With low energy efficiency, high reliance on fossil fuels, high levels of energy poverty and very poorly insulated houses, Ireland is particularly vulnerable to international energy markets and supply. Natural gas prices are around four-times higher than they are typically and some analysts predict that this trend could last for a number of years. The spike in prices is being caused by a number of factors which boil down to declining supply and growing demand.
Growing tensions at the Russia-Ukraine boarder is sparking additional fears of a supply crisis. Russia supplies Europe with around 40% of its natural gas, though all of Ireland’s gas comes from the UK, which in turn is supplied by the North Sea fields, Norway and some LNG from the international market, mainly Quatar (an excellent summary from SEAI is here(pdf download)). Ireland does pay the international price for gas (despite having domestic supplies) and clearly a geopolitcal incident where Russia would restrict exports to Europe would likely have severe knock-on consequences for the gas price.
Moreover, Ireland urgently needs new natural gas power generation capacity over the next few years to replace coal and oil-fired generation, to act as a backup for variable renewable generation (with a target of 80% of power generation to come from renewables by 2030), and to supply growing electricity demand from sources like data centres.
Aside from the risk of cuts in supply - which is low but would be catastrophic - the increased energy bills arising from this supply crunch is exacerbating fuel poverty for people on low incomes, especially those in rented accommodation, who often have little choice and very poor tenancy rights. I was recently in an online meeting with a student who was bundled up with a coat and scarf, visibly shivering. They told me that the room they rent is unheated for most of the day - the landlord restricts heating to two hours a day - and single-paned windows are always damp, and mould is visible in the house.
Unfortunately, some have blamed the rise in energy prices on climate policy (even some acquaintances of mine have mentioned it to me with an accusing look!). While there have been calls in the media for lowering taxes on energy bills - and indeed the Government is giving a €100 cheque to everyone by way of relief from rising energy bills - this will not solve the systemic issues causing our vulnerability to global energy markets. The energy insecurity being felt as a result of the gas crisis are symptoms of a much wider sustainability issue in our energy system, which are also at the heart of our very high contribution to global warming, to air pollution and to fuel poverty.
Firstly, Ireland’s energy system - which fuels electricity, transport, residential and industry energy use, as well as food production - is built in a way that relies very intensively on energy. Like fish in water who don’t know what water is, we find it hard to appreciate how energy-intensive our economic and social systems are. And many of the ways that we use energy are unnecessarily energy intensive. For example, our built environment generally requires that every adult needs a car to fully operate in society. A bike uses 30-times less energy than a car for the same distance (counting calories from the food), but our built environment generally doesn’t facilitate their use. Nearly 40% of car energy use is for trips of less than 8km, which could easily be covered with an ebike. And homes are spread out among the countryside, with poor spatial planning, meaning trips are longer than necessary. Another example is how we heat our homes. Homes in Ireland are among the least efficient in Europe - they are drafty and cold. The example I gave above about my student above is not unusual. The agriculture sector, itself responsible for around 37% of national greenhouse gases, is also very vulnerable to global fossil fuels price shocks because of the perennial ryegrass model for beef and (particularly) dairy production that requires chemical fertilisers. This is heavily dependent on natural gas for its production and as a consequence, fertiliser prices are currently around triple their normal level.
The second cause of Ireland’s systemic sustainability issue is a very high reliance on fossil fuels. Nearly 90% of the energy system is still fuelled by oil, gas, coal and peat. The vast majority of this is imported. Around one-third of natural gas use is produced domestically - at the Corrib gas field, where production is in decline. All oil and coal is imported.
Given the two factors above, fossil fuel use is very high. Gas use alone has tripled since 1990.
These two factors - high energy intensity and high fossil fuel) dependence - mean that our energy and agriculture systems are very strong drivers of climate change, and as a consequence the country faces steep emissions cuts to meet international obligations. It also is the reason fuel poverty is so high, though this is under-studied and we do not have a clear definition or metric for this. These factors together also are the reason why air quality in Irish towns and cities is sometimes the worst in Europe - on a cold, still evening you can taste the smoke from solid fuel burning, which is cheaper to heat drafty homes than cleaner methods. And fourthly we are in a very vulnerable energy security position, with the risk of supply shocks.
All-in-all, more than 80% of energy use is from imports, which is one of the highest import rates in Europe. In my opinion, this import dependnecy indicator is not in itself a cause for concern and should be seen within a wider picture of vulnerability and sustainability.
While this is clearly a very problematic situation - possibly a crisis situation - it also means that there is an extremely important opportunity to make fundamental changes to our energy system which can address these four issues concurrently. This requires that the state intervene to reduce the energy-intensity of transport, buildings, industry and agriculutre, and to replace fossil fuels with domestic renewables.
There is a precedent for this.
Energy transitions can happen quickly if there is state urgency backed up by public support. We can look back to the oil crises in the 1970s where the cost of oil quadrupled and shortages created queues at petrol pumps and electricity blackouts. Three things happened, domestically and internatioally:
- It created an opportunity for a domestic gas industry with exploration and development of the Kinsale field. The electricity system rapidly pivoted away from oil, which was around 70% of power generation in the early 1970s to natural gas and peat. This is not to justify this energy transition from a climate or environmental perspective (the use of peat is especially damaging) but to highlight that energy transitions have been brought about quickly in the past
- The ESB stopped promoting electricity demand growth and instead focussed on conservation - lagging jackets became the norm.
- And globally the oil crisis spurred innovation in energy efficiency and renewables. This opportunity was lost once oil prices fell and supplies stabilised.
So it’s critically important that this energy crisis is used as an opportunity to address high energy intensity and fossil fuels use. The solutions are very familiar:
- Tackle demand by making cars and towns less car-centric; promote public transport, ebikes etc; promote car sharing, the smallest car necessary for each person etc.
- A mass deep retrofit and heat electrification programme; push for efficient appliances.
- More research into and rollout of sustainable biofuels, efuels, green hydrogen etc
- Wind and solar PV on the power grid as quickly as possible, and electrify everything.
To address fuel poverty, and to make sure than climate action is inclusive and just, putting vulnerable people and renters at the forefront of soltuions is important, by bringing in higher minimum BER ratings on rented accommodation and offering targeted supports for retrofitting to people unable to afford it as a matter of priority.
Finally I want to address the question which will inevitably come up - isn’t the gas crisis justification for continuing offshore gas exploration and/or development of an LNG terminal?
From an energy security perspective, Ireland is well supplied with gas from the North Sea through the interconnector with the UK, which has sufficient LNG import capacity to take from the global market. And, as we have experienced, having a domestic supply of gas does not insulate a country from international price hikes, as the Irish consumer pays the global price.
From a climate perspective this is a complete non-runner. The very small remaining carbon budget means that any additional fossil fuel extraction is very problematic. While we need new gas generation in the short-term, this is to support the low carbon transition and should be replaced with low-carbon fuels and battery backup as quickly as possible. What is far more important is to put all efforts into developing alternatives to natural gas use.