Ernst & Young: securing the future
Business is ready but the right political leadership is needed to transform energy.
The island of Ireland has always been highly dependent on energy resources from the international markets. The Republic of Ireland (“ROI”) and Northern Ireland (“NI”) jointly import more than
€7 billion of energy each year. This equates to more than €19 million per day leaving these shores, an amount that is likely to increase annually as global oil and gas prices continue to rise. These energy imports currently act as a life-support machine for the entire island economy.
The International Energy Agency recently indicated it is likely that oil prices will increase from $100 to $150 per barrel. Current projections by the Environmental Protection Agency suggest that the ROI will miss the EU 2020 obligations by between 4.1 and 30 million tonnes of carbon dioxide equivalent, in a best case and worst case scenario. This could cost the ROI’s State up to the £350 million. NI, through its own obligations, has to reach a 40% renewable energy penetration to avoid penalties. Economies that grapple with the challenge of energy prices and emission prices earlier will be more competitive and will also have developed skills and services sought by other countries.
The first step for any economy is to reduce the amount of energy being consumed. Energy efficiency, building design, building retrofits and energy management are rapidly growing sectors responding to this need. If structured effectively and with the right regulatory environment, a lot of this can be financed by the private sector, create significant employment with a net economic benefit to the consumer.
The second step is to switch to more commercially and environmentally sustainable forms of energy. Over the past decade, renewable energy, particularly wind, solar and biomass has been the fastest growing area within the electricity generation sector. This provides fixed-price clean energy with no fuel costs. The introduction of biofuels, the steady shift from petrol to cleaner diesel cars and electric vehicles but to mention a few, are all areas where conscious switching of energy types in the transport sector is fundamentally changing society. NI’s plans for offshore wind and ocean energy are likely to transform entire parts of the economy, attracting supply chains, manufacturing and services, whilst also reducing dependency on gas and oil imports. This process has already begun, with Harland and Wolff and Belfast harbour attracting utility giant Dong and engineering giant Siemens to manufacture and assemble offshore turbines for offshore wind projects off the coast of England and Wales.
The third step, changing attitudes and behaviour is fundamental and is at different stages in globally. Designing a national electricity system to export renewable energy requires a fundamental shift in approach. An inter-agency and leadership focus is required to procure and fund renewable energy projects to facilitate exports or national retrofitting initiatives. Utilising state lands, assets, marine waters and entities in a centralised and co-ordinated manner is central to achieving this. Labelling product energy consumption and emissions standards informs customers and allows them to make a decision based on this information thus changing behaviour. Manufacturers and retailers have become increasingly sensitive to the energy consumed and emissions produced, resulting in changes to operational procedures.
Lastly, innovation is a consequence of the three previous steps. In 2010, $243 billion was invested in the clean energy sector, 30 % higher than 2009. This trajectory is expected to continue upwards. Investment levels in innovation in the cleantech sector are at their highest levels ever. Energy security and environmental protection are the two major global issues facing every country in the world, irrespective of location, culture and size. Funds, venture capitalists and companies around the world have responded to this, investing and helping to build companies in this sector, with a rapid rise in innovation as a consequence.
Private capital and the private sector as a whole are ready and waiting. An appropriate regulatory environment, a highly co-ordinated government-led plan and full support from policy-makers will unleash this capital and generate significant growth across the island. Achieving the triple benefits of economic development, energy security and emission reductions are entirely achievable with the right focus, plan and leadership.
Barry O’Flynn, Director, Sustainability and Cleantech Solutions.
Email: barry.oflynn@ie.ey.com
Tel: +353 87 6777 665
