Ireland faces a bill of up to €26 billion if the country fails to meet its emissions reduction targets by 2030, as it is currently on track to do.

A joint report by the Irish Fiscal Advisory and Climate Change Advisory Council has emphasised that massive action is needed on climate action now to avoid staggering costs.

Ireland has agreed to a number of legally binding climate targets under EU regulations which require us to reduce emissions, increase renewable energy capacity and improve energy efficiency by 2030.

If we fail to meet those targets, the government will have to pay other EU states for compliance, which could come with a massive bill depending on the actions taken in the next few years. 

Countries which are exceeding their targets, such as Spain, Greece, Portugal, and Luxemborg, could sell their excess to countries falling behind, such as Ireland, France, Germany, Italy, and Romania.

According to our current measures, the cost of our missed emissions targets will be between €7.5 billion and €26.4 billion, which Ireland will have to pay to other EU states. 

However, if the government acts aggressively to meet the goals of the Climate Action Plan, those costs could be reduced substantially, although not eliminated altogether.

If the goals of the Climate Action Plan are implemented, that bill will fall to between €3.4 billion and an upper estimate of €11.9 billion.

Speaking at the launch of the new report, Seamus Coffey, Chair of the Irish Fiscal Advisory Council, said, “This is a clear case of being able to reduce a massive fiscal risk.”

“Ireland can take actions now to offset potential costs down the line. It can do so in a way that doesn’t threaten the wider sustainability of the public finances.”

More than half of Irish emissions (51%) are from the agriculture sector, with another quarter (26%) coming from the transport sector.

The report advises several ways in which spending can be targeted in the next few years to reduce emissions from those sectors.

• €7 billion to expand and improve the electricity grid beyond current plans to make it more resilient.
• €4 billion targeted to lower the cost of electric vehicles to under €15,000 and expand charging networks.
• €1 billion to support forestry and rewetting of peatlands

The €12 billion bill for these efforts would be less than half of the upper estimate of the cost of failing to meet our climate goals.

Marie Donnelly, Chair of the Climate Change Advisory Council, added, “While we have made some progress in reducing emissions, our pace of change is not enough to meet our national and EU climate targets.”

“The Government must take clear and decisive action now to transition to a climate neutral economy. It is better to make the investments into Irish households, communities and businesses now, rather than paying significant compliance costs in the years ahead.”