OECD Environmental Performance Reviews: Ireland 2021

Executive summary

Additional effort is required to pursue the Sustainable Development Goals related to climate, energy, water and biodiversity

Over the last decade, Ireland’s environmental outcomes broadly followed the economic cycle. Major environmental pressures, such as emissions of greenhouse gases (GHGs) and air pollutants, nitrogen balance, waste generation and material consumption declined during the 2007-12 recession. Significant underinvestment in the wake of the recession affected the quality of infrastructure and slowed down environmental progress. Environmental pressures rose with the fast economic growth of 2014-19. They are likely to intensify with population growth and increasing urban sprawl, road traffic and livestock. The positive environmental effects of the COVID-19 crisis are expected to be temporary.

Ireland needs to follow through on plans to meet its ambitious climate goals

The 2020 target for emissions outside the European carbon market appears out of reach, despite the impact of the COVID-19 crisis. GHG emissions rose by 3% in 2014-19. More determined action is needed to tackle emissions from buildings, transport and agriculture (especially from ruminant livestock). Ireland committed to phase out coal and peat electricity generation in the 2020s. The share of renewables in the energy mix – especially wind power – has more than doubled since 2010. However, fossil fuels dominate, with coal, peat and oil providing about half of home heating. Ireland needs to phase out residential fossil fuel boilers more rapidly, while considering fuel-poverty risks. It should also focus support for energy efficiency on deep building renovations.

The 2019 Climate Action Plan takes a major step towards bringing emissions outside the European cap‑and-trade system in line with the 2030 target of -30% (compared to 2005). It would also put Ireland on the path to the net-zero emission goal by 2050. The plan’s implementation requires considerable investment. Given public finance constraints, engaging the private sector is crucial to direct investment towards renewables, home retrofitting and electric vehicles (EVs), among others.

Ireland needs to maintain commitment towards a “just transition” to a carbon-neutral economy. The negative net impact on employment is expected to be modest but concentrated in some areas. The government appointed a Just Transition Commissioner and launched a dedicated fund to address the short-term job losses in the Midlands associated with the peat phase-out.

Ireland needs to consolidate the good outcomes of air and waste management

Emissions of most air pollutants have declined since 2010 and air quality is generally good. However, ammonia from agriculture has continued rising and further reducing nitrogen oxides (NO_x) emissions from transport is challenging. Localised air pollution is mostly associated to urban road transport and solid fuel burning for home heating. The ban on “smoky fuels” in selected locations has helped reduce emissions of fine particulate matter, and should be eventually extended to the whole country.

The progressive increase of the landfill tax has contributed to largely diverting waste from landfills, but municipal waste recycling has stagnated. A large share of recyclable and reusable materials is incinerated or exported. Much waste is not properly sorted. Not all service providers charge separate fees for recyclable or food waste. The Waste Action Plan for a Circular Economy 2020-25 includes a wide range of actions to prevent waste and achieve the post-2020 recycling targets.

Inadequate water infrastructure and farming exert high pressure on water quality

Measures to address diffuse water pollution from nutrient losses are urgently needed. Ireland provides financial and technical support to improve farming practices, but needs to shift towards payments based on measurable environmental improvements. Some agricultural inputs benefit from favourable tax treatment. Removing these exemptions would contribute to a more efficient use of resources, improving water quality and reducing GHG and ammonia emissions.

Investment in water infrastructure increased considerably, but Ireland still suffers from high water losses, hot spots of low drinking water quality and inadequate wastewater treatment. Ireland stands out in the OECD in not charging households for water services. Only households that use water above a certain threshold will have to pay an excess use charge from 2022. Hence, the state budget covers the vast majority of water sector financing needs. This model may not be able to keep up with the scale of required investment.

More consistent action is needed to halt biodiversity loss

Ireland has strengthened its biodiversity policy framework, but most habitats remain in unfavourable condition mainly due to pressures from agriculture, resource extraction, and housing and infrastructure development. The national peatland programme, which has helped restore some bog habitats, could be accelerated. Most funding for biodiversity conservation is channelled through agri-environmental payments, but their effectiveness is uncertain. Site-specific conservation objectives and measures are lacking for many sites in the terrestrial Natura 2000 network, and the marine Natura 2000 network is incomplete. In a welcome move, the government pledged to protect 30% of Ireland’s marine waters by 2030, compared to the current 2%, as well as to complete a national marine planning framework.

Environmental governance is deliberative, participative and transparent, but compliance assurance needs to be strengthened further

Ireland implements good international practices in many aspects of environmental governance. National and local environmental institutions collaborate well horizontally and vertically. Ex ante and ex post evaluations support policy making in an effective manner. However, Ireland needs to consolidate regulations, especially in the water domain, in the wake of a disorderly transposition of EU directives. Access to environmental information and justice is widely guaranteed. Public participation is a central element of policy, licensing and planning decisions. Environmental licensing has become more efficient, but extending general binding rules would help reduce the administrative burden on low-impact installations.

Enforcement and compliance promotion are well co‑ordinated, but non-compliance levels are relatively high. Inspections are largely based on systematic risk assessment of regulated activities. In a rare practice in the OECD, enforcement fees recover most inspection and enforcement costs. Enforcement mostly relies on criminal law, imposing a substantial burden on the regulator. Criminal monetary penalties are capped at relatively low levels. Their deterrent effect should be increased by linking them to the economic benefit of non-compliance. Ireland should also introduce variable administrative fines to decriminalise less serious environmental offences.

The response to the COVID-19 crisis should help make the economy greener and more inclusive

Swift action is needed to steer the recovery towards the green transformation and avoid a rebound of environmental pressures. As part of its response to the crisis, the government provided sizeable funding to accelerate investment in sustainable transport, energy efficiency, water infrastructure and peatland rehabilitation in 2020-21. Ireland stepped up public investment but needs to further mobilise private finance. The National Development Plan (NDP) 2018-27 allocates around EUR 30 billion (more than a quarter of its outlays) to the climate and energy transition. The NDP in-depth review, to be completed in 2021, provides an opportunity to further align investment priorities with the Sustainable Development Goals.

There is scope to foster eco-innovation and expand green markets. Ireland has a sound innovation system and highly educated human resources. However, public spending on environment- and climate-related research and development is among the lowest in the OECD. It should be increased and better support small and medium-sized enterprises. Ireland has prioritised research on renewables and energy efficiency. It has specialised in some green technologies, but the number of environment-related patents is relatively small.

Ireland should continue greening the tax and subsidy system

A credible trajectory of carbon prices would encourage low-carbon consumption, investment and innovation. In a welcome move, the government committed to continue increasing the carbon tax to reach EUR 100 per tonne of carbon dioxide in 2030, from EUR 33.50 in 2021. Part of the carbon tax receipts will be used to prevent fuel poverty; ensure a just transition of displaced workers; and finance climate-related investment. To maintain a consistent price signal, Ireland should gradually remove remaining tax exemptions and rebates that encourage wasteful fuel use in agriculture, fishery, heating and transport. Some support to coal and peat has already been phased out.

Mobility patterns and trends are a source of rising environmental pressures

Ireland’s dispersed settlement pattern and low population density imply that road transport is by far the dominant transport mode. Road transport is a major and increasing source of GHG emissions. The progressive shift to diesel and second-hand vehicles raises concerns over urban air pollution. Transport activity sharply declined in 2020 due to measures to contain the pandemic. However, medium- and long-term effects of the COVID‑19 crisis on mobility patterns and environmental impacts are unclear.

Ireland has taken positive steps to reduce environmental damage from mobility

Ireland has implemented a CO₂- and NO_X-based vehicle taxation system and provided generous grants for the purchase of EVs. The government committed to higher investment in rail, public transport and active mobility and to two-to-one spending on public transport over roads, as well as to reallocate road space to more sustainable modes. Co‑ordination of land-use and transport planning has improved to promote compact growth. However, Ireland should better enforce planning regulations to ensure that all developments promote settlements with easy access to transport links and include a network of safe walking and cycling routes.

Better incentives are needed to manage travel demand

Reducing reliance on private vehicles and providing credible alternatives remains a challenge. Congestion and its costs have grown and are expected to increase further, especially in the Greater Dublin Area. Except for the Dublin Tunnel, Ireland does not use road use charges to manage travel demand. Hidden car use subsidies, such as free parking at a workplace, provide implicit incentives to commute by car. Ireland should consider congestion charges alongside investment and policies to enhance travel conditions for pedestrians, cyclists and public transport users. Revenue from charges could fund such investment and provide income support to vulnerable households.

The cost-effectiveness of EV promotion could be enhanced

Ireland set a target of almost 1 million EVs by 2030 as the main pillar of its strategy to decarbonise transport. Generous subsidies have supported sales of EVs, although their share in the fleet remains negligible. Ireland should complement its costly EV subsidies with travel demand management – including road pricing – higher taxation of conventional vehicles and a more extensive charging network. Focusing transport taxation on road use will better address environmental and congestion costs, as well as help offset declining revenue from fuel taxes due to the shift to EVs over the medium term.

The low-carbon transition of the freight sector needs a coherent strategy

In Ireland, the majority of goods are moved by road, as the capacity and usage of rail for freight transport are limited. The government has been promoting the use of alternative fuels for trucks, with a focus on natural gas. Potential remains to integrate road freight, rail and shipping and rebalance economic incentives in favour of rail freight. Additional measures, such as standardisation and data sharing, could improve logistics efficiency and help reduce GHG emissions. Ireland should remove the cap on diesel prices for road hauliers, which limits their incentives to shift to more fuel-efficient vehicles, driving habits and logistics systems.