The 2009 Effort Sharing Decision (ESD) set annual binding emissions reduction targets for EU Member States for the period 2013-2020. These targets cover emissions from sectors outside of the EU Emissions Trading System, such as agriculture, transport, buildings and waste. For the year 2020, the target set for Ireland is that emissions should be 20% below their level in 2005. The ESD allows Member States to meet their targets by means of unused emissions allowances from earlier years, or through purchasing allowances from other Member States or on international markets.
The latest estimates of greenhouse gas emissions, published in October 2021 by the Environmental Protection Agency, indicate that 2020 emissions from those sectors of the economy covered by the ESD are expected to be approximately 7% below 2005 levels. The estimates indicate that Ireland will cumulatively exceed the annual ESD targets by approximately 12Mt. Ireland will, therefore, need to purchase additional credits to meet the projected shortfall.
In order to comply with targets under the ESD, since 2019 Ireland has spent €2.1m purchasing carbon credits. Ireland currently holds a total of 8.2 million international credits which are eligible for ESD compliance. The latest estimates indicate Ireland will need to purchase an additional 3.8 million credits to comply with the targets. The most recent estimates of the additional costs of purchasing credits for compliance with these targets were in the region of €6 million to €13 million, depending on the price and final quantity of allowances required.
As the designated purchasing agent on behalf of the State, the National Treasury Management Agency (NTMA) administers and manages purchases of carbon credits. Details of all transactions entered into by the NTMA are published annually in a Carbon Fund Report at www.ntma.ie in accordance with section 6 of the Carbon Fund Act 2007.