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Minister Naughten speech to Energy Ireland Conference 2017

Croke Park, Tuesday, 13 June 2017.

 

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Good afternoon. I am delighted to be here today in Croke Park.

 

Last year, I spoke at this conference shortly after taking up my role. Since then, there have been a number of international developments that will have long-term impacts on Ireland and our energy system.

 

The most notable development is undoubtedly the vote by the UK to leave the EU. I would also highlight the publication of the Clean Energy Package by the European Commission which sets out a range of proposals for EU energy policy up to 2030.

 

Today's conference theme of 'LOOKING BEYOND 2020' is therefore well chosen.

 

It focuses our minds on the need to plan and manage our future ambitions and actions. It invites us to be open to new thinking, to consider the climate and energy imperatives our world faces.

 

Today, I will not seek to repeat or anticipate the speakers that will address you and I will not seek to cover each area of policy. Instead I will focus on three key topics:

  • The key drivers of energy and climate policy;
  • Brexit; and
  • The specific policy actions I am taking in the energy sector.

 

In his concluding remarks to the December 2015 COP 21 Conference, the United Nations Secretary General described climate change as the defining challenge of our time. The point has been echoed since, and has been reinforced by the international community most recently in response to the extremely disappointing decision of the United States to withdraw from the Paris Agreement.

 

Energy and climate action are inextricably linked. Using less energy, and using it more efficiently, is the most cost-effective and accessible way for us all to take action on climate change.

 

If the money that Ireland spends on energy imports can be redirected to energy efficiency and smarter energy services it will displace imported fossil fuels with local jobs and opportunities for Irish companies. The sums here are not insignificant – in 2015 Ireland spent over €5 billion on energy imports – over €1,000 for every man, woman and child.

 

In March, I published a draft of Ireland's first National Mitigation Plan for public consultation and I intend to shortly publish the final version of the Plan. The National Mitigation Plan will set out what Ireland is doing, and plans to do, to further our transition to a low carbon, climate resilient and environmentally sustainable economy, by 2050.

 

This first Plan is necessarily a work in progress which positions Ireland to develop and evolve medium to long term options to take the necessary steps towards deep decarbonisation in the next and future decades.  The Plan will include over 100 individual actions to be implemented across Government in order to advance the national transition agenda. These actions are the individual building blocks that will enable Government to drive deeper reductions in emissions in the years ahead. This will be an ongoing process aimed at incremental and permanent decarbonisation.

 

In the context of energy policy, the National Mitigation Plan will be fully aligned with and will build upon commitments made in the Energy White Paper.

 

Implementation of the Plan will also be guided by the need:

  • to provide a stable and predictable policy and regulatory framework;
  • to ensure that emissions reductions are achieved  as cost effectively as possible; and
  • to recognise and pursue the investment, innovation and enterprise opportunities inherent in the transition to a low carbon, climate-resilient and environmentally sustainable economy.

 

The long-term decarbonisation required will only be achievable if all of Government and all of society play their part and do the right thing. It will only be successful if wider society is engaged more generally with the climate challenge, if we can motivate changes to more sustainable behaviour, and create structures at local, regional and national levels to support the generation of ideas and their translation into appropriate cost and climate effective actions.

 

That is why I am establishing the National Dialogue on Climate Action. The key objective of the Dialogue is to ensure that wider society is part of an inclusive process of engagement and consensus building aimed at enabling our transformation to a low carbon and climate-resilient future.  I also intend that this process also subsume the proposed National Energy Forum, one of the key actions in the Energy White Paper.

 

At a European level, the Clean Energy Package was published last year. In this package, the European Commission have highlighted the importance of ensuring that the transition to a clean energy system will benefit all Europeans. This includes all consumers who should feel involved and reap the tangible benefits of access to more secure, clean and competitive energy, which are the Energy Union's key objectives.

 

Ireland is actively and positively engaging across all the elements of the Clean Energy Package supporting realistic and attainable targets. We support the ambition at EU level – particularly in the area of energy efficiency. At the recent informal meeting of energy ministers in Malta. . I indicated Ireland's support for an EU level of ambition of 30% in the area of energy efficiency.

 

As we begin to look to the longer-term decarbonisation challenge ahead of us including the ambitious emissions reduction targets that Ireland will face in the next decade, it is essential that we begin to prepare now to scale up our ambition across the entire energy sector.

 

When I spoke to this conference last year, Brexit was something still to be determined by the UK electorate. That decision was made shortly thereafter and, the outcome, though not of our making, presents us with a significant economic and social challenge. The impact of Brexit on Ireland is likely to be much greater than in other Member States, given the close historic, economic and social links we have with the UK.

 

Much is being said and speculated upon in relation to the possible terms of the UK's future trading relationship with the EU. However, at this stage, while different views and perspectives are important, the reality is that negotiations proper are not yet underway until the end of this month, and have a long way to go to reach finality.

 

However, from the outset, detailed analysis and planning was carried out by Government to identify the key strategic, policy and operational risks faced by Ireland.

 

There is a wide awareness of the extent of trade in energy between the UK and Ireland. The UK is the conduit through which we source the majority of our oil and gas imports.

 

The transition to a low carbon energy system will reduce our reliance on fossil fuels. However, in the medium term, the continued secure supply of fossil fuels is a key consideration. It is therefore important to recognise the contribution of indigenous sources of energy to security of supply.

 

We have recently seen the impact of the Corrib gas field, where in the space of a year, Ireland went from importing 88% of our energy needs in 2015 to 70% of our energy needs in 2016, a significant turn-around. In fact, according to Gas Networks Ireland's data, there were a small number of days (3) in 2016, where Ireland did not import any natural gas at all.

 

In the energy sector, four key Brexit priorities have been identified for Ireland:

  • Maintaining trade in secure supplies of energy between the UK and EU Member States;
  • maintaining the Single Electricity Market across the island of Ireland;
  • accommodating ability to meet EU obligations; and
  • ensuring appropriate energy infrastructure

 

We must remember that the UK itself is a net energy importer and trades in energy across gas and electricity interconnectors with other European neighbours including France, Belgium, the Netherlands and Norway.

 

Therefore, it is particularly appropriate in the energy sector that the 27 EU Member states will negotiate as one with the UK.

 

As members of a Union with other like-minded democracies, Ireland has a much more powerful voice as a united team. And our interests are best served from within the Union, helping to shape and influence it for the times ahead.

 

Government is mindful that we have strong relationships with both the EU and the UK and we're intent on keeping both.

 

Speaking to you today in the context of Energy Ireland, I am setting out the actions that I am taking to deliver on our climate change agenda. I expect that other Ministers will set out in other fora the measures that they will be taking across a range of areas such as transport, housing and agriculture.

 

I intend to bring a memo to cabinet in the coming week on Bioenergy Ireland a new venture that will seek to expand the production of bioenergy in Ireland.

 

The all-island Single Electricity Market has delivered an efficient, competitive and secure market for customers in Ireland and Northern Ireland since its establishment in 2007. Work commenced in 2012 on a new market design called the Integrated Single Electricity Market and I am pleased to say that this new market will go live in May 2018.

 

In order to realise the full benefits of the all-island Single Electricity Market, we need an all-island 'Single Electricity System'.  In this regard, the development of the North-South Interconnector is a vital and I would like to reiterate the Government's strong support for this project.

 

Recognising the effectiveness of energy efficiency, and its proven capacity to deliver on our national energy and climate goals, I sought, and secured, a significant increased allocation for my Departments' spend on energy efficiency in the last budget.

 

As a result, the budget allocation to SEAI for energy efficiency and related measures has been increased from €72.7 million in 2016 to over €100 million this year.

 

This is enabling us to expand existing initiatives and, importantly, because we have also been able to take on new resources in SEAI, to introduce a number of new initiatives and pilot programmes. They include new supports for schools to better understand and manage their energy use in coordination with the Department of Education & Skills capital programme with 10 schools selected to receive a deep retrofit this summer. There will also be a a new Behavioural Economics Unit in SEAI.

 

My Department, working with the SEAI, is piloting a number of other new initiatives this year. These will be additional to the innovative Warmth and Wellbeing Pilot already underway since last year.

 

In the commercial sector these include targeted SME energy efficiency upgrade interventions – and with the support of Teagasc we are looking at the potential for energy efficiency on dairy farms.

 

One of the key challenges we face, with a view to our 2030 and 2050 ambitions, is how to encourage and support more households to invest in deeper energy efficiency upgrades to their homes. Our new Deep Retrofit Pilot Scheme is now getting underway and will focus on more ambitious renovation. While it will in itself deliver energy efficiency gains, its main purpose will be to gain practical experience and insights on how best to encourage and support deeper residential energy efficiency offerings on a wider scale post 2020.

 

While our national target of 20% can be seen as challenging, the 33% target set for the public sector is all the more challenging. At the end of 2015 energy efficiency in Ireland's public sector had improved by 21%. This amounts to €154 million less spent on energy in 2015 than otherwise would have been the case – and 548 thousand tonnes of carbon not emitted. And that has already been achieved.

 

Making further efficiency gains needed to meet the 33% target will be more challenging. That's why earlier this year, having secured the approval of Government, I published the first Strategy for Public Sector Energy Efficiency.

 

My Department is currently developing a proposed new Renewable Electricity Support Scheme to assist Ireland in meeting its renewable energy contributions out to 2030. Community Ownership and Community Benefit will be key design principles of the new scheme. If a renewable project wants to be supported under the new scheme, paid for by all customers, it will have to meet community based criteria such as

  • interaction with community benefits register and community benefit payments;
  • opportunities for community investment in all renewable projects; and
  • greater and more transparent community engagement and collaboration.

 

I am not talking about solar panels for community centres or football jerseys for local GAA teams; I am talking about citizens having the opportunity to invest in, and own, and financially benefit from, renewable energy projects, in their area.

 

I cannot control the cost of oil or gas, or how much the wind blows or the sun shines, or how quickly international progress impacts on technology costs. What I, and Government, can control is how a new scheme is designed, the level of ambition for renewable electricity.

 

Government's job is to ensure the new scheme is optimally designed to deliver a least-cost outcome for the customer, and we can and will focus on what we can control. Competitive auctions will drive down costs, as only the most economically viable projects will get built.

 

The introduction of a Renewable Heat Incentive is a commitment in the Energy White Paper and the 2016 Programme for Government. The final public consultation on the design and implementation of the new scheme closed in March 2017, and all 119 submissions are currently being reviewed by my Department. The findings from this public consultation are being used to help inform the final design of the scheme, which I will then bring to Government and continue to engage with the European commission to secure State Aid approval.

 

Greater accessibility to alternative and lower carbon intensive energy sources should present opportunities to encourage householders and businesses to make more sustainable energy choices. I am commissioning a study on the wider costs and benefits of gas network extensions, to include possible climate and decarbonisation aspects, as well as the regional and rural development benefits such as in supporting rural centres. I intend that a preliminary report will be delivered before the end of 2017.

 

To explore the potential for further growth of the electric vehicle market, my Department and the Department of Transport, Tourism and Sport are co-chairing a Low Emission Vehicles Task Force. The Task Force expects to report on an interim basis to Government shortly on Electric Vehicles with associated recommendations for decision.

 

Separately, I plan to introduce an Electric Vehicle Driver Experience Programme in order to increase the profile and awareness of Electric Vehicles in Ireland. This will include a car sharing scheme in city centres for short term hire at attractive rate, a roadshow and commercial fleet trials.

 

I intend publishing the first ever National Clean Air Strategy by the end of this year. Since its original introduction in Dublin back in 1990, and its later extension to major urban areas, the smoky coal ban has proved very effective in reducing particulate matter and sulphur dioxide levels and has had the effect of significantly improving public health.  Research indicates, for example, that the ban has resulted in over 350 fewer annual deaths in Dublin alone. I intend to be in a position to implement a nationwide ban in time for the heating season of 2018 – that is the third quarter of next year.

 

Ireland is open for business and is actively committed to harnessing our abundant wave, tidal and offshore wind energy resources in an environmentally sustainable manner.  The allocation this year for the Government's Ocean Energy Programme is €4.75 million.  Funding is provided by my Department and it supports the development of the test sites in counties Mayo, Galway and Cork and the Integrated Maritime Energy Resource Cluster at Ringaskiddy.   The primary rationale for this programme is to develop and maximise the employment and wealth-generating industry activities that could potentially be associated with ocean energy as it evolves into a fully commercially viable sector. 

 

A strong, stable and certain regulatory framework is vital to ensuring competitiveness. In this regard, I was delighted to announce in December, that the OECD is carrying out a peer review of the Commission for Energy Regulation. I commend the CER for initiating this important work and I am particularly pleased that an organisation of the international calibre of the OECD is carrying out this review.

 

The investment Government is making through the National Broadband Plan provides the opportunity for greater employment in rural areas reducing the climate and congestion impacts associated with commuting long distances.

 

Finally, it is essential that Government's expenditure choices are informed by an assessment of the full range of impacts including climate change at the appraisal stage. The review of the Public Spending Code, which has commenced, will determine if the existing appraisal framework provides the best available advice on measuring and reporting on the costs and benefits associated with climate change measures.

 

In conclusion, one year ago I placed a strong emphasis on working with people and communities. I believe this is now more important than ever in order to overcome the challenges we face and ensure a competitive, secure and sustainable energy system post-2020.

Thank You.

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