One way or another, the single biggest political issue of 2028 and 2029 will not be immigration, or housing, or healthcare, but Irish Government climate policy.
That reality was brought home yesterday by a Newstalk report which will likely get lost in the August weeds: That the Government faces eye-watering potential fines of up to €8billion if it misses the country’s 2030 climate change targets around emissions.
Those targets were set out by this Government in something called the Climate Act, 2021. That piece of law legally commits the Irish Government to achieving a 51% reduction in Ireland’s carbon emissions by the year 2030. Earlier this year, the Environmental Protection Agency stated that Ireland is actually on course to achieve only a 29% reduction – and even that is contingent on what the EPA calls “full implementation of a wide range of policies and plans across all sectors” – something that is, for the moment, entirely unlikely.
For example, the 29% reduction is contingent on the Dairy Farmers losing their fight with the Government over reductions in the national herd.
The fines, interestingly, are not even based on the 51% target set by this Government. They are instead based on the EU’s Effort Sharing Regulation on climate change, which mandates a smaller reduction by 2030 of just 42%. Ireland is, as the EPA points out, on course to miss that by a whopping 13% even in the best case scenario.
Irish politicians are in a vice here, of their own making, caught between two flanks of public opinion. On the one hand there is elite opinion and the power of various lobby groups, as well as a determined environmentalist vote amongst the young and the political left. That flank will be exerting as much pressure as it can muster on Government to cut emissions harder, faster, and deeper.
On the other hand, there is the rest of us: Homeowners facing policies that will be designed to drive the cost of home heating through the roof; farmers facing the mandatory elimination of their cattle; road users facing exorbitant fuel costs; consumers paying additional carbon levies, and so on.
There is no way to square the political circle: The Irish Government will end up with the option of paying enormous fines, or inflicting enormously painful policies on their own voters. In the end, because they are politicians, they will likely choose the fines. As they should.
One of the problems with climate change policy as practiced, rather than as conceived, is that it amounts to a deliberate government attempt to distort the economy and the free market. Consider cars as an example: The Government’s climate policy subsidises the cost of electric cars, by providing grants. At the moment, for example, you can avail of a grant of up to €3,500 to get an electric car. Some banks also offer Government subsidised reduced-rate car loans.
At the same time, Government deliberately pushes up the cost of diesel and petrol cars, whether through permanently escalating fuel taxes or road tax or VRT. The objective of these policies is to artificially make electric cars appear cheaper and more affordable than they are, relative to Internal Combustion Engine vehicles.
The problem with this policy is precisely that it is artificial: The ICE vehicle remains, in reality, cheaper and more reliable. And so every electric car on the road ultimately costs the Irish economy more than every diesel or petrol car – regardless of whether the state or the consumer is paying that cost directly. Collectively, as a society, we are paying more for an objectively worse product, on foot of Government policy.
The same dynamic exists in every other sector: There’s a reason that wind power, for example, is subsidised out the gazoo by the Government every year. There’s a reason that the Government needs to provide massive grants for various home heating upgrades. There’s a reason that it needs to use taxes to disincentivise the use of plastic bottles: All of these policies are in place because without them, the fact that fossil fuels are cheaper would make itself readily apparent, and the green alternatives would fall flat on their faces. When Eamon Ryan talks about “investing in the green economy”, this is what he means: Absent that investment, we’d all live cheaper, if more carbon intensive lives.
This ultimately is at the root of the coming Carbon emissions political crisis. The Government – already amidst a huge spending splurge – has politically committed itself to replacing half of the Irish economy with more expensive, less efficient alternatives. For example, shifting people from flying to rail or boat, which will inevitably cost time and efficiency across the economy.
This is an economic shift that does not lead to us producing more, but to us producing less. And it comes with enormous political and spending costs.
In 2028 and 2029, a Government is going to have to decide whether to proceed with the targets legally set out in the 2021 Climate Act, or to amend that act to defer those targets for another decade. The former course is what we’re told is necessary to save the planet.
The latter course is what that Government will take, amidst much wailing and gnashing of teeth.