Ireland could be hit with fine of up to €26bn for failing to meet emissions targets, C&AG report warns

'If Ireland fails to meet its national emissions reduction targets, the consequences will be significant, affecting the State legally, financially, economically, environmentally, and politically,' report says

Agriculture was the highest emitter of carbon dioxide in 2023.

Ireland may be hit with fines of up to €26bn for failing to meet its climate targets, but which Government department would pay is unclear, as responsibility for climate targets fall between multiple ministers.

The finding is contained in the new Comptroller and Auditor General’s (C&AG) report.

Ireland is legally bound by Irish and EU legislation to reduce total greenhouse gas emissions by 51% by 2030 (relative to 2018 levels) and to be climate-neutral by 2050.

Current projections by the Environmental Protection Agency (EPA) indicate that, even with the implementation of planned additional measures, emissions are expected to exceed the national target in 2030.

“If Ireland fails to meet its national emissions reduction targets, the consequences will be significant, affecting the State legally, financially, economically, environmentally, and politically,” the C&AG report warned.

“Current projections from the EPA indicate that even if all the measures set out in the Climate Action Plan are implemented, Ireland’s emissions will still exceed the binding target.

By 2030, Ireland is likely to need to purchase substantial emissions allocations from other EU member states, which will result in significant financial liabilities and compliance-related costs to the exchequer.

Uncertainty surrounds the value of compliance costs Ireland could face, with estimates ranging from €3bn to €26bn. However, investment in initiatives that offer the highest potential for reducing emissions in future years could mitigate the liabilities.

Six Government departments are responsible for achieving national climate objectives.

These are: Climate, Energy and the Environment; Transport; Enterprise, Tourism and Employment; Agriculture, Food, and the Marine; Housing, Local Government and Heritage; Public Expenditure, Infrastructure, Public Service Reform and Digitalisation.

“It is, so far, unclear which Government department(s) will ultimately bear the costs of failing to deliver on agreed climate actions,” the report said.

The Climate Action Plan sets out a roadmap for achieving the national climate objective.

“However, the current approach to monitoring progress lacks clarity and does not effectively demonstrate year-on-year progress (or lack of progress) or ensure sustained focus on longer-term targets,” the C&AG found.

“There is a disconnect between monitoring the financial investment in climate favourable expenditure (through the green budgeting framework) and monitoring progress of the actions in the Climate Action Plan. This may hinder prioritisation of investments in those measures likely to deliver most in respect of Ireland’s climate objectives,” it said.

The EPA’s latest greenhouse gas emissions projections, for the period 2024-2055, indicates Ireland is significantly off track to meet its legally binding climate targets for 2030.

An overall reduction of 10.3% was achieved from 2018 to 2023.

However, significant further reductions are required if the national target is to be achieved by 2030.

Even with full implementation of all planned climate policies and measures, the EPA projects a maximum reduction of 23% by 2030 compared to 2018. This is a decrease from the 29% projected in the previous year, highlighting a widening gap between current efforts and the national target.

In 2023, Ireland emitted 58.8 million tonnes of carbon dioxide across 11 sectors, including land use.

Agriculture was the highest emitter, followed by transport. 

Additionally, the Government spent more than €118m net in acquiring almost 12 million carbon credits to meet anticipated obligations up to the end of 2022.

Buying carbon credits was part of its strategy to meet emissions targets under the previous international climate agreement, the Kyoto Protocol.

The Kyoto Protocol, adopted in 1997, set binding targets for industrialised states, including the EU member states, to reduce emissions over two commitment periods: 2008–2012 and 2013-2020.

The protocol allowed nations to buy carbon credits where they were unable to meet emissions targets.

But due to restrictions introduced under the 2009 EU Effort Sharing Decision, Ireland was not able to use the remaining 702,000 carbon credits in the fund.

The cost of acquiring the unused credits has been effectively written off.

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