Our new economy: Green, Smart and Ambitious
Tuesday, 12 January 2010
When you’ve been in opposition your entire political life, 12 years in my case, people often ask the question: if you could be Minister, which portfolio would you want and why? The answer I give now is clear: Energy, Communications and Natural Resources, because that’s where the transformation will happen to save the Irish economy.
One of the few advantages of a crisis is that it creates an appetite for radical thinking and reform that would previously have been unthinkable. Ireland has been in crisis for twenty months now and significant reform has never been so badly needed.
Politics must provide the clash of ideas, to stimulate a national debate; to create an aspiration of what Ireland needs to look like in five years time and how best to get us there. The private sector can and will fuel transformation, but the direction needs to come from government.
Excellence in infrastructure must be at the heart of our small exporting economy. Shamefully, after more than a decade of growth, we are not even close to providing the infrastructural standards necessary in the key areas of energy, telecommunications and water.
Energy is the most important. Without secure, affordable and lasting sources of power, a credible program for recovery and growth is fantasy.
The Irish energy market needs to be turned on its head. At present we are sleepwalking into a new economic crisis, as we ignore the risks associated with an almost complete reliance on imported fossil fuel. Put simply, we import 95% of all the fuel we use; we have no control over its price or its security of supply. That is not a good place to be. The oil, gas and coal we use are finite resources and, as they are globally consumed in ever increasing quantities, will become more expensive.
Despite the recent drop in oil prices from a peak of $147 a barrel twenty months ago, oil is pushing above $80 a barrel now in the depths of a global drop in consumption. As economies once again begin to grow, oil prices will only go in one direction, the only question is how rapidly. Although the link has been broken in recent times, gas prices, along with other fossil fuels, generally tend to follow oil prices.
Imagine the impact, if the cost of electricity, petrol, gas, heating oil and coal all rose by more than 100% in the next five years. The State currently spends over €300 million a year alone on importing fossil fuel to simply heat public buildings. The total current annual spend in Ireland on imported fossil fuel is approximately six billion euro a year. We simply cannot afford significant oil price increases and must invest cleverly now to reduce our exposure.
Then there is the issue of climate change. I believe the UNIPCC (Intergovernmental Panel on Climate Change) reports that warn of irreversible and dire consequences of climate change, caused by excessive quantities of man-made carbon emissions, primarily from burning fossil fuels. Despite recent cold weather, the evidence of an increasing and dangerous rate of global warming is accepted by virtually every Government on the planet. Their failure to agree a comprehensive global plan to combat climate change in Copenhagen last December was a bitter disappointment, but they did reaffirm the extent of the risk. Climate change and it’s threats is no scam or conspiracy; it’s real and is forcing a shift away from carbon fuels.
As climate change policies take hold and fossil fuel resources run out, countries are starting to plan for the shift to cleaner more sustainable sources of fuel and smarter energy management. Ireland is no exception, but we are not ambitious enough. We must quickly decide if we are to be a follower internationally or if we want to build a new “Green Ireland” brand for energy.
Ireland should aggressively try to lead the green energy revolution, which is already a multi billion euro global industry, to become a center for energy innovation and development. We have created approximately 15,000 green collar jobs in the last two years, despite recession and poor governance, mainly in the areas of energy management and conservation. Tens of thousands more new jobs will be created, if the State plans appropriately and businesses exploit the potential that exists.
While our dependence on imported fuels puts us in a vulnerable position as an oil consumer, we have a natural competitive advantage in the race to develop renewable sources for power generation. The wind that blows across our island provides the best conditions for wind farms in Europe. In countries with developed wind industries, like the Netherlands, windmills produce electricity about 30% of the time - that figure on the west coast of Ireland is closer to 40%. We have similar potential for wave energy and other renewable fuel sources, such as wood biomass.
The key to exploiting Ireland’s renewable energy generation potential is for the state to build, own and operate the most advanced electricity grid anywhere in the world. We should be disposing of state owned assets that are no longer of strategic importance to the state, in order to finance the massive investment program needed for new “Smartgrid” infrastructure. To make this happen we need a complete restructuring of the regulatory model that exists in the CER (Commission for Energy Regulation) and Semi-State companies like ESB, Bord Gais, Eirgrid and others to modernize Ireland’s electricity market.
Ireland’s new Smartgrid must extend to connect-up new wind farms, in the parts of Ireland with the best wind potential, regardless how isolated, off shore and on land.
If the state provides the grid the private sector has already shown the capacity to deliver the investment to construct generation capacity. At present, grid capacity and connection problems are paralyzing progress. In county Mayo for example, planning permission was granted for the largest wind farm in Europe four years ago and the developers are being told it might be another six to eight years before the grid will be able to facilitate the 400 megawatt project. 400 megawatts is enough electricity to power the city of Galway and more.
The new Smartgrid will have to roll out smart meters to every home and business in the country to empower the consumer to better manage power usage and make savings. It must be able to facilitate interconnection with the British electricity grid. It must be able to connect and support micro-generation projects, thousands of them in homes, on farms and small businesses across the country. It’s called decentralization of power generation and is already happening across the EU, in France, Germany, Italy and now in Britain. The idea is that a farmer, who invests in a micro wind turbine to generate power for the running of his farm, will also be able to sell excess power generated back onto the grid to finance his investment. The same principle can apply to power from solar panels, anaerobic digesters or micro combined heat and power (chp) plants.
The Smartgrid will need to facilitate large scale energy storage facilities, should developers make a credible case and the capital available for a project using new or existing technologies.
The Smartgrid will also need to facilitate the transformation of our transport industry; as electric cars replace petrol and diesel engines. By 2020, I predict that all new cars on sale will be driven on electric engines, charged by the Smartgrid at home or at any one of thousands of charging points around the country. It might sound far-fetched but it is the future and we need to be preparing for it. Electric cars will no longer be cartoon cars but family saloons and sports cars, comfortable and powerful. The battery technology is already there and car manufacturers are investing heavily in new technology and design.
The reason why this is all so exciting for Ireland and businesses here is that we have all the ingredients to make it happen and a country small enough to transform itself at a pace that can give genuine international leadership. Transforming our energy market will be playing to our strengths, it will reduce emissions, protect ourselves from the risks of imported oil and reshape our economy and how it’s powered, by harnessing our own natural resources. In doing so, we can create a new wave of research, entrepreneurship, foreign investment, environmental responsibility, jobs creation and a badly needed new reputation for our country. Ireland: the Green, Smart, Ambitious small nation leading the way towards a new clean energy future. I like the sound of that!
ends.