Source: 'Achieving Ireland’s Energy and CO2 Reduction Targets – An Alternative Approach', a policy advisory issued by the Irish Academy of Engineers Much has been written and said about Ireland’s ambitious commitments under the European Commission’s Energy and Climate Package. There has been a pioneering Irish focus on investment in renewable energy, particularly in wind generation, and in the associated upgrading of the electricity transmission network. Significant progress has also been achieved in emissions reduction in conventional power generation and in larger industry within the so-called emissions trading scheme (ETS) through good management, prudent investment and, not least, by the unfortunate impacts of recession. [login type="readmore"] Yet there has been little focus so far on energy and emissions reduction in the non-ETS sectors, particularly in the residential, commercial, smaller industrial and public service sectors, as required under Ireland’s onerous and legally binding 20-20-20 commitments. The latest Environmental Protection Agency review of Ireland’s greenhouse gas (GHG) emissions points to non-achievement of these national commitments, consequently exposing Ireland to significant penalties from as early as 2016 onwards to 2020. The Academy has therefore identified the need for an alternative approach, hence this Policy Advisory. It was made possible through the pooling of real-world expertise and unique insights of a truly multi-disciplinary team spanning the electricity and gas utilities, energy consultants, equipment suppliers, retrofitting practitioners and academia. The recommendations resulting from team brainstorming and original analysis break new ground in identifying innovative yet practicable solutions. The Irish Academy of Engineering believes that the recommendations in its new policy advisory, which has been submitted to Government, can together enable Ireland to achieve all its 20-20-20 commitments. Furthermore, most of the recommendations can be privately funded, have short payback periods, make national economic sense, create opportunities for enterprise and employment and provide better living conditions for the population, resulting in reduced national healthcare costs. ENERGY TARGETS Under the European Commission’s 20-20-20 strategy, Ireland is committed to:

• a 20% reduction in final energy consumption (FEC), as compared to average energy use, in the period 2001-2005;
• a 20% reduction in GHG emissions from 2005 levels in the non-ETS sector; and
• an increase in the contribution of renewables to FEC to 16% by 2020, with an increase in the overall share of energy from renewable sources in transport to 10%.

Hitherto, the overriding focus has been on the renewable electricity target, with some €8 billion invested on supply-side projects (mainly in renewable energy and in upgrading of electricity transmission), while only €1 billion has been invested in demand-side initiatives towards achieving the FEC and non-ETS carbon dioxide (CO₂) reduction targets. However, both of these reduction initiatives are now falling short of national commitments, exposing Ireland to significant penalties for non-achievement of interim and final 2020 targets. The Irish Academy of Engineering’s policy advisory demonstrates how these latter two reduction goals, which also are consistent with economic recovery, can be achieved through a strategic rebalancing of Government energy policy between now and 2020. The advisory principles are focused on the residential, commercial, non-ETS industrial and public service sectors. RESIDENTIAL SECTOR In the residential sector, the Academy recommends acceleration of the national insulation-retrofitting programme, being more convinced of the greater bankability of shallow rather than deep retrofitting. Hearsay from within the industry indicates that considerably shallower retrofitting has taken place in the housing stock than grant-aid figures would suggest. The Academy estimates further potential energy and emission reductions of 0.28 Mtoe (million tonnes of oil equivalent) and 0.66 Mt (million tonnes) of CO₂ respectively. As insulation technologies are further developed, deep retrofitting may become more viable post 2020. In particular, the Academy recommends the retrofitting of heat pumps in the 300,000 rural dwellings remote from the gas grid, which are currently using oil-fired central heating. The national programme should be preceded by a pilot scheme that would conclusively demonstrate best practice in installation and operation of heat pumps. This heat pump initiative can achieve very significant energy and emission reductions of 0.3 Mtoe and 1.3 Mt CO₂ respectively, as well as making a major contribution to the renewable energy target. As urban electricity distribution has insufficient capacity to support widespread installation of heat pumps, the Academy recommends ‘decarbonising’ through a shift from oil-fired to gas-fired central heating in these 300,000 urban dwellings currently using oil-fired central heating, with priority on 100,000 dwellings within 20 metres of the gas grid. This fuel-switching initiative can lead to another 0.4 Mt in the CO₂ emissions reduction target. The Academy also sees merit in systematic upgrading of existing electrical storage heating to ‘smart’ modern systems now available. An additional advantage of the heat pump and electrical storage heater initiatives is that these, in conjunction with remote communications links, can facilitate rapid system load control, potentially reducing the €535 million proposed investment in thermal generation system controllability required under higher levels of wind penetration. COMMERCIAL AND NON-ETS SECTORS The Academy also recommends continued cost-effective energy efficiency improvements in the commercial and non-ETS industrial sectors, building on the successes of several initiatives pioneered by the Sustainable Energy Authority of Ireland. There is a data deficit on energy usage in the non-ETS industrial sector, which needs to be rectified. The Academy estimates that ongoing initiatives in the commercial and non-ETS industrial sectors can achieve energy and emission reductions of approximately 0.35 Mtoe and 0.73 Mt CO₂, respectively. These goals should be further pursued through extension of the gas transmission network to potential customers in these sectors, though the investment criteria applied by the Regulator to gas network extensions will need to be revisited, taking wider, economically positive criteria into account. The consequent fuel shift can result in further emission reduction of 0.2 Mt CO₂. The Academy also sees considerable potential to reduce energy consumption in the public service sector. The initiative pioneered by the Office of Public Works is an excellent model for extension to the entire public services sector. There appears to be particular potential in improving energy efficiency in the energy-intensive Health Services Executive (HSE) sector. If the very ambitious public sector requirement of 33% energy reduction is achieved, this will result in energy and emission reductions of 0.17 Mtoe and 0.3 Mt CO₂ respectively. The combination of the initiatives proposed in this policy advisory can together potentially achieve the 2020 required distance-to-target reductions in FEC of 1.1 Mtoe and in 2.7 Mt CO₂, enabling Ireland to meet all of its 20-20-20 commitments. These initiatives can also create significant opportunity for private enterprise in the design, installation, retrofitting, quality assurance, maintenance and compliance monitoring of energy conservation measures. These can also lead to significant employment creation opportunities in both rural and urban settings. These initiatives imply a total expenditure between now and 2020 of the order of €5 billion, mostly by the private sector and mostly with short payback periods with a potential for innovative financing, these also leveraging increased VAT returns and almost €1 billion annual savings in energy import costs. There is also a strong case that the associated improvement in human living and working conditions can lead to longer-term reduction in national healthcare costs. SUMMARY In summary, according to the policy advisory, the Government’s key policy goals should be:

• Rebalancing of investment from supply-side renewable and associated transmission, to a focus on demand-side energy and CO₂ reduction;
• Provision of better practical advice to householders on the merits of the various retrofitting insulation and ventilation options available;
• Training of contractors in retrofitting skills and independent compliance checking of this work;
• Incentivising conversion in urban areas with access to the gas grid of oil-fired central heating to gas-fired systems in over 300,000 urban dwellings;
• Incentivising the retro-fitting installation of highly efficient heat pumps in over 400,000 rural dwellings;
• Replacement of older generation electrical storage heaters in over 140,000 dwellings with new higher-capacity, cost-effective units (smart electric thermal storage units, or SETs);
• Demand-side load management of heat pumps and SETs through smart metering;
• Aggressive programme of ‘shallow’ retrofitting, supported by the planned Better Energy Financing programme and possibly tax incentives;
• Incentivise energy suppliers in development of gas network and installation of heat pumps and SETs;
• Prioritise energy efficiency in the commercial, industrial and public sectors, particularly HSE buildings;
• Reallocate resources to incentivising projects of shorter periods that provide payback in under five years, particularly in the commercial and industrial sectors.

The Academy believes that there is a compelling case for embracing these policy advisory recommendations in Government energy policy to 2020. The policy advisory is the latest in a series of reports by the Irish Academy of Engineering since 2006 on energy policy issues in Ireland. See www.iae.ie for more details.