Uncategorized – Page 395 – The Irish Economy

We do microeconomics too! From the current Farmers Journal, and apologies for the length:

Small countries can do little unilaterally to combat climate change. The planet has just one atmosphere, and every tonne of carbon dioxide, or of the other greenhouse gases, released into the atmosphere has an identical impact. It does not matter where in the world each tonne is emitted. For every tonne emitted in Ireland, about 500 tonnes are emitted somewhere else. If Ireland somehow managed to cut emissions to zero, the fate of the earth’s climate would barely be affected. The problem is global of its very nature and requires global solutions. Every country needs to accept its international obligations and indeed to encourage international agreement on faster action. But solo-runs by individual small countries aiming for very rapid emission reductions make no sense, achieve nothing environmentally but could impose serious economic costs.

Ireland has been pursuing very ambitious targets for emission reduction going beyond our international obligations, despite a sharp reduction in the measured output of greenhouse gases in 2009 consequent on the economic downturn. The 2010 figures are not yet available but chances are that emissions fell again and could remain flat until the economy begins to recover. Under current policy Ireland has been aiming for a major switch to wind-powered electricity, more bio-fuel in transport, electric cars and a long list of other emission-reducing initiatives. All of them will cost money and the overall policy pre-dates the onset of the Irish economic collapse. It is not surprising that the new government is being advised from several quarters to re-visit our emission-reduction targets, specifically to take the downturn into account and to see if excessive costs can be avoided.

A report earlier this year from the Irish Academy of Engineering argued that electricity generating capacity is no longer under pressure: reduced demand is being met comfortably given the availability of several new gas-fired plants and there is less urgency about building extra generation, at least for the next five or ten years. The report also questioned the haste in expanding the transmission system. More recently, the Economic and Social Research Institute has argued against subsidies for offshore wind projects and for reduced wind subsidies onshore. Finally the review group on State assets, as well as proposing structural changes to the electricity industry and partial privatisation, also warned against too rapid a rush into wind generation.