A new report warns that Ireland must act immediately to avoid paying significant compliance costs for failing to meet its climate targets. The report, published jointly by the Irish Fiscal Advisory Council (IFAC) and the Climate Change Advisory Council (CCAC), estimates that Ireland could face penalties between €8 billion and €26 billion if it does not take stronger action to reduce emissions. However, implementing planned emission reduction measures could lower these costs by as much as €12 billion.
The EU’s Effort Sharing Regulation mandates that each member state reduce greenhouse gas emissions across five key sectors: road transport, buildings, small industry, waste, and agriculture. These targets are adjusted based on GDP, meaning wealthier nations, including Ireland, face stricter requirements. Countries that fail to meet their commitments must purchase carbon credits from member states that exceed their goals. However, as many EU nations are also struggling to meet their climate targets, a scarcity of carbon credits could create a bidding war in 2030, further increasing costs.
The report highlights that Ireland has already missed out on approximately €500 million in revenue from carbon credits it was eligible to sell. Additionally, two national policies—one on land use and forestry and another concerning renewable energy—could contribute to further financial consequences. Seamus Coffey, chair of IFAC, emphasizes that immediate action could help Ireland avoid these costs without jeopardizing the country’s public finances.
Despite some progress, Ireland remains significantly behind in reducing its emissions. The Environmental Protection Agency (EPA) projects a 29% reduction in emissions by 2030, far below the legally binding target of 51%. This shortfall leaves Ireland among the worst-performing EU countries in terms of emissions reductions. The country currently has the highest emissions gap per capita in the EU, at 8.7 tonnes of CO2 per person. Marie Donnelly, chair of the CCAC, stresses that while some improvements have been made, the current pace of change is insufficient to meet both national and EU climate targets.
If the Irish government successfully implements its Climate Action Plan by 2030, compliance costs could be significantly reduced. However, the report warns that the plan is not being executed at the scale or speed necessary. It suggests that allocating just 10% of Ireland’s planned capital spending to climate action could be enough to address the problem. This investment would focus on upgrading the electricity grid, making electric vehicles more affordable, expanding EV charging infrastructure, increasing forestry initiatives, and restoring wetlands.
The report’s authors emphasize that failing to act now would be a costly mistake. They urge the government to prioritize a transition to a climate-neutral economy. Investing in sustainable infrastructure and green initiatives now is a far better alternative to paying massive compliance costs in the future.
Taoiseach Micheál Martin defended the government’s climate policies, noting that emissions have decreased over the past year and that major investments in offshore wind and the electricity grid are forthcoming. However, he acknowledged that more work is needed to meet Ireland’s climate targets and avoid severe financial penalties.