Irish energy policy should prioritise sustainability, security and competitiveness regardless of Brexit impact

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Research published today (Wednesday, 21 June 2017) by the ESRI re-evaluates Irish energy policy in light of Brexit, and makes recommendations for policymakers. The research findings consider policy responses to the impact of Brexit on the energy landscape. Additionally, the research addresses policy issues that exist regardless of how Brexit negotiations unfold, including climate change targets and requirements for new infrastructure.

Closely linked energy systems

The energy systems of Ireland and the UK are closely linked, and furthermore much of Irish energy and climate policy is determined at EU level. Therefore Irish energy policy should certainly be examined with a view to ‘Brexit-proofing’ Ireland’s energy future. Relevant issues that will have an impact on Irish energy policy include whether the UK remains a member of the EU Internal Energy Markets (IEM) for electricity and gas, the future of UK policy on renewables and security of gas supplies in particular.

Ireland’s gas and electricity systems are currently exclusively connected to Great Britain, which raises concerns surrounding security of supply, as well as efficiency of trading over interconnectors should Great Britain cease to be a member of the IEM. Ireland also has reserve oil stores in the UK. EU legislation surrounding supply security requires member states to be interconnected with other member states and also to store oil within the EU. Ireland may therefore require an exemption from these regulations.

In light of Brexit, it may be tempting to prioritise infrastructural projects such as Liquefied Natural Gas (LNG) terminals or the Celtic Interconnector to France. However, all infrastructural decisions should be justified by a thorough cost-benefit analysis, taking account of likely future energy prices, future demand, future energy investments in Ireland and other countries, and any uncertainties associated with same.

All-island Electricity Market

The special position of the all-island market for electricity in Ireland should be prioritised in any Brexit negotiations. The all-island market has delivered for consumers North and South by harnessing economies of scale and increasing competition, resulting in a more efficient and transparent market. The efficiency of the market may be undermined if there is a divergence in UK energy policy in general, and renewable policy in particular, from its current course as a result of Brexit.

Energy emergencies

The potential impact of Brexit on interruptions to gas supply should be guarded against, in the unlikely event of an energy emergency. While Ireland has access to gas from the Corrib field, the Moffat link with Great Britain is expected to again be the dominant source of gas supply to Ireland by as early as 2018. Opportunities for diversifying gas supply should be studied and the costs and benefits associated with each should be clearly identified.

Long-term energy objectives

In addition to the implications of Brexit, the energy landscape has potential for improvement in many areas that are independent of Brexit. The correct renewable and climate targets for 2030 should be informed by a robust analysis of the least-cost path to carbon reduction, rather than by various specific renewable and carbon reduction targets that often conflict. There may be an argument for shifting renewable energy deployment from the relatively small electricity sector to the larger sectors of heat and transport, which are heavily reliant on fossil fuels. The North-South electricity interconnector is a critical piece of infrastructure that will reduce prices for consumers North and South and will ensure secure electricity supply in Northern Ireland. These issues are of substantial importance and are also independent of Brexit.

Commenting on the research, the author Muireann Lynch said:

‘It is prudent to consistently re-evaluate and reappraise policy in light of major global events such as Brexit. However policy makers should exercise caution in determining their priorities. While Brexit will certainly impact on the policy landscape, there are many opportunities for improving Irish energy policy that should be addressed regardless of Brexit. These include a thorough cost-benefit analysis of new infrastructural projects such as gas and electricity interconnection, efficient renewable energy policies and increasing competition and value for money in energy markets. Policy makers should not focus to an excessive degree on the real or perceived threats of Brexit while potentially ignoring other pressing issues.’

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