I am pleased and honoured to be with the committee. I want to deal with four different inter-locking themes. The first is the broad interdependence between a good economy and a good environment. For the purposes of the COSAC meeting that interdependence should be emphasised. The second theme I want to touch on is the crucial requirement in this country and across Europe generally to get price signals that tell us we should conserve the environment and that conserving the environment will pay. Specifically in that context, I will touch on the greenhouse gas-global warming challenge that we face in this country.
Third, I want to touch on the very exciting developments in Ireland in research development and the relationship between that and sustainability. Again, that has a direct analogue for the wider European programme because the model that we have developed in Ireland seems to have application right across Europe generally but is especially relevant to the new member states. Finally, I want to touch on a local issue. In those three areas I would give ourselves pretty high marks for developing evidence, thinking through options and essentially making broadly sensible decisions, both in the short and long term.
I know that the final area I want to touch on is highly contentious politically - the issue of one-off rural housing. That has direct sustainability implications and we have not adorned ourselves politically, technically or in any other way by the manner in which we have addressed that issue. Again, the wider European issue is germane because it is coming to the fore in Portugal, Spain and Greece also.
On the first point about the interdependency of the environment and the economy, it is a simple fact that nowhere in the developed world does one find a thriving economy where environment is degraded. Smart people or tourists will not go to a clapped out environment. One cannot have a top end food industry in such environments. They are incompatible, so any towns, countries or communities that decided in the modern world to trade off a high quality environment for economy essentially just shoot themselves in the foot. The evidence across the planet is very compelling in that regard, and it is an important message for this group to take to the wider European agenda, where it may not be clearly understood.
The second issue is the use of prices and incentives, and I wish to focus specifically on the global warming issue. Mr. Coghlan mentioned the fact that Europe wide, we are not doing too badly in meeting our Kyoto commitment, which essentially sets a cap on the volume of greenhouse gases that we are allowed to emit. However, that cap was allocated to the existing 15 member states, and ourselves and Spain are wildly over target. We have no hope of complying with the target unless we take serious, sensible and cost effective action.
It involves two actions, one of which we have already taken with our European partners - to introduce an emissions trading scheme. One decides how much of any pollutant one is willing to accept, which becomes the cap or envelope. One then allocates that cap to all the firms that are emitting that particular pollutant, which is normal regulatory practice. The big innovation, however, is that those firms are allowed to trade so that, for example, if my cap is ten and Mr. Coghlan's cap is ten and if it is very expensive for me to get back down to ten but very low cost for him to go from ten to five, he can reduce his emissions below his cap and sell me the surplus available. At the end of the year there is an accounting process, and the rule is that one has to cover one's emissions with one's allowances. One has to hold enough allowances.
Out of that trading one gets a price signal, in this case a price per tonne of carbon under the European emissions trading scheme. The estimated price per tonne would be about €12. It is an excellent system because for the first time in our history we have a price signal. Whether it is Cement Roadstone, Aughinish Alumina or even UCD, they all have a cap. If we in UCD can reduce our emissions below our allotment at a cost of less than €12 per tonne, we can sell that surplus to somebody else and make money out of it. It creates the profit incentive in the environmental domain. That is happening Europe wide in January 2005, and it is hugely significant for the Lisbon process because it allows Europe to meet a lot of its obligations at very low cost.
If one is an emitter in Ireland and there is somebody in the Czech Republic, Poland or wherever that can emit at very low cost, one can buy one's allowances from them. However, that signal only covers about 40% of our emissions so it is very important that we introduce a tax on those emissions that are not covered by the emissions trading scheme. While nobody likes taxes, we can ensure that we take care of competitiveness effects by essentially allowing any company that meets best international practice to be exempted from the tax.
I am chairman of Sustainable Energy Ireland. We have done a pilot with industry and come up with an excellent negotiated agreement model so that if one is trading internationally one can escape the tax by opting into this scheme. Similarly, poor people who are very vulnerable to rises in fuel prices need special transfers and support. Along with those two provisions we need a strong effort at information so that every household that sees its bill going up by, say, 10% should be immediately able to access a set of measures they can take to reduce fuel consumption by 10% and essentially bring its expenditure back down to where it was.
Sustainable Energy Ireland is working on a package of measures to make it as easy as possible to conserve energy. Since electricity prices also rise, the ESB too should be obliged to provide households and other electricity users with a series of energy reduction measures, such as free long-energy light bulbs. Its performance in this area is currently very poor. If we all installed those bulbs in our houses in the morning, we could reduce our energy consumption by 7% or 8%. We need to have that signal, because without it we cannot drive the Kyoto requirement to successful achievement.
The third area, on which I will not dwell so much, is research and development. We were probably the most negligent country in this area until about five or six years ago. For example, no Irish university rates among the top 100 research universities in Europe. In terms of becoming research players, we are moving from a very cold standing start. Virtually everyone now realises that unless this country becomes a knowledge economy, and unless we switch from standard production to process development, we are, economically, dead in the water. That message has been accepted. We have set up a mechanism, Science Foundation Ireland, as well as two well-funded research councils. The universities, including my own, UCD, are completely reorganising themselves to become serious players in this arena.
That is a very good story. It has sustainability implications of course, because as one moves up the knowledge chain one moves into cleaner and more environmentally benign activities. One automatically becomes consistent with the Gothenburg requirements.
The European Union needs to improve its performance in the R& D area generally. The Science Foundation Ireland model has a lot of potential for Europe. Regarding the report for COSAC, what we have done in this area and what we have to offer there, in terms of coherence and serious joined-up government, is worth promoting strongly. For example, in the Finance Bill currently going through the Houses, there is a 20% tax credit for companies investing in R&D. We are putting infrastructure and money into place in the supply side, and driving the demand side.
The final theme, about which I am much less happy, is the rural housing issue and the ongoing debate. Looking at it from a research academic point of view, the fundamental problem is the utter vacuousness of the debate, in the sense that there is virtually no serious analysis or evidence to support propositions on either side of this rather tangled story. The result is that we are rapidly drifting into a situation where it is possible, though not inevitable, that we will encumber rural areas in particular with major costs and disabilities which will essentially hobble them in terms of achieving sustainable development. In my paper, I worked through a few issues which are germane. My frustration derives from the fact that the issues involved are eminently researchable. This is not an area where ignorance is a requirement. Knowledge can be had. We can behave as we have behaved in other areas, in a much more substantive and informed fashion. So far, however, I see no evidence that we are doing so.
There is the matter of consumer preference. What do people want? There are very good techniques for teasing out the answer, whether it be cluster development or one-off housing. There is a presumption that we all want to live in our own little manors in the countryside, but no evidence to support that. My own instinct - a proposition rather than something based on evidence - is that people are going for the one-off option because it is the cheapest, the only one they can afford. I posed the choice between 200 houses placed in a village in a cluster setting, or else sprinkled through the countryside, and my proposition is that for reasons I will enumerate, people would be happier with clusters than with one-off development, if they had that choice. Currently they do not.
I have with me an excellent paper on water quality which I will leave for the committee. Written by Donal Daly of the Geological Survey, it is a very thoughtful analysis of the implications of one-off development for ground water. The facts are straightforward. About 40% of Irish soils cannot and should not have septic tank technology. For the other 60%, the traditional septic tank, properly installed, will work quite well. For the 40% it will not work, and if it does not, one then has to use advanced treatment. About 15% of our soils should under no circumstances have any kind of non-sewaged treatment. The question is whether, with the current model, we will refuse people. The implications are very serious because as Donal Daly notes, the potential for pathogenic infection in our ground water is quite serious. As the density increases, the risk increases accordingly, or even more so, showing an exponential increase. There are nutrient problems, and if, as could happen, it turns out that we do not comply with European Union regulations, Ireland Inc. will be fined, and all taxpayers will probably have to pay a very substantial fine.
That need not happen. Donal Daly goes through the various steps that could be taken to ensure that we do not gratuitously destroy our ground water. We are taking some but not all of those steps. If we end up ten years from now with a debased ground water resource, posterity will spit on our graves, because we will have sleepwalked into the situation when we did not have to.
It is obvious to anyone in the economic development world that broadband access is the crucial passport to modern industrial development. Anyone who wants to start a business anywhere in Ireland in the 21st century must have broadband, or will otherwise not be a player. A very good scheme is currently available. The Broadband Action Plan has invited cluster proposals from people. That feedback will give us very good evidence as to whether, and under what circumstances, it is feasible to bring broadband to rural communities. My guess it that unless people are living in clusters, it will be very expensive, and probably not feasible in some cases. If we give ourselves a pattern of development that essentially precludes large proportions of our populace in rural areas from access to broadband, we will have essentially tied our hands behind our backs.
Regarding tourism, the evidence is not clear, but it must be asked if the model on which we have embarked will damage the tourism capacity in significant parts of rural Ireland. One hears a good deal of anecdotal evidence that it will, and that black spots will be created in parts of rural Ireland. Tourism-wise, urban Ireland will continue to thrive, but parts of rural Ireland may simply be eliminated from the international tourism calendar, while it will probably continue to work for domestic tourism. Once again, we are sleepwalking in this area, since there are excellent techniques and surveys available. One can do serious research to see whether and to what extent the worst-case scenario I am painting has some validity, and to see what we can do if it has not. Once again, ignorance is not bliss in this area. Similarly, it does not take a genius to see that cluster development generally makes public transport much more feasible than dispersed development. There is some piloting with different rural transport schemes with evidence that can be marshalled to test this proposition.
I am acutely aware of the social services issue because my wife is the director of services for older people in the east coast region. She is aware that when older people, often living alone, are in a cluster type development and they can no longer drive, walking to the shops is a huge gain, as opposed to the isolation of a car dependent spatial set-up. It is the same if they need meals-on-wheels or other drop-in services. For older people - and others - who require social services, independence is the primary goal. It is their single asset that they will cherish until the end. They only want to be dependent when it is absolutely the only option available to them. We have not systematically teased out the implications for social service provision to people for whom isolation is a particular problem in this regard.
I apologise Chairman for elaborating at some length on this issue. However, the points I raise are important. I have been somewhat parochial on my last point, but there is a European element to it because countries in the Mediterranean zone are going more or less in the same direction. I suspect that many of the accession states will also be grappling with spatial policy. If we have any insights to offer them, it would be very valuable.