Select Committee on Environment and Climate Action debate -
Tuesday, 18 Oct 2022

Vote 29 - Environment, Climate and Communications

Chairman

The purpose of today's meeting is to consider the Supplementary Estimate for Vote 29. I welcome the Minister and his officials to the meeting.

As usual, before we begin I will read out the note on privilege. I remind members 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 also remind members they are only allowed to participate in this meeting if they are physically located in the Leinster House complex. I ask that if they are joining us online, prior to making a contribution, they confirm they are on the grounds of the Leinster House campus. As this is a select committee meeting, I remind members that, in accordance with Standing Orders, discussion should be confined to the items constituting the Supplementary Estimates. I will call on the Minister to make his opening statement and follow with questions and answers.

Minister for the Environment, Climate and Communications (Deputy Eamon Ryan)

I thank the Chair and committee for the opportunity to present details of the Supplementary Estimate for the Department of the Environment, Climate and Communications. I am seeking the approval of the committee for the Supplementary Estimate allocating a total of €1.362 billion to provide the necessary additional funding of €1.212 billion to subhead B11, electricity credit, and €150 million to subhead B13, emergency generation capacity, both of which are in the energy transformation programme. I am also requesting approval to reallocate €7 million as follows: €6 million for subhead A7, climate initiatives; and €1 million for subhead B6, other energy programmes, national and international.

This reallocation is possible due to savings identified within the climate action and environment leadership area under subhead A4, environmental and climate research, where savings of €2.5 million have been identified; subhead A5, carbon fund, where savings of €3.5 million have been identified; and subhead C3, mining and petroleum services, where savings of €1 million have been identified.

The Government took steps earlier this year to help alleviate the burden on households of the rapidly increasing energy costs when we provided for a credit of €200, including VAT, to be applied to domestic customers' energy bills under the first electricity costs emergency benefits scheme. However, electricity and gas prices have continued to rise due to international conditions, in particular the current challenges arising from the crisis in Ukraine, and indications are that this trend will continue for the foreseeable future.

The Government has taken action in budget 2023 to provide further assistance to those who are most vulnerable to the effects of the cost-of-living crisis. A wide range of measures were introduced, including a €600 electricity credit to be applied in three instalments between November 2022 and April 2023. Additional social welfare payments totalling €1.2 billion across a number of benefits and schemes will support in the region of 1.5 million people over the coming winter period. Further measures introduced by the Government involved significant support for commuters and students. The reduced public transport fares announced previously are to be extended to the end of 2023 and a number of measures have been put in place to help eligible students with academic fees.

In light of the continued increase in household energy bills, the Government has decided to support domestic customers further through a second electricity benefit scheme for this winter. The Electricity Costs (Domestic Electricity Accounts) Emergency Measures Act 2022 provided for the electricity credit to be made under the scheme on a once-off basis in 2022. Therefore, new legislation was required for this scheme to be established. The Electricity Costs (Domestic Electricity Accounts) Emergency Measures and Miscellaneous Provisions Bill 2022, which provides the legal basis for the new scheme, passed all Stages in the Oireachtas on 13 October and was signed by the President into law. The new scheme will be closely modelled on the previous one and an electricity costs emergency benefit payment of €200, including VAT, for an estimated 2.2 million domestic accounts is to be paid in each of the November-December 2022, January-February 2023 and March-April 2023 electricity billing cycles, totalling €600, including VAT, per domestic electricity account. This scheme will have a ceiling of €1.211 billion and within this, a contingency has been included to ensure there is no shortfall to cover the increase in any new domestic customers during the period of the scheme. The scheme will be operated by ESB Networks which will make payments to the individual energy supplies. Those suppliers will, in turn, credit individual domestic electricity accounts. The Commission for the Regulation of Utilities, CRU, will be charged with oversight of the scheme.

A further €1 million will be allocated for those domestic customers whose households many not have an individual meter point reference number, MPRN. Upon completion of the previous electricity credit scheme, the need to have an MPRN resulted in certain cohorts not being able to access the payment. A particular cohort since identified includes some Traveller families in certain local authority accommodations where the MPRN is registered to the local authority and supplies multiple households. Work is under way to establish an alternative mechanism to ensure the payment reaches these Traveller families.

VAT must be applied on the electricity bill balance after the credit has been applied. On that basis, the credit of €183.49 is being applied exclusive of VAT on each account. Inclusive of VAT, the total reduction on each household electricity bill will be €200.

Earlier this year, the CRU directed EirGrid, the transmission system operator, to procure some 450 MW of additional temporary generation capacity for winter 2023-24 through to winter 2025-26 to offset a potential capacity shortfall of electricity supply. The temporary generation capacity may be extended to winter 2026-27, if necessary. To comply with this direction, EirGrid requires financial support from the Exchequer. Legislation to ensure EirGrid can carry out this direction, including the legal basis for my Department providing the necessary financial support, passed all Stages in the Oireachtas in July of this year and was signed into law by the President.

The level of financial support required in 2022 to allow EirGrid place orders on the electricity generation units and to ensure they are delivered and installed in time for winter 2023-24 was estimated at €350 million. As the final level of financial support required in 2022 was not known earlier this year as the contractual arrangements were still at an early stage at that time, it was agreed that approval of the allocation of funding for the emergency generation capacity would be requested in two tranches. A previous allocation request of €200 million was granted in July with the indicative funding request for the initial stages of the project, with a further request forecasted to be required in the autumn of €150 million when the contractual details were close to finalisation. These contracts are now ready to be finalised subject to final terms being agreed and the balance of funding being available. The €150 million balance of funding represents the final agreed figures required by EirGrid for the purchase of the generation equipment and balance of the plant this year.

The total cost of the electricity costs emergency benefit scheme is, as I said, estimated at €1.212 billion and the balance of funding for the emergency power generation scheme is €150 million. As the additional funding of €1.362 billion required is being provided from the Exchequer, the main purpose of this Supplementary Estimate is to allocate €1.212 billion to subhead B11 and €150 million to subhead B13 in the energy transformation programme area to fund the two measures.

In addition to the approval for the Exchequer funding for the two schemes, I am also seeking approval to reallocate €7 million within subheads in my Vote to provide for expenditure for a number of other measures.

Local authorities have a particularly important role in the delivery of both climate mitigation and adaptation. This is reflected in the provisions of the Climate Action and Low Carbon Development (Amendment) Act, which requires each local authority to prepare a local authority climate action plan, specifying the mitigation and the adaptation measures to be adopted by the local authority. These plans will be updated once every five years. The first of these plans is due to be submitted by each local authority by the end of 2023. This funding will allow the Department to establish a governance structure with local authorities for the development and reporting of these climate actions plans. I am seeking approval to provide funding of €3.5 million in 2022 through the allocation of savings identified within the climate action and environment leadership programme area.

My Department has secured support from the Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media and the Broadcasting Authority of Ireland, BAI, for a climate-specific round of the sound and vision scheme to address the need to fund programming specific to the climate crisis. This programming will contribute to an important component of delivering on the national dialogue’s objective of improving climate literacy. Improving climate literacy will enhance the capacity of people to make small changes in their daily lives, engage with climate action at a local level in their communities and at national level in the co-design of policy. Through the expertise of the BAI and the vision of Ireland’s programme makers, we will ensure the delivery of a range of innovative and creative programming to bring climate awareness, literacy and empowerment into homes across the country. To facilitate this, I am seeking approval to provide funding of €2.5 million in 2022 through allocating savings identified within the climate action and environment leadership programme area.

The national energy security framework published earlier this year places a significant emphasis on the replacement of fossil fuels with renewable energy to underpin Ireland's security of supply. The Government is committed to ensuring that the planning system is fully supportive of the roll-out of renewables, something first expressed in action No. 102 of the climate action plan 2021.

As part of its ongoing effort to improve the delivery of its service, An Bord Pleanála recently provided the Department of Housing, Local Government and Heritage with a specific resource plan for the area of maritime development and climate action, including the establishment of the marine and climate directorate. The total funding requirement for the establishment of the new functions is expected to be in the region of €3.5 million and my Department is committing to provide €1 million in once-off funding in 2022 to support the set-up of this function. I am seeking approval to provide this contribution under subhead B6, other energy programmes (national and international), in 2022 through allocating savings identified in subhead C3, mining and petroleum services.

I am happy to take questions from the committee on any aspect of this Supplementary Estimate.

Chairman

I thank the Minister for his opening statement. I invite members wishing to contribute to raise their hands and I will make a list. Can we agree a time limit of five minutes of back-and-forth with the Minister? Agreed.

We should have enough time as we are just discussing one Vote. We will go back for second and third rounds as necessary.

I refer to the funding for local authorities and the public bodies carrying out their duties and the remit they would have. This question could probably extend to the funding for An Bord Pleanála as well. The local authorities, in a broad level, are responsible for a lot of climate action through transport and housing. Decisions that local authorities take have an impact on housing and transport emissions. However, a narrower view is to look at the operational side of a local authority. Do the local authorities take a broader or narrower view in their climate action plans? It is one thing for all public buildings in a local authority area to have low energy lighting, but there is a bigger impact of the local authorities in terms of climate. That question could probably extend to An Bord Pleanála as well, where the line is drawn between its operational remit and its broader remit.

Deputy Eamon Ryan

This payment is part of a five-year programme that will see significant ramping up, not just this first payment, but further larger payments, so that they can meet the requirements of the Act. I have been travelling around the country as best as I can talking to different local authorities to encourage them in that work and listening to what they have to say on the resources they need. This is a response. I also told them that they should take broad perspective as to what their role is; it is not just about how they manage their own energy use within their buildings, fleets and so on.

I will give an example of wider considerations. One of the areas where we have huge potential for decarbonisation development and improving our citizens’ lot is through the development of the likes of district heating. It can only be the local authority, particularly through its development process, that can look to target and identify, and then facilitate, support and, in many instances, manage the roll-out of such systems. That then can be applied across a wide variety of different areas, including transport and energy. It can be applied not only in district heating but also in improvement of their housing stock and the provisions within the development plan around renewable power generation and grid development. Once one starts looking at it, the list of where local authorities can and should have a key role is significant.

That is connected, in a sense, to the economic development role of local authorities. This is where a new economy and opportunities will develop. Those councils and authorities that are ahead of the curve in being part of the decarbonisation programme will see more investment, more jobs and a wider rate base. To answer the Chair’s question, their function should not be seen narrowly as being about the emissions that they are directly responsible for, but rather in that wider remit.

Chairman

I thank the Minister for that. The amount allocated is €3.5 million. Is that across 40 local authorities for this year? I am just wondering if enough money is being given. They would probably come back to us. Actually, we had them before the joint committee earlier in the year and they asked for more money. They would ask for more money, of course. Are we giving them enough money to develop the skills, expertise and teams to understand the broader remit that they have, as I said, as opposed to the narrow one?

Deputy Eamon Ryan

As I said, this is a five-year programme. The figure is due to be the same next year but then will ramp up. Our role is very much in the governance of it and theirs is in the implementation. As I said, it is due to scale up. If it is not sufficient, we will continue to review and address that.

Deputy Richard Bruton

I did not think I would get in so quickly. I thank the Minister for coming. I congratulate him on the measures that he brought in in the budget, which the Economic and Social Research Institute, ESRI, confirmed will protect the estimated 29% who at risk of energy poverty. They are very welcome. It is over the winter period and we need to revisit some of these things. I welcome the new measures the Minister is announcing. will come back to them.

I have a few questions. In respect of the energy credit going to householders, has the Minister at this stage been able to estimate how much we might recoup from the EU measures that are now in the offing? That is, the capping of the price of electricity for the non-gas providers and the solidarity tax on the fossil fuel, and perhaps the longer-term market reform that is coming.

On the emergency temporary provision, how is the state aid being structured? Is this a price commitment in terms of supporting the price that would be paid a capital allocation? It will be there for just four winters at most, although this sort of equipment, presumably, has a 20-year life span or something of that nature. What happens after that? It seems that it would be very expensive and wasteful to take it out of the Irish system. How is that going to happen?

Does the Minister have line of sight on the features that stalled the last auction – things such as planning, availability of equipment and compliance with environmental requirements? Do we have clear line of sight to the effect that none of those things will obstruct this?

My final questions are on the sound and vision initiative. As the Minister knows, I am strongly advocating for a resilience campaign around our reliance on imports. I would like to hear that is going beyond just talking about climate and looking at the practical things that can be done.

In the context of local authority planning, no local authority, to my knowledge, has yet put in place a public electric vehicle charger with the grant that the Government makes available to them. I know that has been changed. However, it suggests there is a bit of a disconnect between the emergency that people are facing and the attitude of local authorities. Can the Minister bring a little urgency into this, along with the allocation of the extra money?

Deputy Eamon Ryan

The amount of money raised from the measures that we have agreed at European Council, such as the inframarginal pricing and the solidarity contribution of fossil fuels, is hard to estimate exactly because it depends on so many different variables – the price of gas and, as a consequence, wholesale electricity prices. The good news is that while they are still historically incredibly high prices, it is a fraction now of what the prices were two or three months ago. The reduction is welcome, however, it still leaves us in a difficult situation. It would also depend, to a certain extent, on the timelines that supply whether the measures are extended beyond original provisions and also the rates and levels that apply. The European Union is recommending that it is beyond €180 per MWh that inframarginal pricing would kick in and this windfall would be gained. However, we have the capability of lowering that and that is something we are looking at.

Similarly, on the contribution, the European Commission is recommending 35%, or setting that as within the terms, but recognising that it could go higher. As I said, there is work ongoing with the Department of Finance and my Department to get the details on this. We have to have it in place before the end of the year. We want the revenue in quickly.

I expect the inframarginal revenue to go towards reducing electricity bills directly. That would be the best use of it. The solidarity contribution may be useful in the context of wider supports. We are looking at including business supports and so on. As already stated, I estimate that it will be between €1 billion and €2 billion, but we will have more specifics on that in the coming weeks when we agree the final details, the timelines and so on.

With regard to the emergency purchasing of aeroderivative jet engines, I thank the Chair and the committee for their involvement. The timeline and speed of progressing the legislation, along with the waiving of pre-legislative scrutiny for aspects of this, which we have had to do, has been extraordinary. It is unfortunate and we would prefer not to be in this situation. We are doing it to make sure that we have sufficient power supply next winter. The provisions came from the CRU asking that EirGrid would purchase the equipment. We are supporting that. It is the last resort. The timeline potentially goes to the winter of 2026-27, as I said in my opening remarks. The expectation is that the generators deploying them would have to sell on the relevant equipment. In my mind, we can probably recoup revenue to recover some of these costs. We have not provided for this because it is an unknown. I expect there will be a significant return to Revenue when that is done, and then, as the Deputy said, that equipment can then be used in a range of other operations. My expectation and preference is that it will be used on the island of Ireland because we will need fast-reacting open-cycle distillate, gas-fired or hydrogen-fired backup generation, which is what the equipment that we will contract in the coming days or weeks will provide. We are not providing for it in the Estimates because it is an unknown, but I expect there will be a significant return to the State at the end of this emergency process, when it is unwound.

Chairman

I am conscious of time. The five minutes are up. Does the Minister want to answer the other two questions briefly?

Deputy Eamon Ryan

Deputy Bruton's third question was about what we learned from the auction. The main reasons were a failure for the supply company to deliver the equipment and the planning system being tight. The main lesson that we will have to learn, which the Attorney General is applying, is a revision of the 2000 Act. It is not fit for purpose. It does not service the people. It is too complicated and some of its provisions are too contradictory. That is the first and most urgent lesson that we learned.

I agree with the Deputy regarding the sound and vision fund. The definition of how that applies to climate and the reduction of our dependence on fossil fuels is central to our current climate difficulties. It will be up to the BAI to judge and decide where the funding will apply. The Deputy made comments about resilience to make us less dependent on fossil fuel imports, which is in the category of projects that we should support.

Deputy Bríd Smith

I thank the Minister for all that he has explained to us. I have a couple of quick questions. The first relates to an issue he touched on. How will those without a meter point reference number, MPRN, get their electricity grant? It seems from reading his submission that he has not quite figured out how that will be dispensed. Will he comment on whether that will definitely go to the Traveller community, which did not get to avail of it last time, and how that will be done? I will raise another matter again, which is a hot political topic at the moment. How will the Minister guarantee that there are no disconnections of those with prepaid meters or those with hefty bills from district heating systems, where much higher tariffs apply?

The main question that I want to ask is about the emergency generation plans and the €350 million that is being voted. Some €200 million has been spent and there is €150 million for the autumn. That is all done and dusted. It is necessary, but it bothers me that there is no scrutiny of why it is necessary. We need to revisit that. The Minister is looking far into the future to 2026, 2027 and 2028, when we may still require this type of plant, yet the State is continuing to connect data centres to the grid when we know that they are soaking up increasingly large volumes of energy. Should we not, at some point, stop scrambling to purchase extra equipment but instead stop the connection of extra data centres when we know that they are the cause of the increase in our energy use? The Minister mentioned the war in Ukraine, but the data centre issue is extraneous to that and we have information from the CRU that shows our electricity demand has grown by 9% over the past five years compared with 27 EU countries, which have approximately 0% growth in their energy demand. Ours is continually growing, which is clearly because of the growth of the data centre industry here.

My last question is about climate research. Why do we have money back from climate research? Why did we not spend the funding when we know from the biodiversity report that there is little hard evidence on the decline of many species in this country and that we should research that and spend the funding to examine how and why this is happening so that we can try to redress the problem and protect endangered species.

Deputy Eamon Ryan

I confirm that we will make sure that Traveller families will get the cash payments that 99.5% or 99.6% of households got in the first tranche. We know that it works. Where there were anomalies or communities were left out, such as certain families within the Traveller community, we will work with the Department of Housing, Local Government and Heritage and with local authorities to make sure that they get the payment this autumn just like every other household.

Disconnections are a critical issue. We recognise that it may be a difficult period for a variety of different customers, whether they are on bill pay schemes or not. Many families with pay-as-you-go services find that it is a useful mechanism. We should be careful not to depict all the problems as being in just one sector. Many people with bill pay services also have difficulties and we have to protect them. The mechanisms to help families on pay-as-you-go services first and foremost involve having a good, close relationship with the supplier and the application of the support mechanisms that it has in place to ensure that households do not have to disconnect themselves in a way that they do not want to. CRU has developed a range of other measures, including the right to access lower tariffs. One measure that we will look at from our energy poverty action plan, which will be published in the next few weeks, is a review of gas connections as well as electricity to see if there are measures to take there to improve people's situations, particularly the relatively small number of but still important households which have hardship meters. How do we get better provisions for them? We have not finished introducing measures to help those households. We will continue to review and to make sure that the State helps them through what will be a difficult winter period.

The Deputy asked why we need to switch off the scheme and why we would not keep generators running in 2028 and 2029. This is an emergency measure. It is not the only measure in place. We also have the T-4 and T-3 auctions. The majority of the 2 GW of backup gas-fired power will come through those auction processes. We need a significant investment, which we are now seeing, in battery storage and additional renewables, through the renewable energy strategy. That is working and it is delivering. The volume of power from renewable power generation has never been as significant as this year. That is how we will make sure that we do it.

We recognise that we had a problem with having to make sure that any new data centres fit in within our energy security and climate targets. The Government strategy set out this summer was clear that any new data centre that will be contracted has to provide flexibility and use its backup power supply to help us to stabilise and secure the grid. We recognise that it was an issue.

We have acted to change the rules and approach the State takes to contracting new data centres. It is not saying "No". There will be no great increase in new data centre connections in the coming years because we are in such a tight situation but that is not to say that, in the coming years, we will not return to seeing new data centres being developed, which will help complement our energy-security-related climate needs.

Deputy Bríd Smith

Could the Minister comment on expenditure on research and why money is being taken back in that regard?

Deputy Eamon Ryan

This is a new subhead, started only this year in support of research and environmental products. The expenditure was funded previously under subhead A3. Savings were identified because expenditure this year is less than projected. Sometimes when there is a new initiative, the universities or industry and market people take time to ramp up their ability to spend the funds. There was no lack of desire to see the funding spent. It was an Estimate of €16.8 million, so the reduction is a smaller part of the overall expenditure. We will spend €14.5 million. We did not have control but there was under-expenditure in the other areas or in this area.

Deputy Bríd Smith

I thank the Minister.

Deputy Darren O'Rourke

I have several questions. On the radio yesterday and again today, the Minister mentioned that contracts will be concluded in a matter of days or shortly. He indicated a figure of €350 million initially. Is he confident that this will be enough to deliver on the projects? It was reported in the Business Post last week or the week before that, with inflation costs, committed projects are potentially at risk. Could the Minister give us some information, or as much as he can, on the number of sites we are talking about? Given the 450 MW, what is the breakdown per site? Is the timeframe for delivery within nine months? I believe I heard the Minister mention that figure before.

Deputy Eamon Ryan

I understand that Business Post article referred to those projects that have already been approved in-----

Deputy Darren O'Rourke

Through auction.

Deputy Eamon Ryan

-----those T-4 auction schemes. These would involve solar farms, battery storage centres or backup fossil fuel generators. Those bids would have been made almost a year ago. I cannot remember the exact date. There has been a significant increase in inflation in the interim, particularly affecting the cost of energy infrastructure. Therefore, there is a specific issue in this regard that the CRU and other bodies will have to address. The emergency purchase of power equipment is slightly different because the contracts have not been concluded. As I said, we hope that they will be concluded within the next week or two. Therefore, the price set will be right up to date.

In this process, we could not go out front and say what we thought the assets would cost. When negotiating on the purchase of assets, one does not name one's expected price. However, we expect that the likely contract price, subject to contracts being signed in the coming days or two weeks, will be along the lines of what we had budgeted for internally. The Estimate today reflects that, in that we are pretty much using the exact amount we expected back in July, in the summer.

Deputy Darren O'Rourke

How many assets or sites is the Minister talking about?

Deputy Eamon Ryan

Two sites. I am reluctant to name them until we get the contracts.

Deputy Darren O'Rourke

The Minister does not need to name them. There are roughly two sites-----

Deputy Eamon Ryan

There are roughly two.

Deputy Darren O'Rourke

-----and 200 to 250-----

Deputy Eamon Ryan

Roughly that and roughly 24 engines. These are effectively jet engines, which have to have a transformer and fuel supply attached.

Deputy Darren O'Rourke

Is it hoped that they can be adapted to use zero-emissions fuels?

Deputy Eamon Ryan

They can switch to hydrogen and are likely to use distillate rather than gas, as I understand it. They are dual-fuel or multi-fuel.

Deputy Darren O'Rourke

Is the timeframe for delivery within the region of nine months?

Deputy Eamon Ryan

It has to be, and that is why we have such tight timelines. If we do not start in the coming weeks, we will not be able to deliver in the autumn of next year, which is when we need to deliver.

Deputy Darren O'Rourke

Let me return to the challenge related to those projects that were in the auction proper. In addition to the CRU, what other body will need to be involved? What sort of options will be on the table?

Deputy Eamon Ryan

The CRU has the chief responsibility but we work closely with it, as does EirGrid. We will continue to work with them on whatever refinements we need to make to ensure the projects are delivered. It will be a matter for the CRU.

Deputy Darren O'Rourke

Over how much energy capacity is there a question mark?

Deputy Eamon Ryan

There is always a question mark. Deputy Bruton asked earlier whether one can be absolutely certain that projects cleared through an auction process will in the end be delivered. One cannot be. There can be a variety of measures. The emergency purchase and emergency procurement on their own will not be sufficient; we need to see the auctions deliver, along with further auctions to come, because we have a very tight situation with power supply and need to address it.

Deputy Darren O'Rourke

This matter has been reported in the Business Post. Has the CRU or the Minister been contacted on the viability of that capacity? How urgent is this?

Deputy Eamon Ryan

It is urgent. In talking to various industry providers, one always asks about the position on the various projects and schemes. There has been a significant inflationary element, particularly concerning the price of steel, which would affect solar farms. Strangely, solar farms have a significant amount of steel. There has also been supply disruption because of the war in Ukraine. I am certain that the CRU and my Department will do everything to ensure we deliver on the additional power capacity.

Deputy Darren O'Rourke

On a related point, we are reading that Tarbert's capacity is down and that it is unlikely to be back to its full capacity over the winter. A fire or some other incident knocked out capacity there. I presume this tightens an already tight situation.

Deputy Eamon Ryan

Yes, in Tarbet, TB3 is at half capacity and TB4 is apparently not operational. There has been a significant reduction following the fire. One has to remember that Tarbert is a very old facility. It dates back to the 1960s, I believe. Plants such as Tarbert and Moneypoint, particularly in a market with a very significant renewables element, are not easily ramped up and down. Therefore, there is a constraint. We cannot rely on these plants. We will have to switch away from the use of coal and heavy fuel oil. We will use these in the interim as part of an emergency backup response but we cannot guarantee the use of the plants in the future.

Deputy Jennifer Whitmore

I thank the Minister for attending. I have a question requiring a brief response and a more in-depth one. I will begin with the first of these. Will individuals who missed out on the payments via the MPRN, such as the Traveller groups, be back-paid for the credit they missed earlier in the year? Will they be compensated only for future credits?

Deputy Eamon Ryan

I understand that it is only future credits but I will have to check the final details for the Deputy.

Deputy Jennifer Whitmore

If they are not being back-paid, will the Minister consider it? There was unfairness in the scheme. It has been rectified this time but it would be good to ensure the individuals concerned get the credits they missed out on.

Deputy Eamon Ryan

I will.

Deputy Jennifer Whitmore

In the Minister's statement, he said the Government has taken action to provide further assistance to those who are most vulnerable to the effects of the cost-of-living crisis and then he referred to a range of measures, including the €600 electricity credit. I have been very vocal about the fact that I do not believe this represents good expenditure of taxpayers' money. There should have been a more targeted approach rather than a universal one.

Regarding a similar scheme earlier in the year, the Minister said it was not being targeted because there were difficulties with targeting. We have had much time since then to come up with a better approach. Why did the Minister decide to make it a universal payment this time? Has an economic analysis been done of how much money will be given to people who I do not think warrant being paid on foot of an emergency measure such as this? I refer to people who may have holiday homes. Equally, has this measure been climate-proofed? Providing this payment in this untargeted and universal fashion means that these funds will be given to people as an energy subsidy. This is contrary to our climate action policies and the Government's stated position in this regard. I would like a comment on these aspects.

Deputy Eamon Ryan

I do not agree with the last point. There is no reduction in the incentive for people to reduce their energy use. There are other mechanisms in this regard. People are arguing for a cap on energy bills, which would, as we have seen in other countries, bring about an increase in the use of gas and energy overall. Our approach was specifically designed to be climate-proofed and-----

Deputy Jennifer Whitmore

This is why the Social Democrats have not been asking for a cap. If there was one, it would again not be a targeted measure. If there were to be a cap, therefore, it would have to be a targeted one. The main reason people are reducing their energy use now is because of a price mechanism. A price driver is causing this. For wealthy people, however, no price driver will make them reduce their energy use. Not only is this the case, but the Government has now given people in this situation more money, which will mean negating any price drivers which might exist.

Deputy Eamon Ryan

This is why I do stand up for a universal payment. I also stand up for targeted supports, and this is why the social welfare provisions I mentioned are critical. I do not believe, however, that they on their own would provide a sufficient response. The scale of the price increases has put people right across society in real difficulty. Often people may be outside the social welfare system and in various circumstances, and I think it is appropriate they get a payment during these difficult times. Once we start to do that, then, do we agree to undertake provisions through electricity bills? I ask this because it would not be possible to do it through gas payments, because only 42% of households have gas connections, or any other mechanism. It was appropriate to take this approach.

The cost to start differentiating, the time delay and the bureaucratic complications involved in trying to change the entire database system, or to try to manipulate it to categorise payments based on income or on whether it is a first or second home, would not have delivered the credit in time. I spoke to energy supply companies in the past week, and they told me the measure in April came at just the right time, when bills were really starting to hit home. The payment next month, on 1 November, will come just at the right time. If we start to complicate this process and, in a sense, let the perfect become the enemy of the good, that would be a mistake. It is appropriate that we are helping out the vast majority of households, as most other European countries are doing.

Deputy Jennifer Whitmore

On this point, the Social Democrats are not arguing it is only people on social welfare schemes who should have been targeted. It should be people at risk of energy poverty and those finding it difficult to cope. I do not, though, believe that people with holiday homes will find it difficult in this regard, especially now they will be getting two payments. I do not think the MPRN approach is the most appropriate either. A better, quicker and more targeted means of doing this would be through measures similar to the Covid schemes used previously. This is how we could have got money into people's pockets very quickly. The MPRN scheme took months the last time before the money hit people's accounts. I refer to a different approach, but I do not think this is going to be the last time this kind of measure will be needed. I ask the Minister to undertake some examination of how a measure such as this can be targeted better next time around.

Chairman

We are out of time, but the Minister can respond briefly, if he wishes to reply.

Deputy Eamon Ryan

This goes back to what was said earlier. The MPRN is the only way to do this, if the payments are to be automatic and without the need for an application. As I said, once we start moving away from this approach, where payments would be made based on an application or screening, then we will be getting into a system that will be much more expensive. A certain amount of money might be saved by excluding a certain number of houses, but it might ultimately be found that it will cost more to undertake this type of differentiated system.

Chairman

I thank the Minister. I call Deputy Devlin.

Deputy Cormac Devlin

Regarding the €7 million mentioned, there is concern about the money that has already been given to local authorities for active travel in the context of those local authorities that have not spent it. A great deal of money has been returned to the Department, as he is aware. What is being done to bulk-up the number of staff to ensure local authorities have the correct resources to spend the money being allocated to them? It is unfair that this money is being allocated to them and they cannot spend it.

In situations where some local authorities do not spend money, I think I heard the Minister say the money will be spent by other local authorities-----

Chairman

I must interrupt Deputy Devlin at this point. These questions are on transport matters.

Deputy Cormac Devlin

I am sorry. The €7 million was referred to in the Minister statement and I thought this related to active travel. Perhaps it is related to climate measures instead. It was actually climate mitigation that was referred to, but I do not have a copy of the Minister's statement. I ask him to elaborate on what is being done in respect of resources for local authorities. I am conscious of situations, and using the analogy of active travel, where money is given to local authorities but then some of that money is being returned nearly as fast to the Minister's Department.

Turning to group schemes, where several tenants are on such a group scheme, what is being done to relieve the pressure on them under the current measures? In addition, and similar to the point made regarding the Traveller community, what can be done for people living in situations where they need assistance and they may be on a shared meter in multi-unit developments?

Deputy Eamon Ryan

Without straying, hopefully, too much from the subject in hand, regarding the resources to mitigate the effects of climate action, which includes active travel, we have provided an additional 230 or 240 staff. It took time for the local authorities to get them in place, but they are there now. In previous years, it was not possible for the monies allocated to be spent. This will no longer be the case. There will be more competition for these budgets than there will be funding available. On that basis, we launched our Pathfinders programme yesterday. This was to reward, highlight and champion those local authorities that will be quick and get the best value from the funding.

Similarly, the Delivering Effective Climate Action 2030 plan had a local authority strategy. It was prepared for the research team at the Local Government Management Agency, with the involvement of consultants, the climate action regional offices the County and City Management Association and the environment, climate change and efficiency and emergency planning committee. This strategy was submitted to us last year. The authors worked out and identified the supports in this regard. This Supplementary Estimate is now responding to that endeavour. It has taken the analysis provided to us regarding what capacity requirements local authorities have and has suggested ways of funding it. This approach encompasses all 31 local authorities delivering phase 1. Included is the establishment of internal organisational supports and governance structures, translating the Climate Action Plan 2021 actions into local authority actions and building the evidence base for adaptation and mitigation at a county level. Stakeholder engagement is also involved.

There are two key specialised resource requirements. One is a climate action co-ordinator, CAC, who will be responsible for managing the climate action resources and overseeing the implementation of climate action measures, in respect of adaptation and mitigation, together with the local authority climate action steering group. There will also be a climate action officer, CAO, who will be responsible for managing internal change, building climate action awareness and readiness in each local authority and providing support to the CAC. The climate action plan has identified 90 actions, with dedicated timeframes for delivering and reporting, for which local authorities have direct responsibility or where they key stakeholders. There is, therefore, a great deal of project work to be done. This undertaking will provide some of the key staff resources, including the CAOs and the CACs. These will work with the other resources we are providing to local authorities, be those in the areas of transport, parks or other elements.

The local authorities that are good at this will find it benefits their overall operations. It cannot be forced on them.

Deputy Cormac Devlin

What can be done for those in group schemes and multi-unit developments that share a meter?

Deputy Eamon Ryan

My understanding is that those group schemes are provided for under the existing measure. Where a tenant has a difficulty in a group scheme or in a multi-unit development, there was a mechanism for them to go to the Residential Tenancies Board, RTB, to ensure that their landlord was allocating. Our evidence from the first application of this energy credit was that it got to 99.6% of households. It is only where people have their own MPRN, but we have provided flexible mechanisms where people have requested the RTB to get a payment if for whatever reason it has not been passed on.

Deputy Cormac Devlin

I understand why the Minister does not want to detail the two sides that are earmarked for the emergency generation, but in the briefing note that we received it is obviously up to the winter of 2025-26. Does he envisage that we will need additional capacity after that if the circumstances continue between now between now and then?

Deputy Eamon Ryan

We need to ensure that our auction system delivers. It will deliver. We are seeing a solar revolution happening. The companies are seeing a fivefold increase in demand. It is an absolute explosion that will go further. From talking to energy companies, I hear that battery storage technology is evolving. The deployment of that will go way beyond what previously might have been expected. It is important and we will deliver on the back of gas-fired generation, not just some of these open-cycle plants, but I expect further auctions may look at the potential for combined cycle or other technologies. That combination of renewables backed up with storage and where necessary with fossil fuel-powered generation in times when there is no wind and no sun will deliver us to a future whereby by 2030 we are using 80% renewable and after that we start switching to things like hydrogen and get to a zero-carbon energy system. There is a path.

Deputy Réada Cronin

I thank the Minister for coming in today. I ask him for his views on prepay meters. He is leaving much to the CRU. Many people on these prepay meters are actually paying a higher tariff for their electricity. They are also paying a higher standing charge. That seems extremely unfair because the provider is actually guaranteed payment whereas if someone had an ordinary meter, the provider is not guaranteed payment until it is actually paid. Has the Minister asked the CRU the justification for them having the right to charge a higher rate? One would think people with a prepay meter should actually get it at a discounted rate.

The Minister mentioned the extra money allocated to reduce public transport fares for students and commuters. That is great, but the policy is only as good as it works out in practice and there seems to be a big gap between the policy and the practice particularly in north Kildare. My home town has Maynooth University. I am inundated with students who are delighted with the reduced transport charge but they cannot get the buses. The buses are full or they are not turning up. Sometimes they are standing up and in the case of an accident they would be like human missiles. The buses are full. The policy is great, but more work needs to be done on delivery so that it works in practice. How does the transport plan work with the living with Covid a plan? Many drivers are not able to turn up to work because they have Covid. That is causing the cancellation of many bus services.

Chairman

Again, they are all in the area of transport.

Deputy Réada Cronin

The Minister mentioned them.

Deputy Eamon Ryan

We will need to continue to monitor Covid as the Minister for Health said during the week. What the Deputy said is true; buses are starting to fill up. The numbers using public transport are rising significantly on the back of the end of the Covid pandemic, but also as a result of lower fares. Many bus services are not providing the reliable services that we expect. It is the role of the National Transport Authority and my Department to ensure that they do. This has included the issuing of fines for companies which have not applied. Many of the difficulties have related to the ability to get drivers. We are considering further measures for how we can help to support and facilitate that. I absolutely accept it is not satisfactory particularly when buses do not turn up on schedule and people are left at the stop which can also lead to buses being over-full. We need to change that.

The issue of prepay meters is complex. There are different circumstances for gas and electricity. Different types of meters are involved. There are also different types of customers. Many people are using prepay meters because it provides a very useful service. It is a very attractive way to manage paying and for many people reducing energy use and their bills. The complexity of that is that a number of different companies are involved. Not every company uses prepay meters but those that do have a variety of tariffs, often better and innovative tariffs to support customers. The standing charge and the per-use charge vary because suppliers try to attract customers with that. There is an issue with those who are in difficulty. We need to address that and the CRU has done a lot of work already.

Included in that is the requirement to ensure that those who are in difficulty are not paying the highest charges. As we go through this winter, we will try to ensure that the discounted tariffs are made available to those most in need of them as well as other supports. In two weeks' time we will publish an energy action plan which will outline further measures that we may seek to deliver in conjunction with the CRU. We are doing considerable work monitoring the consumer protection measures. We will not rest with whatever is there. It means looking at it and ensuring we adjust if people are left in difficulties. We do not want anyone disconnected this summer, least of all those at risk of fuel poverty who do not have the heat and the power that they need.

Officials from my Department are meeting both suppliers and the NGOs to understand the issues on the ground. The CRU is working with the NGO representative group to ensure we apply the best solutions here. There is no lack of commitment to getting households through a difficult winter.

Deputy Richard Bruton

I return to the issue of capping, solidarity and so on. Over what period does the Minister's estimate of €1 billion to €2 billion apply? It could be a significant source of potential funding for activities of all sorts.

Deputy Eamon Ryan

It will be over the next year. However, as I said, work needs to be done to decide the rates that will apply and much will depend on what the energy prices are. There is a real complexity with the inframarginal pricing. It is clear that the solidarity contribution will only in effect really apply to one company, the Corrib gas field. With inframarginal it is complex because there are generating companies, such as wind farms, but they may have sold on power through a long-term contract at low rates to a supplier company or supplier-like company. We are saying we will not just apply inframarginal pricing to the generating companies, but we will also apply it to those suppliers and supplier-like companies if they are gaining a windfall profit from these very high market prices for fossil fuel and gas.

Then one is into the complexity of each different generator in terms of what its arrangements are. However, there are many companies which may be purchasing that power and passing on the windfall gain to consumers by reducing their overall bills. Where that is the case, obviously a windfall charge will not apply. It will take a lot of detailed analysis. We can do this through the market mechanisms we have. The exact amount will only become more clear when we understand how much of those long-term contracts are in place and now much of the savings have been passed on to consumers. I still come back to a figure of at least €1 billion to €2 billion. It could be higher depending, more than anything else, on what the price of energy is in the next year. That price is the unknown.

Deputy Alan Farrell

I had not realised that we would broach the subject of the windfall taxation proposal. My question, without the detail in front of us, if we come to that point, is now many companies it will apply to in Ireland? The jurisdiction is quite small in terms of energy generating companies. Notwithstanding the fact that the Minister has put €1 billion to €2 billion as the potential yield from it, how many companies would it apply to?

Deputy Eamon Ryan

When it comes to the solidarity contribution, there would be a single company. On the supplier, light and generator side, I would imagine 50 to 100. I am guessing on that. It is difficult to know but I would imagine it is of that order.

Deputy Alan Farrell

I thank the Minister. That is important in the context of the overall discussion.

In general, I welcome the initiative from the Department. I join my colleague, Deputy Bruton, in thanking the Minister and the Department for the work they have done to achieve the energy credit, which, among many other measures that are being adopted over the course of this winter, is right under the circumstances.

Deputy Darren O'Rourke

I have a couple of questions. I refer to some of the language around the €200 and its relationship with VAT. To be clear, households can expect to see a reduction of a total of €200 three times. It will be one hundred and eighty-whatever euro plus VAT. It will be a total of €200. The last time around, there was a switch in relation to VAT in the middle of it and people did not see the reduction that they expected to see. Now, it is clear. It will be a total reduction of €200 on three occasions.

In terms of the local authority commitment, we heard from the representative bodies and local authorities. Is it clear what the funding will be allocated towards? Is it staff? Is it the preparation of local authority climate action plans? Is it boots on the ground to deliver on those plans? Is it to populate the local authority climate teams? They had indicated to us that to resource those climate teams might cost in the region of €11 million. What exactly will the funding go towards and deliver in 2023?

Deputy Eamon Ryan

I set out some of the details in response to Deputy Devlin's questions. It is primarily staff. It may include the likes of stakeholder engagement and building evidence of research. One could bring in contracting expertise and so on but it is primarily, in my mind, their internal resource capability to be able to marshal other elements of the local authority. Indeed, to go back to the Chair's initial question, to aggregate a wider community response, it is staff resources more than anything else we need.

Deputy Darren O'Rourke

Will it be spread evenly spread? The Minister has heard me make this point previously. Some local authorities are for a range of reasons more enthusiastic, but also better placed or better resourced initially, to take advantage of these opportunities. Will it be evenly spread or how will the funding be allocated?

Deputy Eamon Ryan

I stated earlier on that the County and City Management Association, CCMA, and others have been involved in terms of putting in the ask. It will be allocated. We do not leave any county behind. One of the guiding principles of the climate response is that every place matters, every person matters and every local authority matters. Obviously, some, such as Dublin, will have much deeper resource pockets than a smaller county, such as Leitrim or Louth, but we need each of them to play its part. It will be, I expect, proportionate in terms of the scale of investment.

Deputy Darren O'Rourke

I do not see where the large energy user rebalancing subvention is accounted for. It is a measure to reduce the cost of electricity bills on households. It is a measure the Minister brought in in 2010 and that has been in place up until a couple of weeks ago. According to reports, it involved €600 million on household bills over a decade. Where is that accounted for? When was it lifted? Why was it in place for so long? Will the Minister give us an update on that?

Deputy Eamon Ryan

That was a decision by the CRU, from 1 October, in its review of network tariffs. As I said, that was an independent regulatory decision. Going back to the original decision in 2010, there may not have been regulated pricing on markets. However, that was a CRU decision and it applies from 1 October.

Deputy Darren O'Rourke

Will households will see the benefit of that tariff being lifted off?

Deputy Eamon Ryan

It relates to very large energy users, that is, very large industrial energy users, not households.

Deputy Darren O'Rourke

I thought the point was it was levied on household bills to the benefit of large energy users.

Deputy Eamon Ryan

It was part of a number of complex CRU measures, including the public service obligation, PSO, going negative. There were elements where there was an increased cost on households and other elements where there was a reduction. There was a net rebalancing, which, if I remember the exact figure correctly, was a reduction of approximately €40. It was within that decision that the network tariff on large energy users was also considered.

Deputy Darren O'Rourke

It would be worth the committee following up. I have written parliamentary questions and they have been referred to the CRU. The CRU is accountable to the committee. The detail on this is not entirely clear. In fairness, Ms Caroline O'Doherty from the Irish Independent has highlighted it. Nobody has contradicted the point about €600 million over ten years. It warrants further explanation.

Deputy Eamon Ryan

I am quite happy for the committee to do so. I think the CRU was in recently.

Chairman

They were. I cannot recall whether Deputy O'Rourke put the question to them at that point.

Deputy Darren O'Rourke

I did not put that question to them.

Chairman

We can certainly look at that.

Deputy Cormac Devlin

Returning to the emergency power generation scheme, I note that there is €150 million allocated to it. There is another €150 million added to subhead B13, which is the energy transformation programme.

On something we spoke about previously, has the Minister explored and engaged with the existing infrastructure to try to keep what we have already, expanding the life span of existing sites around the country to ensure that there is a supply of gas and other materials? Has that happened in tandem with looking at new sites for energy generation? The Minister might come back on that and then I will have other questions.

Deputy Eamon Ryan

We are looking at that. To be honest, people did not expect Tarbert and Moneypoint - the third station this applies to is, if I recall, Aghada, which is an oil-fired generation unit in the ESB plant in Aghada in Cork - to be still running. They are running but within a relatively short period, we see the likes of Moneypoint switching away from coal, perhaps to fuel oil initially. One of the three units runs on fuel oil already but we need to switch away from those heavy carbon fossil fuel plants.

We are running them at present because our situation is tight. However, I do not believe there are any other plants, none that I can think of immediately, which would be accessible. We have everything on the bars at the moment.

Deputy Cormac Devlin

I thought the Minister mentioned the Corrib gasfield in one of his responses earlier. Has that been explored with a view to extending it? Is that being considered?

Deputy Eamon Ryan

Corrib is a gas exploration and extraction facility, so it is different from power generation. The lifetime of the field is determined by how much gas is there. There was talk recently in the newspapers about there being potentially larger reserves than might originally have been expected. That is a matter for the company. That is not something we can determine. There is real potential down the line. If we look at the facility there, particularly when we will be developing offshore wind power in the north west, there must be potential for the use of some of those offshore or other facilities to help tap into the offshore wind that is available to us. I expect it will have a role in the future in some way that has not yet been determined.

Deputy Cormac Devlin

That is fair enough. The Minister mentioned a plan for maritime development and climate action, including the establishment of a marine and climate directorate. He said his Department is committing €1 million. It is envisaged it will be €3.5 million in a once-off fund for this year to support the setup of that function. Will the Minister elaborate more on that marine and climate directorate?

Deputy Eamon Ryan

It is a specific directorate. There is an independence at An Bord Pleanála, so line Ministers do not get directly involved. However, in response to Deputy Bruton, I said earlier it is probably on the planning side that we have the real constraint in our system and that is the biggest constraint in developing offshore renewable energy, and indeed a range of other projects. Recognising this needs very specific skills and expertise in marine ecology and marine spatial planning, it is right for An Bord Pleanála to have a special unit. We are supporting that by part-funding it. As I understand it An Bord Pleanála is currently advertising and looking to bring in the skilled personnel it needs. We have to treat this with urgency, because when it comes to offshore matters, we have to get environmental protection and the planning right. We are in competition in a sense with most other countries in north-west Europe that are looking for similar investment. If our planning and permitting are not done in a timely manner, we may see the shipping, cabling, turbines and other supply chain elements going to other markets. That is why it is critical.

Deputy Cormac Devlin

In the establishment of that directorate, if only €1 million is being committed to it this year, does that jeopardise the applications for offshore wind? Obviously, from what the Minister is saying, An Bord Pleanála does not possess the skills right now.

Deputy Eamon Ryan

That is only my Department's contribution. The Department of Housing, Local Government and Heritage is making a further contribution. My understanding in budget discussions and elsewhere is that there is no restriction on the ability of An Bord Pleanála to draw down resources. The restriction is in getting the capable people with real skills. To be honest, one of the things we need to do is start looking at our universities and our marine and other research institutions and see where we can get the people because that is the biggest constraint. It puts at risk everything we are doing.

Deputy Cormac Devlin

I thank the Minister.

Deputy Jennifer Whitmore

The Minister mentioned that the backup generation of large energy users, in particular data centres, will need to be made available to the grid. Obviously, that does not apply retrospectively to those who are currently operating or have their permissions granted. Has the Department looked at what generation capacity is available within those existing data centres and looked at ways to have that made available and distributed to the grid if there is a possibility to use those in any manner?

Deputy Eamon Ryan

Critically, EirGrid would have a key role in this. It is complicated by the fact that many times a data centre may have a certain grid connection but not use it at full capacity. EirGrid already has detailed working relationships with many large energy users. They have entered into co-operation. I hear EirGrid saying it has got a good response. It is getting a great deal of co-operation in the order of, I believe, 150 MW of flexible capacity that it will turn to in the event of us being very tight and on amber alert. That is one of the resources to which it might turn to help to manage a difficult situation. My understanding is that it has had extensive and good negotiations with all large energy users in that regard.

Deputy Jennifer Whitmore

There could be 150 MW available.

Deputy Eamon Ryan

I could be corrected on that but from memory I believe so. I recall that when we were discussing the emergency legislation at this committee in July, EirGrid at that time mentioned 150 MW as one of the figures. That may have increased since because there has been further engagement.

Deputy Jennifer Whitmore

I am quite disappointed by the underspend on the research side of things. Perhaps we need to go back and see why it was not spent. From being in research myself, I know every researcher has a stack of oven-ready projects that could be funded at a minute's notice. It is surprising the money was not spent, especially in light of the crises in both biodiversity and climate that we face. There may be some barrier. Will the Minister make sure that is cleared?

Deputy Eamon Ryan

I will do that.

Chairman

I thank the Minister and Deputy Whitmore. As it is almost 2 p.m. and there are no other questions, we will bring the meeting to an end. That concludes the consideration of the Supplementary Estimate for Vote 29. I thank the Minister and his officials for assisting the committee today with our consideration of the Supplementary Estimate.