I propose to take Questions Nos. 32, 58 and 64 together.
The 2009 Effort Sharing Decision 406/2009/EC established binding annual greenhouse gas emissions targets for EU Member States for the period 2013 to 2020. For the year 2020 itself, the target set for Ireland is that emissions should be 20% below their level in 2005. This will be Ireland’s contribution to the overall EU objective to reduce its emissions by the order of 20% by 2020 compared to 1990 levels. Ireland’s target is jointly the most demanding 2020 reduction target allocated to EU Member States under this Decision, which is shared only with Denmark and Luxembourg.
The latest projections of greenhouse gas emissions, published by the Environmental Protection Agency in April 2017, indicate that emissions from those sectors of the economy covered by Ireland's 2020 targets could be between 4% and 6% below 2005 levels by 2020. The projected shortfall to our targets in 2020 reflects both the constrained investment capacity over the past decade due to the economic crisis, and the extremely challenging nature of the target itself. In fact, it is now accepted that Ireland’s 2020 target was not consistent with what would be achievable on an EU wide cost-effective basis.
The legislative framework governing the EU’s 2020 emissions reductions targets includes a number of flexibility mechanisms to enable Member States to meet their annual emissions targets, including provisions to bank any excess allowances to future years and to trade allowances between Member States. Using our banked emissions from the period to 2015, Ireland is projected to comply with its emissions reduction targets in each of the years 2013 to 2018. However, our cumulative emissions are expected to exceed targets for 2019 and 2020, which will result in a requirement to purchase additional allowances. While this purchasing requirement is not, at this stage, expected to be significant, further analysis will be required to quantify the likely costs involved, in light of the final amount and price of allowances required.
Ireland's first statutory National Mitigation Plan, which I published in July of last year, provides a framework to guide investment decisions by Government in domestic measures to reduce greenhouse gas emissions. The purpose of the Plan is to specify the policy measures required in order to manage Ireland’s greenhouse gas emissions at a level appropriate for making progress towards our long-term national transition objective as set out in the Climate Action and Low Carbon Development Act 2015, as well as to take into account existing EU and international obligations on the State in relation to reducing greenhouse gas emissions. Although this first Plan will not provide a complete roadmap to achieve the national transition objective to 2050, it begins the process of development of medium- to long-term options to ensure that we are well positioned to take the necessary actions in the next and future decades.
Importantly, the National Mitigation Plan is a living document that will be updated as on-going analysis, dialogue and technological innovation generate more and more cost-effective sectoral mitigation options. This continuous review process reflects the broad and evolving nature of the sectoral challenges outlined in the Plan, coupled with the continued development and deployment of emerging low carbon and cost effective technologies across different sectors of the economy.
The EU Renewable Energy Directive 2009/28/EC set Ireland a legally binding target of meeting 16% of our energy demand from renewable sources by 2020. While good progress has been made to date, with the Sustainable Energy Authority of Ireland (SEAI) advising that 9.5% of Ireland's overall energy requirements in 2016 were met from renewable sources, meeting the 16% target remains challenging. The SEAI's most recent assessment is that Ireland will achieve between 13.2% and 15.4% of its 16% renewable energy target by 2020, indicating that Ireland should be between 82% to 96% towards its target.
In relation to Ireland’s renewable energy targets, the Renewable Energy Directive provides a comprehensive framework for Member States to work towards achieving individual and EU renewable energy targets, including mechanisms for countries to work together such as statistical transfers, which allow Member States to meet their targets by purchasing credits from Member States that overachieve on their renewable targets.
In the absence of an established market mechanism, estimates of the cost of using instruments such as statistical transfers are necessarily tentative. Work undertaken by the SEAI in 2016 indicated that the cost to Ireland of not meeting our overall renewable energy targets may be in the range of €65 million to €130 million for each percentage point Ireland falls short of the overall 16% renewable energy target. Present indications – based on trades agreed by Luxembourg late last year - are that the costs per percentage point for statistical transfers could be below the lower end of the range suggested by SEAI.
While the focus of my Department remains firmly on meeting our 2020 target and on implementation of renewable energy measures, including a new Renewable Electricity Support Scheme (RESS) and a new Support Scheme for Renewal Heat (SSRH), contingency planning has commenced to explore the potential extent, mechanisms and cost of addressing our target within the framework of the Directive.
Any requirement for statistical transfers to meet compliance would be undertaken against a background of discussions by the Irish authorities with the EU Commission and relevant Member States. As any purchases arising would be made over a period, the costs to the Exchequer of acquiring statistical transfers to meet any potential shortfall would likely be spread over several years and the cumulative costs would not be known until 2021, the deadline for completion of all purchases.