THE Irish economy could be one of the worst affected by any sudden rise in global energy prices — with a new survey suggesting GDP could fall by as much as 7.5% on the back of a sudden price increase.
The fact that Ireland — as a small economy — is heavily reliant on export demand and highly dependent on imported fossil fuels means it would feel the effects of large international oil and gas price rises more than larger economies like the US, Britain and the wider eurozone.
European engineering giant, Siemens conducted the report into Ireland’s vulnerability to potential energy price shocks and has called on the Government to develop a high-level strategy covering the next 40 years, to benefit from the potential of renewable energy outlets. It is recommending greater use of electricity in the nation’s transport system and the positioning of Ireland as an attractive test-bed for sustainable pilot projects.
The company said the report was conducted taking into account plausible boundaries of future prices over the next 15 years.
“Ireland’s 80% dependency on imported oil and gas puts the economy at considerable risk. And yet, Ireland is surrounded by an abundance of renewable resources that could reduce our risk of exposure, create employment opportunities and reduce emissions,” according to Siemens chief executive, Dr Werner Kruckow.
“Irish waters have the biggest wave heights, greatest tidal flows and strongest winds in Europe — giving us the potential advantage over other European countries to generate and export energy across the continent,” he added.
Pointing to the heavy falls in international oil prices in 2008 as an example of how sudden energy prices can increase or decrease, Siemens said anything from rising demand from emerging economies and political/social conflict to natural disasters can affect change in price; but a diminishing supply pool from which to extract the resources at low cost should also be considered a risk.
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