The most brutal analysis of the financial implications of Ireland’s continuing failure on promised climate actions came in a joint report from the Irish Fiscal Advisory Council and the Climate Change Advisory Council.
It delivered realistic estimates of the costs faced if we fail to meet our climate commitments.
The State may have to pay out €8 to €26 billion if it does not step up on agreed climate action. The latter figure dominated headlines.
This was described as “a colossal missed opportunity”. Since the report in March, there is little to indicate how exactly the Government will narrow the gap, other than enhanced spending under the revised National Development Plan.
RM Block
We could potentially have to pay out at the higher end of that amount to EU partners if climate action is not stepped up swiftly. For starters, if the Government implements additional measures in its own climate plan by 2030, it could reduce the range to €3 to €12 billion.
The commitments cover domestic reductions in greenhouse gas emissions, increasing the share of renewable energy and improved energy efficiency. There are other costs and benefits to Ireland in reducing its emissions and enhancing green energy. “However, it is vital to understand the costs of missing targets to better understand the trade-offs involved,” the report states.
There are three key pieces of legislation, the most important being the Effort Sharing Regulation (ESR), covering transport, buildings, small industry, waste and agriculture. If Ireland emits more than allowed, the State will have to purchase the gap from overperforming countries – those reducing emissions by more than required.
It will likely be able to offset some costs by using limited flexibilities permitted by the legislation. But two other pieces of legislation could pose smaller yet still significant costs. They cover land use and forestry and the share of energy coming from renewable sources.
By any yardstick, the costs are substantial. To put them in context, less than half the upper end of those potential costs would cover drastic measures to reduce emissions.
As an illustration, €12 billion – a tenth of the capital spending planned out to 2030 – could achieve the following: It could reduce the cost of buying 700,000 new electric cars to less than €15,000 per vehicle, covering one-in-three households. It would allow the Government ramp up charging infrastructure. It would cover estimated additional costs of upgrading Ireland’s grid – and support forestry and rewetting of peatlands.
By not pursuing such actions opportunities for significant improvements in Irish society by way of a healthier, more sustainable and more energy secure society are missed.
The wide range of potential costs illustrates a high degree of uncertainty. This relates to the path for Ireland’s emissions, costs of demonstrating compliance with the legislation and broader uncertainty around costs if the EU as a whole misses its targets. Without action to reduce emissions now, Ireland faces what the report describes as “avoidable costs”.
Minister for Climate, Energy and the Environment Darragh O’Brien has acknowledged lack of certainty on what potential compliance costs might be. He has raised the issue with the European Commission but the exact mechanism to determine what are in effect fines has yet to be finalised.
He hopes to head off any EU fines Ireland may face by pushing Brussels to turn them into “investment orders” instead, such as spending on renewables, which is favoured by some member states. And although he believes the €26 billion figure is speculation, the threat of penalties “is real”.
What to do in the meantime?
UCC energy analyst Prof Brian O’Gallachoir says under the ESR the main focus is on buildings and transport.
On buildings, Ireland is making progress on home energy upgrades converting older and damp homes that are expensive to heat into warmer, healthier homes that are cheaper to run, he says.
“Data from Sustainable Energy Authority of Ireland provides a clear path for what we need to do by 2030 ... upgrade 75,000 homes per year (to B2 standard) to stay on track with our national retrofit plan targets.”
This is three times more than achieved in 2024, but these deep retrofits are accelerating (23 per cent more done in 2024 than 2023). “The grants available are working and should be continued,” O’Gallachoir adds.
He says priority should be given to homes facing significant energy vulnerabilities; in many cases having to choose between fuel and food. “While the scheme available to fully fund retrofits for those experiencing energy poverty has also accelerated, with nearly 8,000 energy-vulnerable homes upgraded in 2024, it pales in comparison with the hundreds of thousands of homes experiencing energy poverty.”
Supporting local authorities to ensure their 140,000 homes are fully retrofitted is warranted, while the shortfall on heat pump installations must be addressed, he says.
Switching heating away from oil or gas to ambient heat and electricity can make a significant dent in our emissions reductions in buildings, he says. “We do have a target to replace 400,000 fossil fuel heating systems with heat pumps in existing homes but have only managed to deliver nearly 17,000 to date.”
On transport, he highlights “system inertia” on emissions reduction. “We had some positive news from the EPA when we learned that 2024 saw Ireland achieve the first post-Covid emissions reduction in transport, albeit by a relatively small amount. There was a combination of factors behind this, which provide pointers to what we need to do going forward.”
Investments and improvements in public transport have resulted in reduced traffic volumes on roads and increased uptake of bus and rail services. Increasing infrastructure investment with emphasis on public transport and active travel should continue.
EV sales have reduced in line with reduced grant support, O’Gallachoir notes. The Climate Change Advisory Council recommendation of grants up to €10,000 (for battery EVs costing less than €35,000) for lower-income households, particularly in areas with limited public transport, should be progressed.
Delivering transport emissions reduction strategies in the “EU Mission Cities” initiative in Dublin, Cork and Galway (a pilot version) should be supported. It aims to deliver 100 climate-neutral and smart cities by 2030. Reducing emissions here results in reduced air pollution, more active travel and enhanced wellbeing, while reduced car space in cities can provide increased green spaces, O’Gallachoir says.
Friends of the Earth programme coordinator Clare O’Connor says three actions can be impactful within a narrow time frame and reduce the magnitude of environmental fines.
First is a halt to development of data centres as they are increasing power demand and making climate targets harder to achieve.
Second is stopping new fossil fuel infrastructure including a State-owned LNG terminal. “This is not in line with our EU obligations and our own climate law,” O’Connor adds.
Third is a move to make it easier for Irish households to get off fossil fuels “and participate in the energy transition”.
With all the required levers in place backed by a legal framework and mandate under climate legislation, it comes down to a political choice, she says.
O’Connor is concerned that “we won’t do what we need to do on time” with rising costs due to inaction. “Government is inclined to forget that. It’s us that [will] have to pay those fines.”
In addition to fiscal pain, Hans Zomer, chief executive of the environmental charity Global Action Plan, says missing climate targets by a large margin represents “our failure to keep our promise to ourselves, and to our children and grandchildren”.
“We are prioritising short-term economic gains over our wellbeing and prosperity. Our lack of climate action undermines our security, food supply and our quality of life, and means we are missing an opportunity to build a better Ireland,” he adds.
It is yet another instance of treating climate action as an unpleasant item for the future, he says. “If we take climate action now, we can improve our shared resources, such as the air that we breathe, the water we drink, the soil that feeds our crops and the stable weather that makes our harvests possible.”
Missing emissions targets increases risk of costly climate-related disasters like floods and droughts – not forgetting the growing inequality and social unrest that come with it.
Climate penalties are intended to shake governments into action, Zomer notes. A stick-rather-than-carrot approach has not worked and “Ireland now finds itself in the scandalous situation where we are about to waste billions of euros on fines while people’s homes flood, crops fail and vulnerable families pay the price for political short-termism”.
It’s a crisis point, “forcing us to rethink our priorities. Just imagine what €26 billion could achieve if it was invested in clean energy, community initiatives, public transport and green jobs”.
But this is not just a job for government, Zomer emphasises; everyone has a role to play in embracing energy efficiency, pursuing sustainable travel and adjusting diets to help shrink our carbon footprint, with community effort a crucial platform for action.
“Companies and businesses must also step up,” he says. “They can reduce emissions, and save money, by transitioning to renewable energy and improving energy and resource efficiency in their operations. Companies can have a positive impact by supporting flexible work and climate-conscious commuting and supporting local community groups.”
Such actions by households, communities and businesses can help build the foundation of Ireland’s transition to a low-carbon, fair and resilient future.
“At its core, our failure to take effective measures to halt climate chaos is caused by a fundamental lack of understanding of how our health, happiness and prosperity are entwined with a healthy environment,” he says – while living our lives increasingly separate from nature “breeds apathy towards climate goals”.
