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Energy Institute Ministerial Speech by Minister Naughten

 

Check against delivery.

 

2nd November 2016

Good evening chairman, secretary general, distinguished guests, ladies and gentlemen and thank you Neil O'Carroll, for inviting me to speak here tonight.

 

Why is there a Department of Communications, Climate Action and Environment?

 

Governments and government departments change priority over time. My Department exists to address the connected challenges of a country, and provincial parts of the country especially, that are significantly behind where they need to be, in terms of modern communications infrastructure.

 

We are also a country playing catch-up on our obligations in relation to Climate Change. This obligation is as much an opportunity as an obligation. In any event it is our children's future and a vital national interest.

 

Reducing waste, using less energy and using resources more efficiently, is the most cost effective and accessible way for us all to take action on climate change. 

We need to support and empower everyone from householders and schoolchildren, to businesses and the public sector to meet the Paris Agreement Targets within the next 398 months.

 

Climate Change

The Paris Agreement will enter into force in two days, ahead of COP22 in Marrakesh, in spite of having been agreed less than a year ago.

 

Thanks to the support of the Government and of Dáil Éireann, I will be depositing Ireland's own instrument of ratification with the United Nations in New York this Friday. 

 

In the coming days, I will also travel to Marrakesh and I am keen to see for myself the global resolve as we move to the next stage of combating climate change.

 

In Budget 2017 a significant start has been made and more than €100m will be invested on energy projects which will save over 116,000 tonnes in carbon emissions every year. These will support around 3,000 jobs, and reduce our overall dependence on imported fossil fuels. €7m is being allocated to kick start a new Renewable Heat Incentive and the Biofuels industry. 

 

More energy efficient homes mean people spend less money on energy, enjoy a more comfortable lifestyle in their own homes and gain improved health benefits, which in turn takes pressure off our health services.

 

A record €25m in grants will be ring-fenced for projects that bring our communities together to engage in collective energy efficiency activity through the Better Energy Communities scheme When taken together with energy efficiency spend on the Local Authority rented stock and new additions under the housing programme, we will impact up to 4% of the housing stock in 2017 in terms of energy efficiency.

 

While a lot has been achieved by interventions to-date, now is the time to look to the future and design new programmes that can help more households to engage in more in-depth renovations of their homes.

 

2017 will see €5m allocated to a new scheme to pilot a range of innovative energy efficiency actions. These new pilots and new ideas are needed as it is critical to establish what actually works in practice to help householders to invest more in the warmth, comfort and sustainability of their homes.

 

We must also build people's awareness of the benefits that energy efficiency can bring. The 2017 funding package will allow SEAI to establish a new Behavioural Change Unit that will undertake the research and appraisal necessary to ensure that our policies and measures really do answer the needs of all energy users and activate their contribution to climate action.

 

This additional funding for 2017 also secures the future of the Warmth and Wellbeing pilot scheme, which got underway earlier this year as partnership initiative between my Department and the Department of Health.

 

The SEAI and the HSE are working together to provide deep renovation to the homes of people over the age of 55 suffering from chronic respiratory problems and living in cold damp conditions. €4m will be allocated to expanding this flagship project, bringing its total allocation for 2017 to €8m.

 

'Ireland 2050'

Of course it is not just Government policy and investment that can drive change. In this regard, I welcome last week's launch by the Energy Institute of the 'Ireland 2050' education and awareness initiative. The aim of this initiative is to provide the public with accessible information so that they can be informed about Ireland's energy system, past and present, and of the challenges ahead of balancing energy supply and demand to meet carbon reduction targets. This will empower people to make sensible decisions and to contribute to local and national discussions on energy matters. A key aim of the recent Energy White Paper is to place the citizen at the heart of energy policy implementation; this initiative gives the citizen the tools he or she needs to achieve that.

 

Renewable Energy – Solar

Renewable electricity is an area where Ireland has made great progress in recent years with over 25% of our electricity now generated from renewable sources. While there are still many challenges to overcome, I believe we are on track to achieve our target of producing 40% of our electricity from renewable sources by 2020.

 

This progress has been driven by a positive policy perspective on renewable energy and the REFIT schemes which subsidise renewable electricity generation and is funded by all electricity consumers in the country through the Public Service Obligation levy. The REFIT schemes have not only encouraged a significant increase in renewable electricity, but have done so in a cost-effective manner.

 

As you are no doubt aware, there are significant volumes of solar energy projects proposed across Ireland, indeed I understand that the total amount seeking authorisations under spatial planning exceeds our usual winter level of demand. My Department and I have been put under considerable pressure to put in place supports in order to enable these solar developments to proceed.

 

While I am well aware from the solar industry's own analysis which indicates that the costs of solar photovoltaic technology fell by 80% from 2008 to 2013[1], it is important to understand whether we have reached a plateau or if this rapid decrease is indicative of a deeper, underlying trend.

 

If it is the latter, and the technology costs continue to fall, then you will appreciate it is vitally important that if a support tariff is to be offered for solar it is struck at a level that is competitive and minimizes the cost to consumers. I also note that the same analysis indicated that solar PV could be cost competitive by 2030 and any support mechanism should ensure value for money for the Irish consumer, a sentiment I couldn't agree more with.

 

Let me assure you that we are listening to the views of all stakeholders but when I consider the role that solar energy will play in Ireland's energy mix, the needs of people and businesses will be foremost in my mind. While I do see a place for solar in the energy mix, we cannot have a situation where a new support scheme leads to an excessive increase in people's electricity bills through a higher Public Service Obligation levy.

 

For example: and based on the solar industry's own analysis, utility scale solar could require €150 per Megawatt hour versus approximately €70 per Megawatt hour for wind. In other words, allowing for market rates and the supports provided by the reference support price, one could potentially be looking at a tripling of the support required, though accepting these figures are evolving as the technology matures. 

 

It is essential that the scale and pace of development are appropriate to the resource available and to the target physical and social environment where it will be constructed. Large levels of early speculation can send poor signals to society and state bodies that facilitate delivery of projects.

 

This type of unchecked speculation could, in fact, be significantly damaging to what is an industry in its infancy in this country. Therefore, I cannot see the significant volume of proposals for solar energy in Ireland being supported in the short-term.

 

In-depth economic analysis is currently underway to inform the actual cost of a new scheme and, while no decision has been taken on the precise renewable technologies to be supported, the cost and technical viability of several technologies including solar are being examined as part of that assessment process. The findings from this analysis will also inform the design of the tariff to be introduced and help ensure that appropriate budget management mechanisms are built into the support scheme to ensure value for money for the consumer.

 

The next, and final, consultation on the new support scheme for renewable electricity will be carried out in mid-2017. I would implore all energy stakeholders to present proposals that minimise the potential impact on electricity prices when making submissions to my Department.

 

Oil & Gas

The Energy White Paper notes that oil and natural gas will remain elements of Ireland's energy supply in the evolution to a low carbon energy system. In the short to medium-term, the mix of non-renewables will shift away from more carbon-intensive fuels, like coal, to lower-carbon fuels like natural gas. In the longer-term, fossil fuels will be largely replaced by renewable energy sources.

 

In that transition the development of Ireland's offshore oil and gas resources has the potential to deliver very significant and sustained benefits to the people of Ireland in terms of economic development, technology learning, enhanced security of supply, import substitution and fiscal return. For example the Corrib gas field which came into production at the end of 2015 created over 1,000 jobs during development, will meet on average 42% of the all-island gas demand over its first two years of operation and will add up to 0.6% to GDP.

 

Exploration in the Irish Offshore is heavily capital intensive, particularly in the Atlantic Margin with its deep waters, distance from shore and adverse weather conditions. Ireland faces competition for exploration investment from established and proven oil and gas provinces and from emerging provinces with similar exploration profiles.

 

In recognition of this the Government has worked hard to position the proposition offered to industry through:

  • Active promotion of Ireland as an exploration investment destination;
  • Reworking and modernising Ireland's regulatory and fiscal frameworks;
  • Provision of cost-effective entry licensing mechanisms such as those offered under the 2015 Atlantic Margin Licensing Round; 
  • Deepening knowledge of the Irish offshore by initiating and supporting data acquisition projects such as the 2D Atlantic Margin Regional Seismic Survey Project and the environmental programme ObSERVE, and by actively supporting research projects such as the new SFI Irish Centre for Research in Applied Geoscience – iCRAG.

That these efforts have paid dividends is evidenced by the outcome of the 2015 Atlantic Margin Licensing Round with 28 new Licensing Options awarded to 17 companies; and indeed by the record attendance over the last two days at the 2016 Atlantic Ireland Conference here in the Doubletree Hilton.

This response to the licensing round is a further positive signal of the building momentum in oil and gas exploration offshore Ireland. The Government will continue to work with industry to deliver on the potential of Ireland's Offshore.

International Relations
A key challenge that we face in the weeks and months ahead is, of course, Brexit. Our preparations have been on-going for over a year now and will intensify in the coming weeks at both political and official level. 

Today, an all-island Civic Dialogue was held here in Dublin which included discussion of key sectors to both Ireland and Northern Ireland. 

Ireland and the UK have an interdependent relationship in the energy sector. Ensuring continued secure supplies of energy and operation of the Single Electricity Market are key priorities. 

Energy Charter
International organisations have a key role to play which is why I am delighted to welcome Dr. Urban Rusnák, Secretary General of the Energy Charter Treaty, here tonight.

The Energy Charter Treaty aims to promote and protect foreign investment both in member countries and beyond. The UK, Ireland and the majority of European countries are signatories of the Energy Charter Treaty.

The Treaty grants a number of fundamental rights to foreign investors with regard to their investment in the host country. The dispute settlement provisions of the Treaty, covering both state to state arbitration and investor-state dispute settlement, reinforce these investor rights. In this regard, I look forward to hearing Dr. Rusnák's address.

I cannot let this evening pass without making mention of the recent passing of Dr. Tom McManus. "Dr. Tom" was the former Chief Technical Advisor to my Department. He came from the gas industry, and played a critical role in the development of Ireland's gas network as it changed profoundly from isolated urban networks to create the natural gas transmission network that we have today. He was a catalytic force in the development of appropriate national gas standards. Although Irish, Tom grew up in Scotland, and I am told he had a very Scottish determined view of the world and what was right and wrong with it, and he was not reserved about expressing his views. He got things done.

Ar dheis Dé go raibh a anam dilis
 
Thank you  



 

[1] A Brighter Future – KPMG Report for the Irish Solar Energy Association, 2015

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