Supporting sustainable energy

Irish people are supportive of the changes required to meet Ireland’s energy transition targets and are willing to adopt the sustainable practices needed to meet them. However, our research shows there are cost and other barriers to overcome if positive sentiment is to be translated into action writes Philip Connolly of the Sustainable Futures team at KPMG.

Powering Tomorrow is the first ever broad survey of Irish attitudes to all elements of the energy transition. Conducted by RED C on behalf of KPMG among a sample of over 1,000 Irish adults in November 2023, the survey found that 60 percent of Irish people are concerned about the effects of climate change.

Over three quarters (76 percent) would support renewable energy projects near their homes; 83 percent are likely to implement home energy efficiency measures; and 20 percent are considering buying an electric vehicle (EV) within the next five years.

Support for these projects is most pronounced where they create jobs and produce clear benefits for communities

Meeting community concerns

The high level of support for wind and solar energy projects is very welcome. At least some of the credit for this must go to bodies like the Irish Wind Energy Association who have done a lot of good work on education and public outreach. Development Teams have been out knocking on doors, holding town hall meetings and trying to ensure that community concerns are listened to. For example, they are implementing measures like turning turbines off at certain times of the day in summer to reduce light flicker.

Support for these projects is most pronounced where they create jobs and produce clear benefits for communities. Unfortunately, wind and solar farms tend not to generate much employment in their immediate vicinity once operational. On the other hand, a community benefit fund of €2 per megawatt hour of generation ensure that RESS projects support sustainable community initiatives and help empower communities to support local causes.

Community support for such projects may not be enough in the face of difficulties with the planning system. As things stand, people are objecting to and appealing against permissions for projects located far away from where they live. There is a need to ensure projects not held up unduly due to frivolous or vexations objections.

Getting it right on planning

As things stand, there are thousands of megawatts worth of new projects held up in the planning system. This is not entirely due to third party objections and there is a clear need to resource An Bord Pleanála and local authority planning departments. . Ireland’s planning and consenting system is operating at capacity and is in need of greater resourcing. Uncertainty and long timelines in the decision-making process – including the high likelihood of lengthy judicial review appeals – add risk and delays to renewable energy projects achieving a final determination on a planning permission application.

Home energy efficiency

While the great majority of people are likely to implement some home energy measures, there is a limited appetite for for ‘deep retrofits’. The government aims to retrofit 500,000 homes to a BER of B2 or better by 2030, but the net cost of €40,000 is prohibitive for the majority of homeowners. Payback through reduced energy bills, even with zero percent finance, is inordinately long.

Tax incentives may tilt the balance for a number of people but will likely be of limited impact for those in lower income brackets. There are, however, good supports for people on very low incomes and they offer very low cost or no cost home energy upgrades in many cases.

Looking ahead, there is a need to develop more imaginative means of helping people to fund these projects.

EV adoption

The scale of the challenge relating to EV adoption is even greater. The Government has set a highly ambitious target of having around 1 million EVs on Irish roads by 2030 but nearly a third (32 percent) of our survey respondents have no intention of switching to an electric car or van within the next five years.

That reluctance to switch is largely due to cost (50 percent). Other contributing factors include a lack of charging points, concerns about new technologies and uncertainty about potential savings.

On the plus side, in Ireland battery EVs had a 19 percent market share in 2023 with sales up 45 percent. This however has slowed in Q1 of 2024. A reinstatement of the full BEV grant would go a long way to making EVs more cost competitive with diesel cars.

In some ways, Ireland is an ideal country for EVs due to the small size of the island. Range anxiety is now almost a thing of the past thanks to new mid-range models which have a range of around 300km which will cover most intercity routes in Ireland. In addition, the fast-charging network is continuing to be developed including the launch of a new €21m scheme to accelerate the development of high-powered electric vehicle charging infrastructure across Ireland's road network recently announced.

On the cost side, new entrants to the market from China are bringing prices down and increasing the pressure on the established brands to decrease their prices even further.

...the reduction in grants and adjustments to benefit-in-kind tax treatment is premature.

Global perspectives

But cost parity with internal combustion engine (ICE) vehicles may be some way off yet. The 24th Annual KPMG Global Automotive Executive Survey of more than 1,000 auto industry leaders around the world found participants less optimistic in 2023 than in 2022 about how soon EVs can reach cost parity with conventional cars, not counting subsidies.

In the previous year’s survey, 70 percent of executives said they expected parity by 2030; in the latest survey, 66 percent said that was likely. Unsurprisingly, 87 percent of Chinese industry executives expect parity by 2030 compared with 71 percent in 2022.

Against this backdrop, the reduction in grants and adjustments to benefit-in-kind tax treatment is premature and will probably dampen demand for EVs at a time when it needs a boost. Indeed, the lesson from other markets like Denmark is that sales decline precipitously when subsidies are reduced.

The other cost component that is often overlooked is public charging. While EV owners who are able to charge their vehicles at home overnight can save up to 75 percent on running costs in comparison to ICE vehicles, that is not the case for increasing number of people who live in apartments or don’t have a driveway. For those people who are reliant on the public charging network, the savings are quite small.

Creative thinking required

That highlights the need for a rethink in relation to subsidy reductions and possibly to consider further government intervention to incentivise EV purchase.

Additional incentives could also be offered to people who are able to charge at home. For example, in the UK, homeowners with smart meters can actually be paid for charging their EVs at certain times when there are excess renewables on the network. The CRU are currently consulting on similar innovative tariffs in Ireland.

There is naturally a high degree of scepticism in relation to the 1 million target, but that is probably to look at the problem through the wrong lens. Instead, we should aim at 100 per cent of car sales being EVs by 2030. We do not want as many cars on our roads, after all. What is needed is more alternative modes of travel – public transport, walking, cycling and so on. But government supports will still be required if we are to achieve the 100 percent goal.

There is also a body of opinion that holds that the best way to achieve the target is by disincentivising petrol and diesel through tax and duty increases. That approach certainly has its attractions, but it would be very difficult politically given its likely impact on lower paid individuals who are dependent on their cars to get to and from work and go about their daily lives.

There is also a need for greater urgency on the Government’s part.

Overall targets likely to be missed

Sadly, while Irish people are prepared to embrace the changes required to meet climate action targets, a significant majority, 61 percent, of respondents to our survey lack confidence in Ireland’s ability to achieve those targets.

That pessimism is shared by various bodies including the EPA, the SEAI, and the Climate Change Advisory Council which all say sufficient progress is not being made.

More certainly needs to be done. Ireland lags behind in areas like biomethane, electrification of heat, public transport, cycling infrastructure, and newer technologies such as carbon capture and storage, and hydrogen production. The country needs to start investing in these things now if we are to catch up on our global peers.

There is also a need for greater urgency on the Government’s part. The Government has declared a climate emergency but many question has it treated it as such. During the financial crash and Covid various task forces and emergency bodies were established to deal with the situation. The same approach needs to be adopted to tackle the climate emergency. Solutions need to be pursued with the same vigour and urgency as they were during those crises.

Ireland has some of the most ambitious decarbonisation targets in the world. Lack of ambition is not the problem, lack of implementation is. We need to move from talk to action - with 2030 just six years away, 2024 has to be the year for delivery.

Get in touch

Our Powering Tomorrow report shows that there is real support for the right large-scale energy projects in Ireland.

If you have any queries about how your business could seize this opportunity, please contact Philip Connolly of our Sustainable Futures practice. We'd be delighted to hear from you.