Economy-wide CO2 emissions are expected to decrease by 9.5 per cent this year arising from the coronavirus pandemic, according to analysis by the Economic and Social Research Institute (ESRI).
However, it warns "this reduction is short-lived as the low current energy prices increase energy demand and emissions rise again in 2021". Based on current trajectories, Ireland will fail to meet key 2030 targets on reducing CO2, it adds.
In a separate economic analysis it concludes Irish GDP is expected to decrease by about 13 per cent in 2020 as a result of economic disruptions caused by the coronavirus crisis. With stimulus measures, “household disposable income will decrease by 8 per cent on average, where rural households are still hit the hardest”, the ESRI predicts.
The results come from research applying the ESRI’s environment, energy and economy model for Ireland known as 13E.
Financial crash
This study incorporates recent changes in the structure of the economy due to Covid-19 and recent international energy price movements. The model considers different production sectors, carbon inputs and emissions.
The 9.5 per cent annual cut in emissions is the largest since the 2008 financial crash. Other predictions by climate scientists suggest a short-lived cut of 6 to 7 per cent was likely this year. The new Government target is a yearly reduction of 7 per cent averaged up to 2030.
Though initially emissions will fall due to the economic downturn, in the medium-to-long term lower energy prices will lead to an increase in energy demand, and hence an increase in emissions as restrictions are lifted, the ESRI said. “This will lead to a failure to meet the Irish EU legally-binding emissions targets in 2030.”
Report co-author Dr Kelly de Bruin said "though the economic impacts of the Covid crisis are severe . . . we do not expect large emissions reduction as seen during the financial crisis of 2008.
Environmental challenges
“Ireland would still need to put in considerable effort to reach its EU emission goals. The results underline the importance of having a well-designed Government response policy package, which considers the unique economic and environmental challenges presented by the Covid-19 crisis.”
The research, funded by the Department of Communications, Climate Action and the Environment, examines the coronavirus-related production shutdown in specific sectors, changes in consumption habits due to restrictions, declining labour force participation, trade impacts and the Government’s initial response.
“Each of these changes impacts the economy, where it is found that the largest impact comes from the production side. This work assumes that the economic structure of the Irish economy will recover in 2021,” the report said.
