Climate change in the 32nd Dáil

The 32nd Dáil has already thrown up some, eh, interesting views on climate change , which I previously responded to here. The new Dáil also sees the return of the Green Party, with two TDs elected.

With the formation of the new government on Friday we now have a Department for “Communications, Climate Change and Natural Resources“. Denis Naughten, independent TD for Roscommon-Galway, has been appointed as Minister.

On the one hand, having a government department with climate change in the title seems like progress. On the other hand, taking responsibility for climate change away from what used to be the department of the Environment — now “Housing, Planning and Local Government” — could be problematic. This new division of responsibility seems to me to reinforce the impression that the Government, and civil servants, view climate change (to the extent that they think about it at all) purely from a mitigation perspective — i.e. the challenge of reducing emissions and the potential costs associated with this, including costs of non-compliance with our existing commitments (see Steve’s recent post on risks highlighted in the Dept of Finance’s spring statement).

But there are also fiscal and economic risks for Ireland from the impacts of climate change. Our exposure to those risks will be determined in large part by policies related to planning and housing.

New Minister for housing, Simon Coveney was on the radio this morning [.mp3] talking about housing policy, and doing a fine job of saying all the right things, without really saying very much at all. It will be interesting to see how his plans to create the incentives for “as many houses as possible, to be built as quickly as possible” [paraphrasing] can be reconciled with the need to do this in a way that (a) helps to tackle emissions e.g. by encouraging more sustainable commuting patterns and moderating domestic energy demands, and (b) also limits future exposure to climate risks such as flooding.

I’m hoping Simon and Denis are on good terms.

Comments

comments

Author: Tom McDermott

I am a lecturer at the School of Economics, UCC, a Principal Investigator at the Environmental Research Institute, UCC and a Visiting Fellow at the Grantham Research Institute on Climate Change and the Environment at the London School of Economics. My research is at the intersection of environmental and development economics. I am co-editor with Sam Fankhauser of The Economics of Climate Resilient Development (Edward Elgar, 2016). I am also Principal Investigator for a project funded by the Environmental Protection Agency on the economic impacts of flooding in Ireland, and options for managing flood risk, including an emphasis on the role of insurance.

29 thoughts on “Climate change in the 32nd Dáil”

  1. “The crisis takes a much longer time coming than you think, and then it happens much faster than you would have thought.”

    flooding already cost something like 1% of GDP and is only going to get worse. Policy is incoherent
    I know from the Rhone that a lot of continental rivers run between levees. Could this be done in Ireland ?

    Cork will have to be abandoned at some stage. Corcaigh means marshy. It does what it says on the tin.

  2. Tom, if climate change has commenced; then that’s it for us modern humans and our fossil fuel driven economies. The process will likely exhibit, with time, a positive rate of geometric growth. Very nasty. We might be able to mitigate the rate somewhat, but that would axiomatically require significant reductions in our global use of coal and oil. Outcome? Permanent economic regresssions. I would not like to be the one to attempt to sell that scenario to politicians in the US, UK, EU and points eastwards. I believe they cut off the noses and ears of persons who bring such bad news.

    Notice that new discoveries of oil reserves are the lowest since 1957? And they were found in somewhat inaccessible spots. That means that 2026 might be an ‘interesting’ year for global crude oil productions. Reductions in the use of fossil fuels may not have to be voluntary after all. Nature (geology and geography) may impose them upon us. Interesting.

    Of course, if climate change has not yet commenced: party on!

  3. @ Brian Woods: You say: “Notice that new discoveries of oil reserves are the lowest since 1957? ” and go on to speculate about production in 2026.

    Have you not heard of the shale oil/gas fracking revolution? It is just as likely that we may see peak Demand rather than Supply of oil over the next 20 years or so. And if gas is likely to be a significant substitute for coal that is all to the good. If you want further enlightenment look at “Not so big Oil” in this week’s Economist.

    A rural TD like Mr Naughten might like to look at the Irish fetish with on-off rural housing and its effects on carbon emissions (like driving 5 miles when you desperately need a pint of milk).

    1. I would like to see a model of Irish emissions and where they come from, other than the bovine ones. Turbo consumption is more of a feature of urban areas AFAIK.

      Dublin is incredibly inefficient. Public transport is a joke. Still no rail connection to the airport. Even Sofia has that. La honte.
      http://www.sofiaairport.org/trains.shtml

      Everyone has a garden.
      http://www.rte.ie/tv/iwantagarden/

      The city area could easily support 4x the current population on current emissions…

  4. There’s a tough trilemma in here. How do you get homes that are: 1) high quality and durable with plenty of living space; 2) highly energy efficient, closing in on passive; 3) at a construction cost low enough to allow plenty to be built, whether by private market or public housing models? The low hanging fruit on this has already been plucked by current building regulations. How to tackle, or cut through, the trilemma should be at the centre of our debate on housing and sustainability, and it is not.

    Domestic energy consumption accounts for about a quarter of total energy consumption in Ireland. It is a really tough nut to crack because it is mostly about heat, and a large part of the heat performance of homes is locked in for at least several decades when the home is built (barring major retrofitting interventions whose cost often greatly exceeds the NPV of the reduction in energy consumption). By contrast, there is a reasonable prospect that ground transport in Ireland will be substantially decarbonised through electric vehicles within 20 years by a combination of wind and energy storage, making commuting patterns much less important to sustainability.

    1. ” … there is a reasonable prospect that ground transport in Ireland will be substantially decarbonised through electric vehicles within 20 years by a combination of wind and energy storage, making commuting patterns much less important to sustainability.”

      I would regard this as quite wistful thinking. Electric road (private passenger) vehicles – despite all the PR bullsh*t, are only about one third as effective as the crudest, petroleum internal combustion engined vehicle. Their range and carrying capacity are significantly lower than standard ICE vehicles. Its likely that many potential consumers of electric powered vehicles would be unable to afford the cost of a full battery replacement; which is woefully expensive. Electric powered trains and trams may have a future – need fixed track and cabling. Will never re-pay the construction and maintenance costs.

      Electricity is useless for heavy goods vehicles, mobile heavy construction rigs, ocean-going vessels and aircraft. These all must have liquid fuels as their primary source of motive power.

      Electricity is not a primary energy source – its generated from something, with something. There’s the gumption trap. The colossal costs of the build-outs of generation and transmission. A deflating economy will not be able to afford those costs. Re-usables are intermittent. Its the maintenance of a guaranteed base-load 24/365 that is critical. A reduced carbonized economy will mean that you may only have full countrywide electric power for 12/24, each day. That’s not funny.

      The Housing Trilemma; its impossible. You can have any two; but not three? But whose counting?

      1. BWS

        What about passiv houses?
        Most of the national housing stock is crap just like most national economic thinking

      2. The cost per kWh of batteries suitable for electric vehicles is falling rapidly, and the energy density is increasing. The chances are pretty good that for cars the economics will break parity with internal combustion engines within 10 years. Most existing electric cars are terrible, and sold on the basis of warm fuzzy feelings, but we are almost at the point where it is possible to make good electric cars – Tesla is almost there. The problem is with the cost of batteries, and that is being solved rapidly.

        For Ireland, there is no problem in principle with the supply of electricity to power them. We already have more wind power than we know what to do with, and space to fit a lot more capacity if there was only an economically useful market. The problem is with the energy storage required to solve wind intermittency, but there is a reasonable prospect that there will be a viable solution within the next 10 years. Even if there is not, powering a car using electricity from a combination of wind and gas turbines is cheaper than powering an equivalent car with petroleum.

        Once the economics reach parity with internal combustion engines, whenever that is, it is unlikely that many more cars driven by internal combustion engines will be bought in Ireland. It’s possible that new sales of internal combustion engine cars will be banned. Ten years after that, most of stock of old technology vehicles should be off the road, and the infrastructure for distribution of petrol and diesel should be dying off.

    2. btw, sorry for burdening this section with comments, but it’s a set of topics I find very interesting.

      There’s an issue just off to one side of it that I think is mentioning. It is that in wind energy, as in other types of investment, to put it as Heinlein did 50 years ago – TANSTAAFL – there ain’t no such thing as a free lunch. We are hearing a lot about needing to maintain investment confidence in wind, we are seeing advertising about the benefits of wind, and we are seeing opportunities to invest in wind being offered to the non-expert public with returns in excess of 10% being quoted. This comes as Ireland is hitting the point where there is a strong economic and technical case for cutting subsidies to wind power, just as a number of other European countries are doing with intermittent renewable sources of electricity. It’s not slam-dunk sure how the government and regulator will act on this. If they do act it may be after a significant delay, and the scope and nature of the action may change over time. However, there are at good grounds for thinking that projections of returns on future wind investments should include scenarios with sharply reduced feed-in-tariffs and penalties for feeding the grid at times of high supply (i.e. when the wind is blowing). The economics of wind energy depend on returns over an operating period of about 20-25 years. Any amateur planning to invest should become familiar with the term “stranded assets”.

      1. BCT

        Free lunches are always available to the well connected.
        Problem with your bond pricing? Ring up Janet and she’ll sort out QE for you.

  5. @Tom McDermott,

    Welcome and thank you for this post. It appears you are the first of the new panel of contributors.

    Unlike on occasion with individual “independent” ministers or ministers from small parties, the identity of ministers from the main governing party (Denis Naughten is as solid traditional FG stock as Simon Coverney) and the specific briefs they hold generally don’t matter very much. They just have to be bright enough to read what their officials prepare for them and to able to put up a credible “public front”. The allocation of responsibilities often revolves on political and personal relationships and issues, but it can reflect wider government concerns about current politcial troubles or possible trouble coming down the track. And it might take a while before the allocation of responsibilities between, in this case, the Dept. of Communications, Energy and Natural Resources and the Department of Environment, Communities and Local Government is sorted out.

    The allocation of responsibilities in this instance suggests that Minister Coveney is being given a clear brief to focus on housing, while Minister Naughten will have to deal with the political fallout of the unnecessarily costly legacies of former ministers Ryan and Gormley. I don’t expect much more than widespread high quality presentation of the usual BS seeking to conceal the usual fudge and protection of special interest groups.

    Minister Coveney has the additional pleasure of dealing with Irish Water and water charges. That’s what happens when you seek to advance yourself as the Crown Prince!

  6. Sure John. I’m referring to what we term ‘conventional’ oil reserves. A decade is the minimum time needed to bring a new reserve to production. Natural gas is not a (chemical energy) substitute for coal; its a complement. Fracked wells have very short half-lives – and are comissioned and run on credit. They barely (if at all) repay the capital development costs. Their product has to cost consumer in excess of $80 bbl. That might not be affordable if our economies stagnate. I’ll check out the Economist. Thanks.

    John – no need to go further than the Merrion or Stillorgan Roads. Peak traffic (in both directions) is regularly congested and spews out copious amounts of negative externalities – courtesy of the Lána Busanna and Cycle Paths which force two/three streams of vehicles into one. Traffic planners must be using some form of economic New Math. When your numerator is smaller than your demoninator – you get inverse quotients!

    And I’ll attempt to refrain from mentioning that two kilometer stretch from the Mount Merrion Avenue – Rock Road Junction to the Temple Hill – Monkstown Road junction and on to the Newtownpark Avenue junction. How many traffic signals? And have you experienced the ‘new’ Leopardstown Road – Brewery Road junction – that one that replaced the Magic Roundabout (that was controlled by the two sets of pedestrian signals)? Its a real revelation.

  7. Off topic but the other discussion is closed

    Uncategorised has 75 pages
    European economy has 4
    Political economy has 2

    There is no category for the Eurozone train crash

  8. @bct

    “There’s a tough trilemma in here. How do you get homes that are: 1) high quality and durable with plenty of living space; 2) highly energy efficient, closing in on passive; 3) at a construction cost low enough to allow plenty to be built, whether by private market or public housing models?”

    I think the big picture here is that so long as the central bank does not facilitate another real estate lending boom / bubble, then there is an inevitable squeeze.

    The political priority post 2008 was to do whatever it takes to prop up land prices because of the bank/state/NAMA nexus. The recent election has emphasised the fact that that bandwagon is stale. The new one, housing provision, is being boarded by legions of local and national politicians.

    There isn’t any particularly sensible reason for building land around outer Dublin to cost 150K per house. This is entirely discretionary, in as much as the system that allows this (zoning, no meaningful vacant site/zoned land tax).

    There is no reason (apart from what remains in NAMA and the Irish banks, and legacy politics) why this could not be squeezed down to, say twice the agricultural value – around 30K.

    Er, theoretically…

    1. @grumpy,
      I think that is desirable, and I hope to see it. However, I don’t think it resolves the trilemma by itself.

      1. @bct

        IMHO your trilemma needs tweaking:

        “3) at a construction cost low enough to allow plenty to be built”

        You focus on construction cost – which is usually regarded as kept high by materials costs, labour costs, local government levies, financing costs, government taxes etc, because they arise when building.

        But Land is also a significant cost, and it is an element that significantly distracts “builders” and “developers” from focussing on doing what it says on their respective tins, because they are forced to be players in the asset market that is land.

        If you alter “construction cost” to “land and building costs” then your trilemma could be addressed by a political choice to decrease the cost of building land.

        1. @grumpy, as I say, I don’t think that is a full solution. There have been credible claims that over much of the country the cost of construction to current building standards, inclusive of levies, exceeds the price at which homes can be sold, even excluding the cost of land. For these, apparently extensive, parts of the country, it is difficult to reconcile improving energy efficiency, further improving affordability, and maintaining liveability, no matter how far you cram down the price of development land.

          Raising energy efficiency without otherwise changing building standards would make this

          1. Yes, for parts of the country that’s right. I’m referring to the area around Dublin and a few other cities where most of the unmet demand for housing is.

    2. “There isn’t any particularly sensible reason for building land around outer Dublin to cost 150K per house”

      The Baileys and the other 5 or 6 families who hoard the land. But it’s political, same as ZIRP levels of rates. All about power.

      Dublin is a kip as well.

    3. 1. There is a challenge vis a vis the lending rules regarding building sustainable houses in that generally the sustainable measures increase the cost of the house but reduce the running cost of the houses – banks lend against cost of the house and not running cost of the house. In theory though if your energy bill is €100 less per month on account of your investment in sustainable features part of a new house then you should have €100 more a month to spend on a house per month – this would be 20k extra purchasing power based on a 25 year mortgage at 3.65%. I am unsure if in the loan underwriting that this is taken into consideration – particularly for 1,100 sq ft starter type houses where a lending formula is pretty well applied. Perhaps allowing a further €20K to be borrowed for a house above say a A3 BER rating could incentivise production of more sustainable homes?

      2. Impact of NAMA on land prices has been talked to death somewhat on the site but if you assume that sites were bought at 180k per unit (and a lot higher) near the peak with 60k equity (or none); equity gone and 50% haircut on the loan leaves a breakeven price of 60k per site for NAMA – NAMA now needs to consider the economic impact of the site disposal process and not only the financial return to NAMA if they are to break out of the frame of how to recover the remaining 60k and do good for the taxpayer. The social economic impact surely at this stage must justify reducing recovery on the sites to 30k in a targeted and measured way.

  9. As recently as 2009 the Environmental Protection Agency was predicting that a consequence of climate change for Ireland would ‘drier summers’!

    1. For me, the way that a large part of Irish public service decision-making connected to Irish climate change gave the impression of relying on a single climate model for a number of years did a lot to undermine its credibility. Credibility on fine grained climate change stuff like this comes from having a large number of models developed, or at least tailored, independently of each other, and producing generally consistent results.

  10. Excellent article by John Fitzgerald in Tuesday’s Irish Times.

    http://www.irishtimes.com/business/economy/rewriting-history-on-ireland-s-recent-crisis-1.2640960

    He really lays into the doom pornography industry.

    “But, at the time (2010-2013) any suggestion that Ireland had a bright economic future was greeted with disbelief. Today the problems with the housing shortage owe much to the excessive pessimism of 2010-2013”.

    This is similar to what I’ve posted here a million times. The doom in 2010-2013 was hugely overdone. The media, celebrity economists, and the vast majority of posters here, (with the exception of myself and a handful of others) greatly over-egged the recession pudding. In addition, they rewrote history to try and prove that the previous 20 years growth was an illusion. They’ve been proved hopelessly wrong. Why isn’t there any media follow-up as to why they got it so wrong? Why aren’t those economists and commentators who were predicting economic armageddon just a few years ago, and who were being reported in media all over the world, greatly damaging Ireland’d reputation in the process, why aren’t they now being interviewed by the same media as to why all their predictions proved to be dud? The main proponent of ‘we are are totally doomed’ in that period has gone totally silent and hasn’t been heard of for 5 years. I would argue that the extreme pessimism of that period was not based on intelligent analysis of the economic data, but on the fanatical loathing that many of the Dublin 4 elite have always had for traditional Ireland, in particular FF and the Catholic Church. They simply couldn’t believe that a country in which these two bodies played a prominent role could possibly achieve economic success and was inevitably headed for disaster.

    Although the broad economy has recovered and is now well above its pre-recession level, one sector is still far below its pre-recession level. I refer to house-building. This should never have been allowed to fall as far as it did. But, remember, at the time the doom economists (to whom John Fitzgerald was referring) were running around falsely claiming that the Celtic Tiger was based entirely on house-building, that Ireland had 350k empty new houses (note: actual figure was 30k), and that, to quote one prominent economist from that period, ‘Ireland would need to demolish more houses than it builds in the next decade’. The homeless are now paying the price for this nonsense.

    1. Another sector that is “far below its pre-recession level”: every element of the public sector. But only the relatively less-well-off rely on public service provision so who cares? It won’t affect little Fiachra…

      Meanwhile, the 1% party like it’s 2005. Check the 161 luxury cars tooling around Dublin these days. The shame is gone.

      Sometimes I wish for a Baader-Meinhof style movement to arise just for a month or two. Time enough to put some manners on the rich in this country.

      1. Ernie

        the parasite rich of neoliberalism are in for a shock. The system has reached a dead end. What little 1% growth there is comes by pauperising people. Sign of a dead economic system.
        SnP 500 revenues are flat going back 5 years cos the peasants do not have the readies to buy more expensive products. Hedge funds are unable to generate values.
        Neoliberalism is a suicide machine. Seeds of its own destruction.
        And no financial asset has an intrinsic value anyway.

        Low interest rates enrich the rich but they are political. And the politics are changing especially with the GOP melting down.
        4% rates would be just as good as ZIRP.

        Soi disant experts are clueless. Models are useless

        http://www.ft.com/cms/s/0/92ccee5e-0345-11e6-af1d-c47326021344.html

        The Atlanta Fed’s GDPNow model estimates first-quarter GDP growth at just 0.3 per cent. This extends the long-running conundrum of punchy jobs growth combined with damp GDP data, Mr Bullard said, adding his bank’s model had been repeatedly indicating that 3 per cent growth was “just around the corner” and this was not happening.

        The only question is whether the denouement is peaceful or not.

    2. Well said, John
      Let’s hope for more maturity and less adolescent grandstanding from contributors going forward.

  11. On carbon emissions it seems that Ireland will inevitably face some heavy EU fines as a result of exceeding targets. Changes to housing and transport can help but absent a substantial reduction in the cattle herd it is very likely that agriculture will continue to be a key contributor to rising emissions, particularly as food production is seen as one of the main drivers of exports and economic growth in the Programme for Government. I suspect the Government accepts these fines as inevitable so why not make the case up front, if they think it is a price worth paying to support rural Ireland?

Comments are closed.