An Bord Snip & Green/Sustainable Issues

Heroditas

From page 35:

Programme reforms
The Group recommends that the multiplicity of energy efficiency schemes funded by Sustainable Energy Ireland (SEI) and the funding of energy awareness programmes should be rationalised, as the benefits are already well appreciated by consumers and energy prices are a stronger determinant of consumer behaviour. Such programmes should be promoted routinely by the energy companies, under regulatory requirements if necessary.
Energy efficiency schemes should only be funded in the future if the cost of achieving the reduction in carbon output secured by them is equal to or less than the market price for carbon credits.
Furthermore, the introduction of a carbon tax, in due course, should obviate in economic terms the need for any such schemes.
Scarce resources such as radio magnetic spectrum should be allocated through auctions to maximise the return to the State.

Programme C - Energy
C.1 Terminate energy awareness programmes run by D/CE&NR or SEI €1.0m
C.2 Rationalise multiplicity of energy efficiency schemes run by SEI €40.0m (capital)
C.3 Transfer energy research funding to new single funding stream for all research €3.5m (capital)
C.4 Review the operations of Bord na Móna to achieve optimal value -
Programme C savings (incl. €43.5m capital) €44.5m

Well that's a massive kick in the teeth to SEI's €60m annual budget! €4m goes on wages so that leaves them with next to nothing.
Bye bye home reheat scheme, future SEEEP funding and any other schemes such as CHP.

This page will no longer exist if those cuts are proceeded with:

http://www.sei.ie/grants

Cervantes

From page 218:

C.3. Discontinue the Green Schools Initiative
The Group is of the view that community-based initiatives such as the Green Schools Initiative (GSI), which aims to facilitate children walking to and from school, are best handled at local level and that such a level of direct Exchequer financial support is unnecessary. There is likely to be a
significant overlap in State funding between this and closely related initiatives in other areas (Education, Health, Local Authorities and voluntary schemes).
The State does not need a special Programme of €10m over five years to convince school children and their parents to walk to and from school rather than drive. There must be alternative, cheaper ways to achieve the outcome sought from this initiative, which ultimately relies on community
spirit and organisation.

The seem to have a poor grasp on the concept of the Green Schools programme - it's reduced to "facilitate children walking to and from school", ignoring such areas as water conservation, energy conservation and waste/litter reduction.

These aspects have already delivered savings to the exchequer in the form of reduced water, electricity and waste bills - have they worked out the cost effectiveness of cutting the programme?

bigtam

Cervantes wrote: »

These aspects have already delivered savings to the exchequer in the form of reduced water, electricity and waste bills - have they worked out the cost effectiveness of cutting the programme?

A fundamental flaw of the Bord Snip Nua Report is that it proposes budget cuts in a vacuum. A proper analysis of public policy and proposals for reform would be subjected to a number of tests before publication. The cost effectiveness and displacement effects of proposed measures and the impact of measures on legal obligations would be some of the many tests that An Bord Snip Nua should have carried out. Instead they have compiled a shopping list based on who knows what. Perhaps it would be helpful if they released the working papers which informed their decision making.

An interesting dilemma for Greens is the proposal to cut or reduce a number of programmes designed to reduce CO2 emissions and instead purchase more carbon credits. Ignoring for a moment the economic sustainability of this argument, An Bord Snip Nua's proposed reliance on carbon trading demonstrates an ignorance of the basic problems underpinning carbon trading (see http://www.guardian.co.uk/commentisfree/2009/jul/13/climate-change-emissions-uk et al for a fuller discussion of this subject). But just to take the example of cutting insulation schemes. This will increase CO2 emissions and result in a loss of jobs. More carbon credits.More Social Welfare. Of course the proposal to make savings in carbon credits by cutting the Suckler Cow Scheme could be intended to offset increases in CO2 emissions elsewhere.:rolleyes:

Listening to the radio this morning it is clear that the politicians, as usual,are going to pick and choose what they like. Armed with their shopping list the horse trading will begin. At a time when Ireland needs focus and leadership we are once more destined for a dogs dinner. Cheers lads.

quentingargan

Cutting grant payments of €40m won't save €40m. On a typical 200L solar installation costing €4,500, there is a grant of about €1,000. However, VAT comes to about €535 and the labour component of roughly €1,200 will have a fair dose of income tax and PRSI coming out of it.

Put that plumber on the dole (ahem, even if you reduce the dole) and your €1,000 saving becomes a cost instead.

Would that installation have happened without the grant? Maybe half of all installations would happen with or without a grant (that's a very optimistic figure). So the saving might be up to half of your €40m.

Cut the grant by 25%, and you might get almost as many solar installations going on, keep the VAT, PAYE and PRSI rolling in, and save €10m.

Of course everyone will be fighting their corner on the Bord Snip report. But I reckon that for the most part, the SEI grants are revenue neutral. I hope the actual changes introduced are more nuanced than the report was...:eek:

SolarHome

While I don’t always agree with Quentin, I think his analysis of the fall out from removing grant schemes for renewable energies is correct. The most progressive countries in the areas of renewable energies still have grant initiative programs (Germany/Austria). I personally feel that removal of the grant will cause a short-term collapse of the industry we a gradual return of a much reduced number of customers customers to the market next spring/summer. If the grants were to be reassessed an approach that would be budget natural to the government would be a reduced grant (€100/metre) and VAT exemption on systems fitted by trained tax compliant installers. When you take the tax/PRSI returns from the employees involved within the industry and of set the social welfare payment to unemployed installers the systems would be self-financing, not to mention the 0.6 tonnes of CO2 emissions saved/ year from each system installed.

rayh

Can I just put another dimension to this thread. The Greener Homes program has delivered 26,352 Applications of which 54% were Solar and we have nearly 1.5 Millon households in Ireland or less than 1%.

How can the withdrawl of this programme affect an industry or more importantly, how did we justify it in the first place as a commintment of government policy to reduce our CO2 emissions?

bigtam

Lets get the math right first. There are estimated to be 1,462,296 households in the country (Source: CSO). Therefore 1.8% of total households have received grants under the Greener Homes Scheme. Unless of course you are only referring to the solar installations?

Not much difference between 1 and 2% ? You have to first take into account the wider objectives of the scheme.

From the SEI website:
"What is the objective of the grant scheme?

• To increase the number of households in Ireland that use renewable energy;
• To guide consumers towards discerning choices of Renewable Energy Heating;
• To ensure that the market for the products, services and fuels continues to develop in a robust manner;
• To decrease our reliance on imports of fossil fuels;
• To benefit the environment by reducing Carbon Dioxide emissions."

So:

• Almost 2% of households have switched to using renewable energy;
• Those households and their neighbours, friends and families have become more aware of the possibilities of renewable energy in the home;
• A variety of renewable energy options have become commonly available in Ireland whereas five to ten years ago they were almost unheard of;
• Contractors are developing an awareness of renewable technologies and developing the skills to install them;
• The reliance on fossil fuels for almost 2% of all Irish households has decreased;
• There has been a consequent reduction in CO2 emissions.

This also has to be put into the context of wider measures to reduce CO2 emissions from domestic housing e.g. the home energy savings scheme and improved building regulations. The Greener Homes Scheme has contributed to the development of an industry in domestic renewable energy as a policy measure to reduce CO2 emissions. That is a valid role for government.
Of course it may be argued that the money would be better spent on further insulation projects as this would be a more cost effective option to acheiving CO2 reductions. I would argue that, in the short term, both options remain a priority if we are to reduce our future dependance on carbon trading. Over €73m has left the country in the last 18 months to offset our carbon emissions. That money could have been better spent in providing jobs, reducing the cost of living for people in Ireland and reducing our CO2 emissions.

As other posters have noted in this thread the grant schemes are at worst revenue neutral. If they contribute to reducing our carbon credit bill they are providing a saving for the Treasury that is sustainable over many years.

An Bord Snip Nua proposes that "energy efficiency schemes should only be funded in the future if the cost of achieving the reduction in carbon output is equal to or less than the market price for carbon credits. Furthermore, the introduction of a carbon tax, in due course, should obviate in economic terms the need for any such schemes." This demonstrates, once again, a narrow view of the objectives of renewable energy policy, an ignorance of the ineffectiveness of carbon trading schemes in combating climate change and finally a fundamental misunderstanding of the respective and complementary roles of budgetary support and fiscal measures in the evolution of new public policy.

As to the proposal to "transfer responsibility for appropriate schemes, such [as] the Home Energy Savings Scheme and the Warmer Homes Scheme, to the energy companies..." I suggest Colm McCarthy asks turkeys to vote for christmas.

maniac101

Energy efficiency schemes should only be funded in the future if the cost of achieving the reduction in carbon output secured by them is equal to or less than the market price for carbon credits.

Looks like a false economy to me. The idea that you can simply switch from purchasing CO2 credits to energy efficiency at the drop of a hat when carbon prices become less favourable is facile. There's also no indication in the report that the author has taken into account the longer term costs of trying to catch up in energy efficiency terms when carbon prices start to cripple us. I'm all for looking for cost savings, but I wonder if these projected savings are fully thought out.

Furthermore, the introduction of a carbon tax, in due course, should obviate in economic terms the need for any such schemes.

The approach to carbon taxation that's winning favour in Ireland at the moment is to set the tax rate annually at budget time based on the price of carbon futures at that time. Given the volatility of futures prices in the last few years, the McCarthy proposal would mean having to adopt and then abandon energy efficiency schemes from year to year depending on market movements. This would be counter-productive, and a waste of public money.

rayh wrote: »

Can I just put another dimension to this thread. The Greener Homes program has delivered 26,352 Applications of which 54% were Solar and we have nearly 1.5 Millon households in Ireland or less than 1%.

How can the withdrawl of this programme affect an industry or more importantly, how did we justify it in the first place as a commintment of government policy to reduce our CO2 emissions?

According to the DCENR, the Greener Homes saves 64,000 tonnes of CO2 per annum. Taking a current CO2 price of say €15 per tonne, and based on McCarthy's approach, if the scheme costs more than €960k per year it would be axed. I've no idea how much the scheme costs, but it's probable that in the original justification a much higher carbon price was assumed.

maniac101

bigtam wrote: »

Of course it may be argued that the money would be better spent on further insulation projects as this would be a more cost effective option to acheiving CO2 reductions. I would argue that, in the short term, both options remain a priority if we are to reduce our future dependance on carbon trading. Over €73m has left the country in the last 18 months to offset our carbon emissions. That money could have been better spent in providing jobs, reducing the cost of living for people in Ireland and reducing our CO2 emissions.

While I'm in agreement with you, I think it would be good to evaluate all of these schemes in terms of 'cost of scheme per tonne of CO2 saved'. This would help prioritise the most effective ones in the event that some needed to be axed in the short term. I suspect that Greener Homes would not compare favourably to the Home Energy Saving Scheme, for instance, which I think was what rayh was getting at.

bigtam

The issue here is programme thinking versus strategic policy thinking. An Bord Snip Nua fell into the same trap.

Climate Change Policy requires a range of different actions to ensure that we achieve long term and sustainable cuts in CO2 emissions during the transition to a low carbon economy.

Some actions adapt current structures, for example insulating your home, and are relatively swiftly implemented and provide effective initial reductions in CO2 emissions which can be sustained in the medium and long term through repair and replacement programmes.

Other actions are about changing aspects of your home eg. the Greener Homes Scheme. They have longer lead times because people replace their heating systems at infrequent intervals and markets have to be influenced to ensure that renewable technologies become available and replace carbon based technologies.

In the even longer term the impact of new building regulations should ensure that new houses are built and equipped to far higher standards than retro-fitting can ever achieve and retro fit schemes will eventually become redundant.

Within this broader context you cannot ask which programme is most effective in terms of the cost of the scheme per tonne of CO2 saved now. You have to ask which is most effective in terms of cost of scheme between now and 2020 (and beyond) and how the scheme contributes to CO2 savings now, next year, the year after and so on until the middle of the century. You must also take into account the lead time for initiatives and understand that expenditure on programmes will be uneven at different stages.

Cutting or limiting a programme now leads to greater expense in the future. It has already been pointed out in this thread that at present the Greener Homes Scheme is at worst revenue neutral whereas cutting the programme will lead to the expense of carbon credits somewhere down the line.

The problem with the McCarthy Report is that it doesn't address any of the issues that are being discussed in this thread but leaves the threat of random cuts hovering over a swathe of policy areas.