The calculation by finance and climate advisers of penalties Ireland faces for failing to meet emission targets has been labelled “back of the envelope stuff” by the Minister for Climate, Energy and the Environment.
The Irish Fiscal Advisory Council (IFAC) and Climate Change Advisory Council (CCAC) warned Ireland risks fines and other “compliance costs” of €8 billion-€26 billion for failing to sufficiently cut emissions by 2030 in line with European Union obligations.
Darragh O’Brien dismissed their estimates, saying there is no agreed way of calculating penalties and he does not believe the EU would impose them.
“There’s no formula; there’s no calculation that’s agreed at all,” he said. “This is back of the envelope stuff.”
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In response, the IFAC and CCAC issued a joint statement standing over their work.
“The analysis carried out by the Climate Change Advisory Council and the Irish Fiscal Advisory Council was thorough, robust and independently peer-reviewed,” they said.
The threat of having to pay for missed climate targets has hung over Ireland for many years, but in a joint exercise earlier this year, the IFAC and CCAC calculated how much they could be.
Ireland is behind on its national emissions cuts targets and those set by the EU.
The Environmental Protection Agency forecast last May that the State would achieve at best a 23 per cent cut by 2030 instead of the 51 per cent set in national law.
It has been expected that Ireland would have to make up for its underperformance by buying substantial amounts of carbon credits from countries that have performed ahead of target, or from other carbon trading markets.
Given the likely high demand for credits among countries struggling to make their targets, the price could increase enormously.
Speaking at a post-budget press conference, Mr O’Brien said he does not expect the EU to make any such demands of Ireland.
“I don’t see that happening. I’m not going to deal with hypotheticals,” he said.
“Our focus is on meeting our targets and looking at our 2040 targets.”
However, IFAC and the CCAC stressed afterwards that Ireland has already been required to pay compliance costs for failures in relation to obligations under the Kyoto protocol, the EU’s previous Effort Sharing Decision and the Renewable Energy Directive.
These were in the form of “statistical transfers” or payments to high performing EU member states with credits to spare.
In their statement the bodies acknowledged their estimates are broad but said the report covered all possibilities.
“It examined a range of potential outcomes in the event that Ireland does not comply with its legal obligations.”
This is not the first time the expert bodies’ exercise has been called into question. Shortly after it was published last March, Taoiseach Micheál Martin, said it was “highly speculative”.
Mr O’Brien said he spoke directly to the European Commission about the compliance issue earlier this month and made clear Ireland is making progress in cutting emissions.
However, the joint IFAC and CCAC report, which ran to 74 pages of calculations and analysis, also references commission sources.
The report said the money lost on compliance costs post-2030 would be better spent on ramping up climate action immediately to ensure targets were met.
It said paying up later with nothing to show for it instead of investing immediately to make lasting changes would be “a colossal missed opportunity”.
Meanwhile, Mr O’Brien also signalled that bus and rail commuters could face fare increases to pay more for the expansion of services.
The Minister said fares, which were reduced as part of measures to tackle the rising cost of living in 2022, will not increase as a result of this year’s budget.
However, he said he is not ruling anything out.
