Ireland must go beyond European Ambition to deliver on Climate Action Bill.

This month marks a divergence in Ireland’s Energy and Climate Policy, moving to a more national focus where targets set out by Europe will have to be significantly exceeded to align with the Climate Action Bill.

The European Commission has adopted a package of energy, transport, and climate proposals known as ‘Fit for 55’ with the objective to reduce net greenhouse gas emissions (GHG) by at least 55% by 2030, compared to 1990 levels.

For Ireland, this package will likely take a policy back seat as the recently signed Climate Action Bill demands a more significant reduction in emissions to 2030.

Modeling of pathways by the European Commission that is consistent with the bloc’s updated climate ambition shows Ireland must achieve a minimum of a 33% reduction in emissions (relative to 2018) by 2030. This is compared to the 51% required by Ireland’s Climate Action Bill.

In short, Ireland will need to go over and above what is demanded by the EU proposals. This is not surprising as the EU as a region has delivered a 25% reduction in GHG emissions since 1990, whereas Ireland is yet to drop below 1990 levels.

But the task ahead should not be underestimated.  Historically Ireland scores high on climate ambition and low on climate action.

Ireland failed to meet both its EU 2020 commitments in terms of renewable energy and emissions reduction and had to achieve compliance through the purchase of statistical transfers of renewable energy and emission reduction credits from international markets.

It may seem counterintuitive that the 55% reduction in emissions at the EU level is less challenging than the 51% reduction in Ireland’s Climate Action Bill but the reason is due to different baselines, which for Ireland is 2018 and for the Commission is 1990.

When both targets are adjusted to a relative starting point of 2018, the European proposal requires a 40% reduction in GHG emissions as a bloc by 2030 while Ireland is aiming for a 51% reduction over the same period.

The targets are not readily comparable as the role of land use, how compliance is measured, and flexibilities can change the gap, but the difference in ambition and how it is legislated is clear.

EU Climate Policy distributes emissions reduction goals through two key pillars each targeting individual sectors within the bloc.

Just under half of all emissions come under the EU Emissions Trading System (EU ETS) which is a pan-European cap and trade system for emissions within the power sector, industry, and flights within the EU.

The legal responsibility for emissions in the EU ETS rests with the 11,000 or so companies within the system.

The Commission estimates that the ‘Fit for 55’ policies will deliver a 65% reduction in emissions for Irish companies in the ETS relative to an agreed 2005 baseline

Emissions outside of the EU ETS such as Transport, Buildings, Agriculture, and Waste, rest with national governments with individual Member State obligations distributed on an Effort Sharing Regulation basis.

Traditionally, this is where Irelands emissions obligations lie at EU Level and are often called the Non-ETS sectors where emissions are distributed via an effort sharing process.

The Effort Sharing process balances the ability of a Member State to pay for reductions based on wealth and its technical ability to reduce emissions based on cost-effectiveness.

The Commission places a greater emphasis on wealth meaning that less wealthy countries have less ambitious targets.

Ireland’s current EU target for this sector is a 30% reduction in emissions relative to 2005 but in the Effort Sharing methodology Ireland is an outlier because the possible emissions reductions as measured by GDP/capita is significantly higher than the technical cost-effective potential due to the low mitigation potential in agriculture

The recent EU analysis deemed that ‘no Member States should see its target increase by more than 12%’ (otherwise it would have been much higher) so effectively Ireland’s target increases from a 30% reduction to a 42% reduction relative to a 2005 agreed baseline.

Corresponding projections by the Commission shows that Ireland meets this target with the use of flexibilities through the generation of LULUCF credits (Land Use, Land Use Chane and Forestry amounting to 26 Mt) and ETS allowances (19 Mt) allowing for the option to transfer EU emissions allowances from the EU Emissions Trading System

The Climate Change Advisory Council previously expressed concerns with the option of ETS allowances as this could involve significant Exchequer cost depending on carbon price within the ETS when the allowances are canceled.

Finally, an important feature of Irelands Climate Action Bill is ‘Carbon Budgets’ which limit the amount of carbon emitted over time rather than set a point target for a reduction at some point in time.

My colleague Prof Brian Ó Gallachóir has estimated Ireland’s carbon budgets based on preliminary data at 423 Mt (million tonnes) with current EU projections showing an equivalent budget of 80 Mt higher or 35 Mt higher if full flexibilities are used.

It should be noted that at the time of writing it is unclear how land use will be treated in Ireland’s Climate Action Bill, so these figures are an upper bound.