The Irish economy is the second most energy efficient in Europe, a fact not recognised here, writes Brendan Butler
The Irish Times Editorial on November 8th, entitled "Reducing Carbon Dioxide Emissions", was not only misleading but contained a number of factual errors. The thrust of the Editorial, that "dirty and inefficient industries" are the cause of climate change and have done nothing to rectify the situation, does not stand up to even the most cursory examination.
Substantial rises in greenhouse gases (GHG), the main one being carbon dioxide (CO2), have been shown to cause discernible effects on global climate. The Kyoto Protocol requires developed countries to reduce their emissions to 5 per cent below 1990 levels by 2012. The EU target was an 8 per cent reduction, with different targets for individual member-states. Under a 1998 EU burden-sharing agreement, Ireland agreed a 13 per cent increase over 1990 levels by 2012.
Contrary to the statement in the Editorial, industry is not the major contributor to Irish GHG emissions. Industry accounts for 7 per cent of emissions as against transport at 14 per cent and agriculture at 32 per cent. While rapid economic development in the 1990s has led to increases in emissions, Ireland is currently only 12 per cent ahead of our Kyoto target and not 25 per cent as stated in the editorial.
The Editorial statement that recent decisions in Irish climate change policy show Ireland following the lead of President Bush is absurd. Ireland has recognised the real threat posed by climate change, signed the Kyoto Protocol, received a demanding target and has had a National Climate Change Strategy in place since 2000. Overall emissions in Ireland have fallen by 5 per cent in the last two years.
The Editorial also criticised the decision to abandon proposals to introduce a carbon tax.
Recent dramatic price rises in oil, gas and electricity have sent a much stronger signal than the introduction of a national carbon energy tax ever could. It is also clear that such a tax was neither an effective nor efficient mechanism in terms of its impact on the environment.
Emissions trading, identified as a key mechanism to combat climate change, is where a limit is placed on the quantity of CO2 that an installation can emit. If the installation exceeds that limit, it will need to buy CO2 emission rights from other companies that have some to sell because they have reduced their emissions below their limit. Alternatively, the company could pay a penalty.
A recent Cabinet decision allocated 67.5 million tonnes of CO2 allowances to 85 companies, including a number of power plants. Ireland's National Allocation Plan (NAP), prepared by the Environmental Protection Agency, sub-divided the overall 67.5 million tonnes to individual site allowances.
Irish companies have the following options: to reduce emissions to their limit by lowering production or improving efficiencies; to buy allowances from other EU sites if available; or to pay the pilot phase penalty of €40 per tonne, rising to €100 per tonne thereafter. In addition to compliance costs, participants will bear the additional costs of permits, company audits, transactions, monitoring and verification.
The statement that companies have been granted more than they need is simply false. Analysis shows the NAP has imposed cuts, some exceeding 25 per cent, with a significant cost attaching to each and every site. In fact, Ireland's NAP has reduced industry's ability to compete, by capping emissions at less than needed and imposing unknown - but potentially significant - costs on growth.
Although industrial production has more than doubled over the past 10 years, energy consumption rose a mere 32 per cent. Emissions from industry and power generation have fallen by almost four million tonnes, or 14 per cent, in the last two years, which leaves very limited scope for further reductions. Ireland has made remarkable steps in reducing energy intensity and now - according to the UN Human Development Report 2002 - is the second most energy efficient economy in Europe. Industry in Ireland is efficient and clean, a fact recognised internationally, but unfortunately not here at home.
Irish industry has recognised and accepted its responsibilities. It is part of the problem and therefore must be part of the solution. Companies never, as stated in the editorial, advocated no constraints, but wish that efforts be equitable to competitors within the scheme and other sectors of society. Companies need certainty, equity and consistency.
Industry has taken the lead in addressing the issue of climate change while other sectors have not faced any such costs or constraints. The challenge of climate change is a societal one that will impose costs on all sections of society and requires a sophisticated response.
Business has been playing its part in environmental protection for many years. It is time now for all sectors to look at the real problems, moving away from the adversarial and toward the constructive. Business has and will continue to play its part.
Brendan Butler is director of enterprise at the business and employers' organisation IBE. brendan.butler@ibec.ie