data centres in this country than we can meet the needs of now and into the future. I think they will end up taking renewable energy that should be used for residential homes and standard levels of economic growth, not just for meeting the data centre needs from companies that are overseas. Some 30% of our electricity use will be by data centres by 2030, which compares with 3% across Europe. At some stage we have to say that we have far too many and we are taking far too many on board.

There is also the issue that if we cannot provide a secure grid – we have seen this already – we will have companies like Intel saying they cannot invest and create other jobs here because they do not have access to secure energy. That is a real risk. I do not think the Government has done this in tandem and I do not think it has gotten the balance right. It will be a major issue down the road when we realise we will not meet all our renewable energy requirements through wind energy and we sacrificed an awful lot of that to be used for data centres, many of which are not actually giving anything back.

We have to finish up at 3 p.m. so I ask-----

Can I answer that?

I hear the Deputy on that, although I think she is making the assumption that all of these wind farms will be built anyway and instead of them powering houses and other parts of our economy, they are powering data centres. The truth is that many wind projects are being funded by companies that want to decarbonise the powering of their data centres. Many of the renewable projects happening in Ireland are happening because companies are setting ambitious targets for themselves with regard to decarbonising and ultimately getting to net zero in the future. That is driving the funding of many of the renewable power generation projects in Ireland. Do not make the assumption that there is billions of euro out there that will build wind farms all over the place easily. Many of the offshore wind farms - I hope we will be able to get them moving and funded – will be projects that will be funded by large private sector companies that are on a decarbonisation journey and know they need to get to targets by 2025, 2030 and so on. That is not a bad thing. It is driving a whole industry and helping to fund it in Ireland. Comparing the Irish economy to other European economies, we are very different. It is a good thing that Ireland is driven by technology and data as an economy. It gives us a huge competitive advantage. It is not a bad thing and it should not be painted as that.

I am not painting it as a bad thing. What we are saying is that-----

No. We are saying it is not strategic enough. I would be interested for the Minister to come to Wicklow and explain to people that the 60, 70 or 80 turbines they will look out at are there primarily to provide energy for data centre storage of-----

There will be many more than 60 or 70 turbines off the east coast of Ireland over the next few years.

Absolutely and that is no problem because we need it to decarbonise our current demand.

That is why we have a licensing system and planning system to be able to do that and make sure they are happening in the right place, that they have the appropriate grid connections and so on.

For the right purpose.

However, as the Deputy knows, many of the land-based wind projects happening around the country are funded by companies looking to move away from a reliance on carbon-based fuels to renewable energies. That will happen both offshore and onshore. Whether it is off the coast of Wicklow or Cork, we will see that. I do not see that as a bad thing; rather, I see it as an industry building to scale in Ireland, which will ultimately decarbonise our overall economy and society in a positive way.

I do not want to give the impression that I am downplaying the responsibility of the State in a policy towards data centres; I am not. I am just saying that data centres are an important part of the Irish economy today and will be into the future even more so. We need to make sure we are strategic in where they are developed and how they are powered. We also need to ensure they are sustainable in respect of how they are powered as they use an increasing amount of our overall electricity demand. I think we can get the balance right. The conversations with all of the large data companies that have data centres reflect that, whether they be IDA or EI clients.

I welcome and thank the Minister. I thank his officials as well for coming along today. I wish to get back to the overall purpose of the Department being here, which is around our obligations and role with regard to the climate Act.

Looking at the climate action plan for 2023, and the annex of actions in that regard, the Minister's Department is the lead one in ten of those and is associated with many more. What is quite frustrating for me is that without roadmaps, and without the completion of some of those roadmaps, it is very difficult to interrogate what is happening. Would it be possible to have representatives of the Department appear before this committee again once these roadmaps have been published to enable us to ask about what has happened compared with the annex of actions? This is the frustration I have now. As a result of that situation, we tend to then focus on very specific things, when, ultimately, we are trying to achieve decarbonisation very quickly.

I will take up some of the points raised by Deputy Bruton. It is very frustrating when we see the level of engagement by businesses. I remember when we had previous sessions devoted to the circular economy. What was made clear then was that businesses flourish through regulations because they put everyone on a level playing field. When we push back too much of the responsibility onto individual, and often, very small companies, to step forward and to apply for funding, then too much is going onto those individual enterprises. Much more needs to be done to support the entire enterprise sector.

I wish to focus on the issue of timber for construction. I visited the timber engineering research group in Galway University with the Minister of State, Senator Hackett. One of the things that group would love would be for Ireland to fully embrace having, and a pilot may not be the right word in this context, something that will demonstrate timber's ability in construction. We know that, often, those who are the first movers are the ones who have financial difficulty. Can something be done to support businesses to undertake pilot projects to demonstrate the uses of timber in construction? I know this has been done in other countries. The type of wood we grow in Ireland has a different density than in other parts of Europe, and this may mean it might be better used in some parts of construction than in others. Having seen, however, the pressure Irish wood can take, I think it is time to look at the regulations. One advantage we have is that our wood grows very fast, which is not something countries in other parts of Europe have because of the climate. Is there something innovative that could be done in this regard?

Is there some way the Minister can see to put in place more legislation to help put businesses in a position where they would be tracking their decarbonisation performance? An example would be the gender pay gap legislation, which targets larger businesses first, before encompassing smaller businesses over time. If something like that could be done, then we could point to the businesses performing really well. There could then be some way of awarding those doing very well.

On the last bit first, on reporting requirements, this is happening. At a European level, there is a reporting obligation. We are going to move to a point where, effectively, companies will have to provide their sustainability credentials each year in the same way they have to provide their annual financial returns. We will be starting this process with larger companies and then moving to smaller companies over the next few years. Even larger companies, though, will have to report in the context of their full supply chains. As the Senator is aware, many firms trading business to business, B2B, smaller businesses, will end up having to contribute to the reporting obligation for a larger company anyway. If we look at how the Irish economy works, there is much interaction between multiple companies before a manufactured product is produced. What the Senator has referred to in this regard, then, is already happening at a European level, which I think is the appropriate way to do it.

I do not believe we should be introducing laws and regulations in Ireland that would, potentially, require a significant increase in the bureaucratic burden placed on Irish companies that their competitors in the rest of the Single Market would not have to apply. The European Commission has led on this initiative. Industry is a little concerned about the increased challenge of reporting. I think mandatory reporting standards will become a normal part of business in the years to come. Our job in the Department of Enterprise, Trade and Employment is, of course, to help businesses with this transition, and to try to make it as easy as possible and to try to allow digital platforms to make it easier to do so to ensure we do not have small businesses spending a disproportionate amount of their time putting audits together when this could be done more efficiently. We are, therefore, working with many business representative bodies now in the enterprise forum and in the SME forum to discuss what this framework will look like and what the obligations will require those companies to do.

We are, obviously, trying to keep the costs here down as much as possible. Let us not forget the multiple policy decisions that have made the costs of businesses higher. These are, by the way, all for the right reasons, whether this concerns the minimum wage increases, extending sick leave provision, extending new types of leave for domestic violence, etc., more bank holidays or pension provision for the future. These are all extra costs for employers. A reporting obligation is also going to be an extra cost for employers. We must, therefore, try to be very aware of the cumulative burden of all these extra costs on many small businesses under pressure. I agree with the Senator, then, but let us do this in the context of what is happening at an EU level and let us help businesses to do it as efficiently as they can, keeping the costs down.

In terms of supporting pilot projects in building, this is happening now in respect of modern methods of construction, MMC, as it is now called. I am sure the Senator has seen some of the projects in this area.

I have, but these are on a very small scale I suppose and people-----

-----do not seem to be applying for these projects. It is more on the more innovative level.

I have to say I visit building sites to see whether there is really change happening on those sites, and it is.

I was on a building site in Cobh recently where houses were being built with a material I had never seen before. It is providing extraordinary improvements in terms of heat and energy management once the homes have been built. I think this is happening now and our job is to accelerate it further and, basically, to make it the norm. If we need to look at new incentives and new grant aid programmes to do that, then we are very open to it.

I could understand the frustration in the Senator's voice when she was making her point on the roadmaps. Until we have roadmaps that set specific targets, then it will be very hard to hold me and my Department to account in this regard. We do, of course, have targets in terms of the existing carbon-budgeting targets that we must meet by 2025 and 2030 and that are very difficult to reach. We need, though, to break this process down into roadmaps that can be delivered upon. By the way, I am more than happy to come back to the committee once we have published these two roadmaps I referred to earlier. Perhaps we can delve into them in a bit more detail then.

I thank the Minister for that response and Senator O'Reilly for her questions. I call Deputy Paul Murphy.

In his opening statement, the Minister mentioned "carbon abatement" a couple of times. What does he mean by this?

I am not sure I mentioned carbon abatement at all. Did I?

The Minister said it twice. I thought it was not an accident that he said it twice. The Minister first said: "We will measure ourselves going forward against carbon abatement objectives, alongside employment and productivity".

What I mean by that is emissions reductions, basically. It is about moving away from industries, sectors and practices that produce carbon emissions. If we can replace them with alternative materials, fuels and approaches, that is effectively what I am talking about. It is carbon abatement.

If you google carbon abatement, which is a central topic of discussion at COP28 at the moment, it has a very definite meaning, which is the reduction of the amount of carbon dioxide that is produced when coal and oil are burned. The significance is that it is when coal and oil are burned. That is not how the Minister means it.

It is not just coal and oil. It is gas too. We are trying, with carbon abatement, to move away from carbon-based fuels and to reduce the emissions that come from the burning of them to generate energy. I am not quite sure what the Deputy is getting at.

What I am getting at is that "carbon abatement" means something quite different to the phasing out of fossil fuels. It means we are going to keep using fossil fuels but not to worry because we are going to capture the carbon. That is what it means technically. I think it is important to be clear out this. If the Minister means phase out-----

To be clear about that, as far as I am concerned, we should use as few carbon fuels as we can. I recognise that we will be using gas in particular for quite some time as a transition fuel until we can replace gas with biogas, until we can develop a hydrogen economy and until we can generate sufficient electricity from renewable sources, predominantly wind but also solar, and maybe other technologies in the future. We need to move away from the use of fossil fuels. I also think that some fossil fuels will be part of our energy mix for some time because of energy security concerns. Many people, including me, would like to have moved away from coal earlier at Moneypoint but the energy security reality has not allowed us to do that. We have moved away from peat, which has been a difficult transition for many people who were employed in that sector. We will move away from coal and, ultimately, we will move away from gas, but we have to do it in a way that maintains our economic resilience and energy security. We have to be realistic about the pace of that change. My job is to accelerate it as fast as we can but I think it is self-evident that Ireland will be importing gas for some years to come.

When does the Minister think we can have a complete phase-out of the use of fossil fuels in Ireland?

I do not think I can give any certainty on that. All I can say is that, by 2050, we have a target of generating 37 GW of electricity offshore. At least 10 GW of electricity will be generated onshore by wind. There will probably be a considerable amount on top of that from solar too. Hopefully, at that point, we will have quite a large hydrogen economy and a large biofuel and biogas economy too. Looking at the ambition for where Ireland wants to be by 2050, at some point along that route, we will see a gradual reduction in the reliance on carbon-based fuels, which is a good thing.

It is an essential thing.

Yes. It is necessary. We have said that Ireland wants to reach net zero by 2050 and maybe before that. My job is to take this in chunks. We have targets to get to by 2025, which is not that far away, and by 2030, which are very demanding. I think that is where the focus is now.

Carbon capture and storage, which is linked to the notion of abatement, is unfortunately a central topic of discussion at COP28.

The Minister, Deputy Ryan, made a specific reference to cement production, which is in Deputy Coveney's Ministry. Will the Minister tell us what progress has been made on carbon capture and storage for cement?

I talked a lot about carbon capture and storage at the start. I do not know if the Deputy was here for that. The cement industry is difficult to reduce emissions from. We are effectively trying to do three things. One is to shift the industry towards a lower carbon form of cement and to try to incentivise that through public procurement, with State construction contracts and so on. Second, we want and need to look at other practices that can reduce the carbon intensity of this industry at various different stages, whether the manufacturing of cement or its application. We should be looking at alternatives to concrete and cement for construction. We talked earlier about laminated timber, for example, its increased use on site, and other materials that are less carbon intensive than concrete and cement.

Third, recognising that we will have a cement industry for some time, since it is part of the Irish economy, we look at whether we can capture and store the emissions coming from the sector in a way that does not solve all problems, by any means, but which certainly prevents the release of damaging emissions into the environment. It is not a silver bullet but it is part of a mix for how we address this. We said earlier that 41% of emissions in the industrial sector come from the cement sector. It is a huge issue. I think it is 5.3% of our overall emissions. It is a sector that cannot and should not be ignored. At the moment, along with the Minister, Deputy Ryan's Department, we have a working group looking at the viability of carbon capture and storage with regard to cost and timelines for implementation. We will be able to give firmer timelines and costs for it early next year, hopefully.

Okay. When this process is begun, I presume that the Minister would agree that it is not feasible at the moment and it does not happen at scale anywhere in cement production/ I think the danger of carbon capture and storage is that it acts as an illusion and we are told not to worry because this technology is around the corner and we can just keep going. If this does not prove to be feasible, at what point or in what year does the Minister say that we have had enough and that we need to wind this down and focus more on the question of alternatives?

The Deputy and I often disagree on various different policies but I think that is a fair concern, that this would be held up as a solution that can give a green card to the industry to keep doing what it is doing, because at some point we will just capture the emissions. That is why I think we need to make progress in understanding what is feasible and what is not, and on what can apply here in Ireland. I think the Minister, Deputy Ryan, is keen to do that, and so are we. There is a cross-party working group. Do we have a timeline for when it is likely to report back?

Mr. Joseph Cummins

Next year.

Knowing the Minister, Deputy Ryan's view on this issue, I think he will be impatient to get some recommendations about what is possible and what is not. That will determine how we will work with the cement industry in the future. This is a sector that has to find a credible route to reducing emissions, given how big a contributor it is. We want to do that in a way that does not wipe out an industry, because I think that would be wrong. We need this industry for the foreseeable future. This will be a partnership between the State and the sector to look at what we can do with regard to technology to capture emissions, to reduce the carbon intensity of how we produce cement, and for the construction sector to look at alternative materials. All of that is under way.

I would have to accept it is at the early point in carbon capture and storage. I do not want to sell this as some kind of silver bullet but it is a technology worth looking at. The same argument can be made about lots of technologies, such as floating wind, offshore, etc. Some people are sceptical and some are certain it will happen in the future, as am I, and it is likewise for hydrogen. We cannot bet on one technology but must explore them all to ensure we maximise potential.

In response to Deputy Whitmore, the Minister made an interesting point, effectively making the argument that a lot of the renewable investment we have would not be happening if it was not for data centres.

What percentage of the renewable capacity added to the grid over recent years or projected is energy going to data centres?

I will try to get that information for the Deputy. I do not have it off the top of my head. My point is that some of the capital that is funding renewable projects today, helping to build an industry around renewables, is from companies looking to decarbonise their systems. That is why we saw the development of some wind projects directly linked to an individual company. When Apple wanted to build a data centre in the west, it also wanted to build a very large wind project because it wanted it to be sustainable. Other companies are doing the same thing. One ask we have in new data centre development is for companies to look at making them sustainable from a power generation perspective. Increasingly, we will see large energy users, not just data centres but high-energy manufacturing in semiconductors and pharmaceuticals, try to reduce their emissions by building a solar farm, sponsoring a wind farm, looking at an offshore project for wave, wind or tidal, etc. I see that as a good thing. It is part of building capacity in the overall renewable sector, building scale and ensuring we have an economy driven by renewable power.

It does not get us any closer to driving the rest of the economy and society via renewable power, if you add energy usage-----

If you add energy usage and you simply add-----

The point I am clearly not explaining well enough is that by building more wind farms, we also build capacity for others looking to build wind farms, connect them to the grid and sell into the system. A scale is necessary for a vibrant on and offshore wind industry. It is likewise for the solar industry. When Eli Lilly in Kinsale decided to build a solar farm next door to its manufacturing facility, that was a good thing which we encouraged. When other companies look to build a wind farm to decarbonise their systems, that is a good thing. In Cork Harbour, four of the very large pharmaceutical companies have large wind turbines right in the middle of their campus. That is a good thing and it builds capacity from an engineering, design and supply chain perspective to develop the kind of capacity we need for the scale of wind energy projects we are planning for the next 30 years.

There is another side to that argument. I get the argument that, if the only wind farms built are to generate energy for new industrial projects, we are not decarbonising the grid at the pace we need to for other users. I hear that but we can do both. It is easier to do both if we have scale in the wind industry. Anyone who goes to a wind industry conference today versus five years ago will see it is a totally different scale. Some of the largest wind energy companies in the world are coming to Ireland because we have projects happening at scale. Data centres and semiconductor and high-energy pharmaceutical manufacturing play a part in that, which needs to be recognised.

As I said when the Minister, Deputy McConalogue, was at the committee last week, ordinarily, we do not get to have this kind of back and forth with a Minister to discuss in detail some of the challenges. It is a fantastic discussion and we are teasing out the problems we are trying to solve. It shows the power of the process put in place with the Climate Action and Low Carbon Development (Amendment) Act 2021 two years ago and the annual revisions of the climate action plans.

The Minister did not celebrate some of the achievements in the sector, which are worth acknowledging. Coal and oil were referenced. Use is massively down in industry. That should be put on the record. The Minister, Deputy Ryan, said it last week but there is a good story in that regard, notwithstanding that Moneypoint is still operating. It is there in reserve.

Chemical fertilisers are also down 30% in two years.

Other sectors may have primary responsibility in electricity generation and agriculture but so does the Minister's. No sector can operate independently. The Minister is very passionate about Ireland's offshore opportunity in the decades ahead. It is fair and legitimate to say, given the limited resources at the Department of housing, that it is focusing on the east coast development of our offshore industry. It would be wrong if we did not do everything we can to get the south and west coast going in parallel. There is a concern that we are not doing enough. It is not in the Minister's area as regards primary responsibility but I think he will take a strong interest in the southern and western opportunity and developing DMAPs. I am sure the Minister is engaging with the Minister, Deputy O'Brien, on that challenge. It is critically important we get the enduring regime, as we call it, moving as quickly as possible.

The Minister, Deputy Ryan, brought two new rail projects to Cabinet, one being Galway to Claremorris and the other Waterford to Wexford. They are part of a new freight strategy to create a freight corridor between the north west and the south east. It is very exciting. It will help rebalance the country in its economic and spatial development and, critically, it will help us to decarbonise if we can move a lot of haulage onto our rail system. While it is a primary responsibility of the Department of Transport to make that happen, there is a role for the Department of enterprise to help industry and businesses to make that transition. Where they might currently use road haulage to a great degree, there is an opportunity to shift a lot of haulage to rail.

Sometimes at meetings like this, we focus on what is yet to be done rather than what has already been done. I will try not to be partisan but the term of this Government has been extraordinary in trying to reshape the policy approach towards green and climate issues. The role of the Green Party has been central to that. It has been mainstreamed and accepted by all parties as regards the need for acceleration to deliver on the ambitious targets we set for ourselves, as well as the legal obligations because we also passed legislation.

If one looks at agriculture, which gets a lot of focus these days when it comes to emissions, water quality, etc., agriculture has reduced chemical fertiliser use by 30% in two years - 15% this year, 15% last year. Ten years ago, that would have been thought impossible.

Maybe even a year ago.

Maybe even a year ago. If one looks at even agricultural practices now in terms of how family farms are run, how grassland is managed and how slurry is injected into the soil, there is extraordinary change happening. I am only using agriculture as an example, but it is across lots of other sectors too. We should recognise that because some of this change is not easy.

On the offshore wind side, I am a big proponent of this. Something I did not mention earlier, which I assume this committee will be interested in, is that by the end of the first quarter of next year we will be publishing a new industrial strategy for offshore wind. Of course, that is about recognising the importance of offshore wind from a climate and decarbonisation perspective, but it has a huge benefit as well in terms of new clean industrial development for Ireland creating new clusters of development opportunity in places such as the Shannon Estuary, in and around Cork Harbour, probably in and around Rosslare Harbour and, potentially, places such as Killybegs, where we will see whole industries being built up around servicing, assembly, landing of cables onshore and strengthening of grid infrastructure from some huge infrastructure projects that are likely to be built over the next 25 years offshore. To give the committee a sense of that, it costs €3 billion to build 1 GW of capacity of wind generation offshore. We are talking about building 37 GW of it. Over the next 25 years, only in terms of the build cost of this infrastructure, we are talking about well over €100 billion, entirely funded by the private sector. That is the scale of what we are talking about. This can lead to an extraordinary generation of economic activity in the west coast and the south coast and can be a rebalancer, if you like, of the dominance of Dublin and the east coast from a wealth generation perspective. We are quite excited about that. We are working with the Minister, Deputy Eamon Ryan, obviously, because we are on multiple task forces with his Department team in terms of trying to make that happen because building this scale of infrastructure offshore, as we have heard from Deputy Whitmore, will be challenged, and there will be a whole load of barriers in the way that we have to get past to get to where we need to be.

The other point I would make is that there is a new approach towards rail freight, trying to link Shannon Foynes to Limerick, linking Rosslare to Waterford and Galway to Claremorris, which is more of a commuter link in some ways but also some freight potentially. We are trying to build-in viability to get bulk freight, in particular, off the road and onto rail where we can and then, of course, to electrify the rail system over time to help to decarbonise it. There is a lot of good stuff happening there.

Obviously, the job of this committee is to focus on what is not happening yet and to keep me under pressure to make sure that it happens but, when one looks at the lifetime of this Government over the past number of years in the context of climate and environment, it will be an extraordinary record when one looks back in 20 years' and 30 years' time as to what began during that period. I am obviously a little bit partisan politically on that. We will be judged by the experts but there is a lot of good stuff under way. Meeting targets though, particularly the 2025 targets, will be really difficult. That needs to drive a lot of change and acceleration next year.

I am a bit partisan as well, but I agree with the Minister. I acknowledge the work of the committee members, who are incredibly engaged on these issues and who turn up, week after week and multiple times a week, on these issues. I am happy to say there is broad political agreement on the direction of travel, if not the detail. Everybody approaches this is in good faith and sincerely. I think we are going in the right direction.

I am conscious that we are over time. I do not know if there are any final quick questions for the Minister before we finish up. As there are not, I thank the Minister for his time today and, indeed, for that of his officials who came in with him as well.

It has been an interesting session. We have established a pattern now of climate action plans being published, the EPA reporting in the summer publishing its projections, the Climate Change Advisory Council giving its take on how we are doing and bringing the Ministers in towards the end of the year prior to the next climate action plan. That is a pattern that is established and should continue in the years ahead.

It will be very difficult to achieve the targets. None of those were chosen lightly. They are stretch targets but it is fair to say that the process is a good one in terms of pushing the system towards achieving them. I think this session proves it, as did the two sessions we had last week, with the Ministers, Deputies Eamon Ryan and McConalogue. We can see the level of engagement with the issues and the challenges that we have in these sessions from the Ministers and, indeed, from the broader Oireachtas as well.

With that, because we have gone over time, I propose that we go into private session because we have some other business to deal with. I thank the Minister again for his time today.

The joint committee went into private session at 3.07 p.m. and adjourned at 3.11 p.m. sine die.
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