State is stor­ing up trou­ble by be­ing windy on cli­mate change

Irish Independent - Business Week - - APPOINTMENTS -

WAS it the prospect of a gen­eral elec­tion in the off­ing that prompted the Gov­ern­ment to take a step back from a full suite of cli­mat­e­change mea­sures that might al­ter be­hav­iour while also rais­ing funds for the Ex­che­quer?

Per­haps it was the back­lash from ru­ral Ire­land or the voices of the In­de­pen­dent Al­liance TDs which con­vinced Paschal Dono­hoe that hik­ing car­bon tax, diesel, and other mea­sures might be elec­tion­day lu­nacy.

Equally, it might have been Brexit. In­creases in fuel, heat­ing and trans­port costs hit busi­nesses as much as they do con­sumers. As the busi­ness com­mu­nity faces Brexit, and the hos­pi­tal­ity sec­tor was tak­ing a big hit on Vat, the Min­is­ter for Fi­nance may have felt this was not the time to make busi­nesses here less com­pet­i­tive.

Ei­ther way the Gov­ern­ment needed to raise more money to fund ad­di­tional bud­get give­aways. And what bet­ter way to do it than un­der the guise of em­brac­ing the cli­mate-change agenda.

The Gov­ern­ment even had per­fect cover given the pub­li­ca­tion of a ma­jor cli­mate change re­port ear­lier in the week high­light­ing the per­ils and fu­ture cost of in­ac­tion. En­vi­ron­men­tal groups will lament what they will see as a missed op­por­tu­nity. Mr Dono­hoe and Taoiseach Leo Varad­kar can say that now was not the time.

Busi­nesses and con­sumers will breathe a sigh of re­lief. But the cli­mate-change-agenda rum­bles on. It is an ex­tremely dif­fi­cult area in which to make pol­icy.

It is all based on pay­ing now to fu­ture-proof some­thing down the line. Ir­ish govern­ments are not tra­di­tion­ally run that way.

As things stand how­ever, some tough de­ci­sions will have to be made. Hik­ing up car­bon taxes seems like a lazy way of com­bat­ing cli­mate change. Make peo­ple pay more, so they will use the fuel less. It is al­most about pun­ish­ing peo­ple for their be­hav­iour while grab­bing ex­tra money for the Ex­che­quer.

But how will we feel when the EU hits Ire­land with fines for fail­ing to com­ply with the likes of Green House Gas (GHG) emis­sions? Ire­land is the sec­ond­worst per­form­ing EU mem­ber state in tack­ling cli­mate change, when it comes to na­tional ac­tion and sup­port for greater am­bi­tion, ac­cord­ing to Cli­mate Ac­tion Net­work Europe, an

NGO sup­ported by the Euro­pean Com­mis­sion.

This re­port, called ‘Off Tar­get’, found that all EU mem­ber states are fall­ing short in adopt­ing the Paris Agree­ment on Cli­mate Change. Yet, how they all tut­tut­ted when US Pres­i­dent Don­ald Trump said he wouldn’t abide by the Paris plan.

He wasn’t even go­ing to try.

Lots of EU coun­tries are just not try­ing hard enough.

And therein lies the real prob­lem for any Ir­ish gov­ern­ment in mak­ing big steps in this area. It can ar­gue that there are lag­gards ev­ery­where, in­clud­ing the big­gest econ­omy in the world. It can also see that such mea­sures re­quire fi­nan­cial pain now for pos­si­ble but not def­i­nite fu­ture gain.

If Ire­land busted a gut on cli­mate change and big­ger economies didn’t, we could hardly save the planet alone.

But Ire­land has to live up to its obli­ga­tions and it could weigh up the other shorter-term fi­nan­cial ben­e­fits of show­ing lead­er­ship on the is­sue. It is one thing to pur­sue eco­nomic growth tar­gets for a par­tic­u­lar sec­tor, but en­tirely dif­fer­ent to do that while also sign­ing up to re­duc­tions in gases that af­fect cli­mate change.

Take agri­cul­ture, for ex­am­ple. Un­der the Food Har­vest 2020 and now the Food Wise 2025 eco­nomic pro­grammes for the sec­tor, the cat­tle herd is set to in­crease con­sid­er­ably. The gov­ern­ment and the in­dus­try have set tar­gets to in­crease milk pro­duc­tion dra­mat­i­cally with the end­ing of the EU milk quota sys­tem.

This will cre­ate jobs, ex­che­quer rev­enues and eco­nomic growth into the fu­ture for the sec­tor. All good stuff.

But belch­ing and fart­ing cat­tle are the main con­trib­u­tors to the sec­tor’s GHGs. The more cat­tle, the more GHGs. To­gether with trans­port, agri­cul­ture is the big­gest con­trib­u­tor to GHG emis­sions.

In­dus­try as­sess­ments sug­gest that, based on a rea­son­able set of as­sump­tions about how the in­dus­try will per­form in the years ahead, the cat­tle pop­u­la­tion is set to keep grow­ing.

Yet Ire­land has signed up to cut­ting GHGs to 20pc be­low 2005 lev­els. We can en­gage in some emis­sions trad­ing but the non­trad­ing re­quire­ments would see the fig­ure cut to 10pc be­low 2005 lev­els un­der EU tar­gets.

Fail­ure to com­ply will cost us money – pos­si­bly as much as €500m a year. Yet, the eco­nomic and en­vi­ron­men­tal tar­gets are not com­pat­i­ble.

There are some so­lu­tions. In agri­cul­ture there are mit­i­gat­ing mea­sures that could be taken around slurry man­age­ment, ni­tro­gen use ef­fi­ciency, fer­tiliser for­mu­la­tion, etc, but they may not be enough.

Ac­cord­ing to a pa­per pub­lished in June by Tea­gasc, called ‘Fu­ture Sce­nar­ios For Ir­ish Agri­cul­ture’, “with­out con­sid­er­able mit­i­ga­tion ac­tions, Ir­ish agri­cul­tural emis­sions of both GHGs and am­mo­nia are set to in­crease rel­a­tive to their re­spec­tive lev­els of 2005”.

The pa­per went on to say that even when mit­i­ga­tion mea­sures are ap­plied “reach­ing emis­sions re­duc­tion tar­gets be­low the 2005 level over the next decade is likely to be very chal­leng­ing”.

It added that its anal­y­sis “high­lights the con­tin­u­ing dilemma between pol­icy-driven and in­dus­try-mo­ti­vated am­bi­tions to in­crease agri­cul­tural ac­tiv­ity lev­els and com­mit­ments to re­duce emis­sions”.

If the mit­i­ga­tion mea­sures can­not do enough, more rad­i­cal so­lu­tions might have to be found such as ac­tu­ally re­duc­ing the size of the na­tional herd in the years ahead in­stead of the cur­rent plan of in­creas­ing it.

That might prove very painful for farm­ers who have in­vested heav­ily

Gas guz­zler:

More rad­i­cal so­lu­tions, like re­duc­ing the size of the na­tional herd in­stead of plan­ning to in­crease it, may be needed to fight cli­mate change in this new post-quo­tas “liq­uid Gol­drush”.

An­other way through this dilemma would be to take a more ag­gres­sive stance tack­ling emis­sions com­ing from the trans­port sec­tor.

In­cen­tives to move to elec­tric cars, greater in­vest­ment in pub­lic trans­port, more ef­fi­cient ve­hi­cles, make it more ex­pen­sive for peo­ple to drive pol­lut­ing ve­hi­cles.

This is where the Bud­get comes in. The Gov­ern­ment is run­ning scared from some of the eco­nomic and elec­tion con­se­quences of th­ese moves. I am not say­ing they are wrong, but per­haps they are just post­pon­ing the in­evitable.

Surely the best way to get busi­nesses and con­sumers to sign up to higher costs on tra­di­tional fu­els, is to give them the money back in sub­si­dies for more ef­fi­cient and en­vi­ron­men­tal­lyfriendly al­ter­na­tives?

Peo­ple in ru­ral Ire­land would be rightly ticked off at pay­ing more for their diesel, espe­cially when they have to com­mute to jobs that are miles away from where they live.

How­ever, if the rev­enue raised from higher car­bon taxes or higher diesel taxes was di­rectly ap­plied to more ru­ral pub­lic trans­port in­fra­struc­ture, greater home retro­fit grants or so­lar power, it might be more palat­able.

But sim­ply stick­ing it into the gen­eral mass of Ex­che­quer fund­ing, im­plies their money will get swal­lowed up on health sec­tor waste, fi­nanc­ing pub­lic sec­tor cock-ups or sub­si­dis­ing peo­ple who don’t need it.

In the cur­rent fragility of Ir­ish pol­i­tics (and it looks like it will stay that way), surely the best way to take tough long-term de­ci­sions is to di­rectly link the cost with the ben­e­fits for the fu­ture for those who are pay­ing up now.

We do not ring-fence enough pub­lic money for spe­cific pur­poses. At least peo­ple can see where their money is go­ing.

In the mean­time, the Gov­ern­ment may feel that po­lit­i­cally it isn’t the best time to take tough de­ci­sions on th­ese things. Safer to wait. With GDP grow­ing at 9pc and an un­ex­pected ex­tra €1.1bn land­ing in Cor­po­ra­tion Tax re­ceipts, when will there be a bet­ter time?

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