Decarbonisation of all areas of Irish society is at the forefront of public discussion as the economy recovers from the pandemic and with increasing energy costs. The EU Green Recovery¹ stimulus plan aims to repair and prepare the European Union for a decarbonised future. This plan has been followed up with the REPowerEU² plan which aims to make EU energy supply independent from Russian fossil fuels and respond to rising energy costs.
These policies set ambitious targets for decarbonising energy and are accelerating the move away from fossil fuels. This will have significant impact across key sectors including electricity, transport, built environment and agriculture. In Ireland, the government has established ambitious climate action objectives. The Climate Action Plan 2021³ has translated carbon budgets and climate objectives into actions, incentives, and multi-annual carbon budgets, which is the beginning of the roadmap to the 2030 ambition.
There is now a clear decarbonisation trajectory that businesses can proactively pursue to support the transition to net zero.
Transition to Net Zero
The direction set out by the EU Green Deal puts the pillars of decarbonisation and a just transition at the core of European policy. Ireland’s Climate Action Plan puts five-year carbon budgets at the core of the transition to net zero carbon emissions by 2050. The ambitious targets set a 50% reduction in C02 emissions by 2030 which will impact all areas of society. The EU and Irish policies are aligned on the level of transformation required across core sectors and industries which are set out below.
Delivering large scale renewables
Ireland has reached world-leading levels of renewable penetrations during windy periods which translated to an overall contribution of 39%⁴ to annual electricity generated in 2020. The 2030 ambition of achieving an 80% share will be driven by significant growth in wind and solar generation. Renewable energy auctions and corporate power purchase agreements will form a key part in supporting the development of these green sources.
Energy Efficiency
The Climate Action Bill aims to reduce CO2 emissions by up to 50% by 2030. This will be driven by a “renovation wave” that will look to improve energy efficiency across 500,000 homes and buildings. In addition to this, there will be a programme to retrofit heating systems with electrified heat pumps and municipal heating systems for a total of 650,000 homes and buildings.
Transport
Transport accounts for 20% of Ireland’s overall C02 emissions and the plan to address this is for 1 million electric and low emission vehicles on the road and the phaseout of sales of petrol and diesel vehicles by 2030. The development of infrastructure for electric charging and low carbon fuels such as biofuels and hydrogen will be key in realising this transition to a low carbon transport sector.
Enabling the Energy Customer
The participation of the end customer in the energy transition will be a foundation of realising the ambition of the Climate Action Bill. New technologies such as behind the meter generation, smart home appliances and smart meters will provide the basis for active energy citizens. There will be a drive to install renewable sources such as solar PV in homes and businesses across the island and the establishment of smart energy communities will be key for engaging customers and small businesses.
Ensuring a Just Transition
The post COVID-19 world will require a more socially focussed transition. Issues such as equitable access to new technology for vulnerable customers and eliminating energy poverty will be key elements of delivering a just transition. Reskilling of workers in affected industries and supports for fuel allowances are some of the initiatives that policy makers will introduce in the coming years.
What should businesses focus on
The Climate Action Bill sets the basis for achieving a 51% reduction in carbon emissions on average from 2021 to 2030. The Government has set out carbon budgets and sectoral ceilings to define the roadmap for making the required transition.
For businesses, there are opportunities that the green transition presents in transforming operations to increase resilience, reduce costs and gain benefits through proactive action.
Organisations should consider five key areas when approaching their future energy needs.
- New ways of working and transport: Investing early in electric and low-carbon fleets will lead to more sustainable operations in the future and avoid carbon-related taxation for petrol and diesel vehicles. With hybrid working arrangements, businesses can also reduce their travel carbon footprint.
- More efficient operations: Understanding your energy consumption and gaining insights on your energy profile will enable businesses to target initial investment in increasing efficiency in their operations. The EU and the Government support for energy efficiency and retrofit programmes will enable businesses to make worthwhile investments.
- Empowering customers: In the future green focussed world, the customer will become a much more active participant in the transition. Businesses need to prepare for more sustainability conscious customers and the need to support a just transition in communities.
- Embedding digital at the core: Harnessing digital technologies can enhance business resilience to possible disruptions in the future. By accelerating digital adoption, businesses can have the opportunity to deliver innovation in core operations.
- Holistic sustainability strategy: Considering all elements of the sustainability strategy holistically will ensure that businesses realise the greatest benefit from their investments. Just targeting compliance will lead to incremental improvement but businesses that are proactive in their responses will achieve greater returns over the longer term.
As businesses look to adapt to a world that is transitioning to a decarbonised future there are opportunities to transform operations centred on sustainability. With climate action at the forefront of policy in Ireland and Europe, business leaders need to consider reducing carbon consumption as part of their ongoing business. Those that adopt a coherent strategy in responding to the challenges of climate action will be positioned to benefit the most.
