AT THE TURN of the year, the State’s two leading agencies in charge of documenting Ireland’s carbon footprint published their analysis of how Covid-19 restrictions have altered our emissions profile.
This has meant we failed to meet our 2020 emissions targets and experts see our 2030 target as difficult to achieve, meaning more money will need to be spent on carbon credits. One of the reasons that the shift away from fossil fuels has been so slow is the level of subsidies provided to the industry the world over. One example is the US where it is estimated that over $60 billion in implicit subsidies are dished out to the fossil fuel industry every year.
These subsidies, the CSO has said, are likely to “incentivise behaviour that could be damaging to the environment irrespective of its importance for other policy purposes” such as social policies in the case of the fuel allowance for low-income households. The State is also in control of its decision to support diesel over the past two decades through lower excise duty on autodiesel, lower excise duty on marked gas oil used in agriculture – referred to as ‘green diesel’ – and VAT refunds on diesel for business use.
Since the CSO started closely tracking environmental supports in 2010, €8 billion has been paid out compared to over €20.5 billion in fossil fuel subsidies. The system is the world’s largest emissions permit market and the 100-odd Irish installations involved – including large power stations, refineries, cement factories, aviation, and agri-food processors – account for around 25% of our annual emissions.
According to the EPA’s preliminary analysis for 2020 figures, the emissions fall for companies under the trading scheme of 6.4% was well below the average fall of 11 to 12% across Europe. The Climate Change Advisory Council has also found that the EU ETS has not encouraged adequate decarbonisation as allowance prices have been too low.Another issue pointed to for delays in emissions reductions from companies under the trading scheme is the high rate of free emissions allowances given to companies.
A 2019 study from the EPA found that an “overallocation of free allowances” combined with the recession meant that a price signal was not reached to encourage firms to invest in carbon reduction technologies.