Climate, Energy and Natural Resources
The energy landscape continues to develop in response to the war in Ukraine and consequent concerns in relation to security of energy supply.
Expanding upon the European Commission's REPowerEU Plan published in May 2022, the Council of the European Union ("the Council") has sought to address the rising energy costs faced across Europe with a new Regulation addressing high energy prices. The goal at a European level is to act in a coordinated manner. Concerns in relation to rising energy costs were further reflected in credits allocated under Budget 2023.
At a domestic level, the progression of legislation in respect of offshore wind and maritime development, including the Maritime Area Planning Act and the proposed Maritime Protected Areas Bill, aims to further progress Ireland's green energy targets.
Proposed legislation in relation to oil emergencies under the Oil Emergency Contingency and Transfer of Renewable Transport Fuels Functions Bill, as well as a move towards a policy on hydrogen, are further reflective of the balancing act currently
in place between addressing rising energy security concerns and attempts to remain on track to meet Ireland's ambitious energy targets.
The delivery of offshore wind is a key component in Ireland's drive towards renewable energy. Having previously committed to 5GW of offshore wind energy by 2030, the government increased this target to 7GW in July following the agreement of the Sectoral Emissions Ceilings. A new Climate Action Plan for 2023 is intended to be published in the coming months, to set out the actions necessary to meet these targets. The Maritime Area Planning ("MAP") Act 2021 has been described by the Minister for Housing, Local Government and Heritage as a “key legal enabler” for expanding Ireland's offshore energy resources, but a number of key provisions await commencement, specifically the establishment of the Maritime Area Regulatory Authority ("MARA"). As the body responsible for granting Maritime Area Consents ("MACs"), as well compliance and enforcement of the new regime, its establishment will be an essential regulatory milestone for offshore wind projects.
While the Minister for the Environment, Climate and Communications dealt with MAC applications for a number of Phase 1 projects, MARA will take responsibility following its expected establishment in Q1 2023. In September a campaign to appoint members to the board was launched, and the recently enacted Planning and Development, Maritime and Valuation (Amendment) Act includes provisions for the appointment of a chief executive designate to MARA.
Environmental considerations will also play a role in Ireland's continuing maritime development with a newly proposed Maritime Protected Areas ("MPAs") Bill introduced in the Autumn Legislative Programme. This bill reflects the government's commitment to designate up to 30% of Ireland's maritime area as MPAs, an increase from the current 2.13%, and it remains to be seen how this necessary marine conservation will work alongside the development of Ireland's maritime area for clean energy.
In response to rising energy prices, EU energy ministers reached agreement on 30 September 2022 at an extraordinary Council meeting on a regulation to introduce common measures across Europe to reduce electricity demand and to collect and redistribute the energy sector's surplus revenues to final customers. As of 6 October 2022, the EU member states have formally adopted the regulation. The measures are temporary and extraordinary in nature and will apply from 1 December 2022 to 31 December 2023, and it is estimated that during this time that they will raise €140 billion. These measures include a cap on market revenues for electricity generators that use inframarginal technologies to produce electricity, a solidarity levy for the fossil fuel sector (commonly referred to as a windfall tax), and both a voluntary demand reduction target of 10% of gross electricity consumption and a mandatory reduction target of 5% of electricity consumption in peak hours. Finally, it was agreed that member states may temporarily set a price for the supply of electricity to small- and medium-sized enterprises, including setting a below-cost price for the supply of electricity as an exceptional and temporary measure.
The press release from the European Council can be accessed here.
"In these times it is wrong to receive extraordinary record revenues and profits benefiting from war and on the back of our consumers. In these times, profits must be shared and channelled to those who need it most."
Ursula von der Leyen, European Commission President, 14 September 2022, State of the European Union address.
To support the achievement of Ireland's emissions reduction targets, the Department of the Environment, Climate and Communications ("DECC") recently launched a consultation to gather the views of stakeholders and interested parties to inform the development of a hydrogen strategy for Ireland (the "Consultation Paper").
The publication of the Consultation Paper follows the publication of the National Energy National Energy Security Framework, which prioritised the development of a hydrogen strategy to reduce Ireland's dependency on imported fossil fuels. Production of green hydrogen was a key part of the European Commission’s strategy to accelerate the green energy transition under its REPower EU plan, published in May 2022. This Consultation served as a formal acknowledgment by the Irish Government of the role of green hydrogen in decarbonising transportation, heating (including the decarbonisation of the existing gas network) and power in Ireland, while noting that it can be transported and stored relatively easily.
The Consultation Paper focused on seeking input from the market on key feasibility points to ensure that the policy that is ultimately adopted will provide sufficient confidence for stakeholders. The Consultation closed on 2 September 2022, and we now await the publication of the responses to the Consultation.
This Consultation Paper is likely to open up a wider policy debate around the benefits of hydrogen and how hydrogen project development can be reconciled with Ireland’s emissions reduction targets. It gives an indication of the Irish Government's 'direction of travel' and appears to show that policymakers are open-minded.
"Never has it been more vital that we use our vast offshore wind resource to create renewable energy and ensure the security of our own energy supply. The development of our offshore wind energy capacity will lessen, and eventually eradicate our dependence on imported fossil fuels, and bring an unprecedented reduction in CO2 emissions for a climate neutral future."