From Department of the Environment, Climate and Communications
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"I will join the Joint Committee on Environment and Climate Action today to discuss the pressing matters of energy security, energy prices and protecting our vulnerable consumers. The National Energy Security Framework (NESF), which was approved by Government and published in April 2022, sets out Ireland’s response to our energy security needs in the context of the invasion of Ukraine and our specific national circumstances. I would emphasise the impact the war in Ukraine is having on gas market prices and, in turn, the impact on both gas and electricity bills over the coming winter and beyond.
"The short to medium term oil supply outlook has stabilised, with petroleum product availability having improved recently we have seen a slow softening of international oil prices. NORA (National Oil Reserves Agency) currently holds approximately 85 days of oil stocks, the overwhelming majority of which is in the form of physical product, with approximately 85% stored on the island of Ireland.
"Gas supplies from Russia to Europe have been severely reduced over the last year and continue to be a cause for concern for Europe’s energy security. This has resulted in natural gas prices that are approximately ten times the levels seen just two years ago.
"The continued supply of natural gas to Ireland has not, to date, been reduced or interrupted as a result of the war in Ukraine. The UK, where 75% of Ireland’s gas supply comes from, is at a strategic advantage compared to other European countries with a diverse source of gas supplies.
"The European Council recently agreed a regulation on reducing gas demand by 15% this winter. This regulation requires all Member States to put in place a demand reduction plan. As Ireland is not directly inter-connected to another Member State, it is not required to meet the mandatory reduction target in this regulation. Preparations are underway to put the voluntary demand reduction plan in place.
"Separate to the war in Ukraine, there are challenges to the security of electricity supplies in Ireland. Concerns over such risks had arisen largely due to the non-delivery of previously contracted capacity, increasing electricity demand and the increasing unreliability of some existing plants. The tight margins are evidenced through an increase in the level of System Alerts on the electricity system.
"As stated in the Climate Action Plan 2021, the level of dispatchable electricity generation capacity needs to increase significantly over the coming years – to enable us to reliably meet the expected demand for electricity. The Commission for Regulation of Utilities [CRU] is managing a programme of work initiated in April 2021 and finalised in September 2021 to address this challenge, with the support of EirGrid and my department.
"In June, the government approved legislation and capital funding to support EirGrid’s role in expediting the delivery of temporary generation capacity. I also informed the Oireachtas in June that the government has approved my recommendation to consider the factors that have led to the current situation. To that end, Mr Dermot McCarthy, former Secretary General to the government and the Department of the Taoiseach, has been engaged to conduct an independent review as to how the present situation has arisen.
"Further, I welcome that the CRU are reviewing the Capacity Remuneration Mechanism, the capacity auctions, to make sure that it is fit for purpose. In carrying out this review, it is vital that we support the projects who have been rewarded contracts under the existing mechanism and that planned capacity auctions proceed.
"In respect of the longer-term outlook for energy security, my department is carrying out a review of the energy security of Ireland's gas and electricity systems out to the period to 2030, in the context of reaching net-zero emissions no later than 2050. This review considers potential risks to both our natural gas and electricity supplies, and examines a range of measures to mitigate these risks. My department has received the final technical analysis to inform the review and I expect a consultation to launch in the coming weeks.
"The Committee will be acutely aware that the exceptionally high wholesale gas prices seen since Russia invaded Ukraine have led to unprecedented increases in electricity and retail gas prices faced by consumers. This, in turn, has resulted in a very significant increase in the number of people at risk of energy poverty. Recent estimates from the ESRI indicate that up to 29.4% of households are now spending more than 10% of their income on their home energy needs.
"The government is keenly aware of the pressure on households facing these bills and has already implemented a €2 billion package of policies and measures to support energy customers. These supports included an Electricity Costs credit which was applied to over 2.1 million domestic electricity accounts, a reduction in VAT on electricity and gas bills from 13.5% to 9% and increases to the Fuel Allowance.
"The government also greatly enhanced the home retrofit supports available to households. For example, the number of free energy upgrades for households at risk of energy poverty delivered each month is over double that seen last year and a new 80% grant support for cavity wall and attic insulation was also introduced as a response to the exceptionally high energy prices. These supports will help to protect homeowners from energy price increases in both the short and long term.
"However, the government recognises that more needs to be done as prices continue to increase and additional measures to support households are being examined in the context of the forthcoming Budget. I very much welcome the announcement by the CRU last week of a range of additional consumer protections under the National Energy Security Framework.
"My department also recently published a review of the Strategy to Combat Energy Poverty, alongside a public consultation that will help to inform the development of a new Action Plan to Combat Energy Poverty. The new Action Plan will set out a range of measures to be implemented ahead of the coming winter, as well as key longer-term measures to ensure that those least able to afford increased energy costs are supported and protected. It is intended that the new plan will be published shortly after the Budget. The development and implementation of the new Action Plan is being overseen by a cross-departmental Steering Group, chaired by my department.
"Finally, the biggest energy challenge facing Ireland and Europe is the price of natural gas and its effect on gas and electricity bills as we head into the winter. We are not alone in facing this challenge and we will continue to work very closely with the European Commission and European Council in our response."
ENDS
The National Energy Security Framework, which was launched by the government in April 2022, provides an overarching and comprehensive response to Ireland’s energy security needs in the context of the war in Ukraine.
The Framework sets out how the government can support households and businesses, with a particular focus on protecting those most at risk of fuel poverty, how it is already ensuring Ireland’s energy security, and how it will speed up the country’s shift to increased energy efficiency and indigenous renewable energy systems. It also sets out how consumers and businesses can be supported to save energy and save money.
An Energy Security Emergency Group has been established to coordinate and oversee Ireland’s response to the current challenges. This group, chaired by the Department of the Environment, Climate and Communications, has overseen the development of a new National Energy Security Framework.
The National Energy Security Framework coordinates work on energy security across the oil, gas and electricity sectors and sets out a 'whole-of-government' response to energy security including a key focus on energy affordability.
The Framework sets out the government’s action in response to these issues across key themes:
The Framework also sets out how households and businesses will be supported to save energy and money with a programme of communications that will inform what actions they can take to reduce their energy demand, how they could lower energy bills and what supports are available to them.
A public information campaign – Reduce Your Use – is under way to inform the public about the actions they can take to contribute to the national effort. The campaign will empower people to reduce their energy use and encourage long-term sustainable behaviour. The campaign will take account of seasonal demands on energy consumption to ensure information and advice is relevant and timely.