Policy Options to Reduce Ireland's Greenhouse Gas Emissions

Ireland faces a difficult and long-term challenge to reduce its greenhouse gas emissions, but the current economic crisis offers an opportunity to lock in reforms that could reduce costs in the long term. The authors recommend: 1. Legislative approaches: The Government directly controls a large part of the economy, e.g. through regulation, the public service, and its vast ownership of buildings and vehicles. A genuinely independent Climate Change Commission could ensure consistency across policies and encourage public participation. 2. Market- and incentive-based approaches: Emissions trading and carbon taxes are good at securing emission reductions at least cost. Carbon taxes should be used to cover the approximately 70 percent of Irish emissions that are not covered by the EU Emissions Trading Scheme. Revenues should be used to offset income or labour taxes to aid competitiveness, with a share set aside to help the vulnerable. Experience with this approach elsewhere has been favourable and widespread adoption would be ideal. 3. Standards and regulations: These can be crude and costly, but standards and regulations help in instances of market failure, e.g. buildings insulation and spatial planning. 4. Subsidies: These require higher taxes to fund them and in the absence of carbon pricing they can be ineffective or even counterproductive. They are appropriate for research and development of technologies, though carbon pricing is needed to encourage adoption. If the Government does not apply policies that ensure that a long-term credible price applies to all carbon emissions, accompanied by measures that support society, competitiveness and innovation, the nation will pay more to achieve its goal. But how to implement such a policy mix is still an open question. A major step would be recognition that the framework requires protection from short-term political interference, clearly defined incentives through a price on all carbon, and a transparent, dynamic and fair process with which the public can engage.

Note for Editors: Authors - Sue Scott is Associate Research Professor at the ESRI. Thomas Legge is Program Officer, Climate & Energy Program, The German Marshall Fund of the United States, Washington, D.C. and previously worked on COMHAR – Sustainable Development Council, Ireland. Ireland’s greenhouse gas emissions rose rapidly during the economic boom years, but one side-effect of the economic crisis is that the country is likely to meet its 2008-2012 commitment under the Kyoto Protocol to limit emissions growth to 13 percent above 1990 levels. Even still, Ireland’s targets for 2020 and beyond are still daunting. National emissions must reduce by at least 20 per cent below their 2005 levels, but without a dramatic change in current trends and policies, emissions in 2020 could be similar to their 2005 level. To date too little attention has been paid to the problem of climate change: it has barely featured on the agenda of the primary forum for policy agenda-setting, the Social Partnership. Moreover, sectoral interests that rival the national good have consistently blocked worthwhile policy change in Ireland. But progress is possible: Ireland emerged from the economic and social crises of the 1980s, and it can climb out of the current economic, social and environmental hole. Three principles can help to guide the adoption of a wise climate policy which will:

• Keep down costs: There are many actions and technologies available for reducing emissions. Policies should provide a framework to encourage best choices rather than attempt to choose technologies and targets for each sector.
• Charge an equal emissions price: Imposing a single price on all emissions will prevent the unnecessary use of high-cost reductions at the expense of low-cost ones.
• Use economically efficient policies: Achieving the sizeable reductions in emissions could be expensive. Efficient policies are required that do not pre-empt resources that can help vulnerable sectors and the economy as a whole. The report will be published online on 29 July and available to download from the ESRI website www.esri.ie.