Carbon prices: a key driver of emissions reduction?

Minister for Communications, Climate Action and Environment Richard Bruton was reported in the Irish Times on 29 November 2018 as saying that Ireland is 95% off meeting its binding EU Greenhouse gas targets.

Ireland’s draft National Energy and Climate Plan 2021-2030 (NECP) is due to be delivered to the European Commission by 31 December 2018, and the full document will be made publicly available in early 2019.

One of the key policy levers to achieve this is via carbon pricing. Across the economy, carbon pricing is split between those activities that fall within the purview of the EU Emissions Trading Scheme (EU ETS). This includes power generation and some industrial activity, and non-ETS activity (largely heating and transport) that is subject to the Carbon Tax. The ETS sector covers around 30% of Ireland’s emissions.

ETS scheme participants must submit European Union Allowances (EUAs) for every tonne of carbon dioxide equivalent (CO2eq) they emit. In response to an oversupply of allowances, 900mn EUAs were withheld in a bid to increase prices.

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