Marie Donnelly, Chair of the Climate Change Advisory Council, discusses her organisation’s role in helping Ireland achieve its ambitious climate change targets – and how Chartered Accountants, and we as individuals, can support that work – with the Institute’s Public Policy Leader, Cróna Clohisey FCA.
Cróna Clohisey: First, as Chair of the Climate Change Advisory Council, could you explain your organisation’s purpose, remit, and ambitions?
Marie Donnelly: The Climate Change Advisory Council was established by the Climate Action and Low Carbon Development Act in 2015. We are an independent advisory body, and our role is to assess and advise on how Ireland is making the transition to a low-carbon, climate-resilient and environmentally sustainable economy by 2050. It is probably relevant to point out that in July of this year, there was an amendment to that Act called the Climate Bill Amendment Act and it has had a material impact on the Council, both in terms of its operations and structures. For example, the Council is now mandated to bring forward carbon budgets for the five-year periods 2021–2025, 2026–2030 and a provisional one then from 2031–2035. These budgets set out the maximum amount of greenhouse gas emissions that can be emitted by Ireland in the five-year period. The budgets are all-economy budgets and once the Government receives them and hopefully accepts the budget from us, the Government then allocates the budget across each of the sectors with ministerial responsibility for keeping their sector within the budget. That’s the most immediate and visible action emanating from the Act.
Each year, the Council also conducts an annual review. The annual review heretofore was a catch-up on a range of things. The Act is now quite specific in that the Council must review each sector, identify the emissions coming from each sector, and identify the policies and actions that are working or, as the case may be, not working. It’s a sectoral review, and much more detailed than has been the case up to now. The new form of review will begin in October 2022.
In principle, the cycle is that the carbon budget will be published, the Government will allocate a budget to each of the sectors, and Government will then publish a Climate Action Plan. This plan has policies, practices, and initiatives by sector designed to reduce emissions and stay within the carbon budget. We then comment on each sector’s emissions and the following year, the Climate Action Plan will be adjusted because some things will have been done, or more needs to be done. We are into a rolling cycle of activity thereafter.
It is often said that time is running out in our fight against climate change. For context, can you explain where the world is currently in terms of that fight, and what might happen in the decades ahead if the appropriate corrective action is not achieved?
I think it is clear to everybody that climate change is already happening, even here in Ireland. If you look at the IPCC (Intergovernmental Panel on Climate Change) report that was published this summer, it was very well presented in that they had maps so you could pick up your own area and learn what is likely to happen. It is probably fair to say that the implications of climate change for more southerly countries include extensive droughts with a shortage of water, impacting on food production and, indeed, the capacity to live in some of those spaces. Further north, you could have greater cold measures with higher rainfall, snow and ice. The island of Ireland is in the middle. We are a temperate climate so for us, we are looking at warmer and possibly drier summers and somewhat colder and probably wetter winters. The impact on Ireland is likely to come from a number of things, though.
First, we are likely to have more storms and they are likely to be more intense. I don’t think there was a hurricane in Ireland before Ophelia, so we’ve had our first hurricane and we have seen some horrendous storms. The number of named storms we have is increasing every year. Second, and we can see this for ourselves, is rainfall that can be almost tropical in nature. This is leading to floods. Third, the sea is warming and sea levels are rising at about 1mm per year. We did a coastal workshop recently and the implications for coastal cities like Cork, Dublin, Galway and Limerick are really quite significant over the next 30-50 years. We may need to look at coastal defences for these cities because of sea rise.
There are implications, even in a country like Ireland. We are a small country and a temperate climate, but even in Ireland you can see the implications coming down the track so action clearly is necessary. Now, people have argued that Ireland is so small, our efforts don’t really matter – but that’s not correct. We need everyone to put their shoulder to the wheel or we won’t succeed, so there isn’t a free pass for anybody. It doesn’t matter whether you are big or small, rich or poor, we all have to do something in this space. That’s the urgency for us – to do something, and to get on with it.
The Paris Agreement was a time of hope, but events have arguably diminished that optimism with some extreme weather events this year alone – not to mention that climate change and its impacts are reportedly accelerating. In that context, what does the COP26 event in November need to achieve?
Sometimes words are very important, so I think there must be a declaration of ambition and a commitment to that ambition from each of the countries. Ireland has declared its ambition of a 51% reduction by 2030 and we need to put it into action. We have seen numbers come from other countries – the US, Canada and the EU member states – but what we are really looking for is the other big countries to make that commitment, and first among them would be China.
We then need an acknowledgement from fossil fuel-sourcing countries such as Russia, Saudi Arabia and Australia, for example, to make the kind of commitments that are necessary – to at least make the pledges. Then, the second stage must be to put them into practice.
In that challenging context, is net-zero genuinely achievable by 2050?
Yes, and I have no doubt that it is achievable. I would admit, however, that I could not tell you today how we will achieve it but I am absolutely convinced that solutions will be developed in the coming years that haven’t even been thought about today. Technological evolution and the capacity to innovate will be brought to bear in this space, but it is a black box for the moment. Nonetheless, for now we must use the technologies that are available, and intensify our efforts.
There are many levels of responsibility when it comes to fighting climate change – political, corporate, societal, individual. In your view, what is the route to sustainable life in the medium-term and who bears the brunt of the responsibility for bringing about change?
Everybody has a role, but there are distinct responsibilities for various groups. Certainly, the Government has a role. It has to set the ambition, which indeed it has, but it must follow-up that ambition with the economic environment, the behavioural environment, that allows for success. Part of it will be ‘command and control’, such as the standards in our building regulations, part of it will be through a carbon tax, part of it will be through grants and incentives, and part of it will be through ensuring that the policy environment allows both businesses and individuals to make the right choices. So I do think that Government has a really important role to play.
But, of course, it won’t be able to deliver on this itself. I also believe that industry in its widest sense has a huge role to play. It needs to be a leader in itself and many companies are making announcements regarding net-zero or carbon reductions, for example. Some of these announcements could be interpreted as marketing activities because they say that they will reduce their carbon footprint by a certain amount, but they are going to buy carbon credits to achieve that. It’s good, and I don’t wish to denigrate that, but it isn’t the depth of action we need. Industry has a hugely influential role in the context of its stakeholders and if you add up the number of contacts an organisation has with clients and customers, the communication potential is enormous.
While I do see industry as being very pivotal in this space, it’s also down to you and me as individuals. Ultimately, we will be presented with choices and sometimes, the choices might be a little bit more expensive or difficult. But really, the onus is on us to make the right choice because in the end, it will benefit ourselves, our families and the climate.
Our more than 30,000 members are often relied upon for guidance in this space as advisors to, or within, a business. So, what is your message for Chartered Accountants specifically with regard to their role in fighting climate change?
The first thing is to know your number. Accountants are very well-placed to know what the number is for the business or activity. By that, I mean: what is your emissions profile today? You can have a pseudo-calculation of that by looking at your energy because you can then do your calculation from energy into emissions. If you happen to be sourcing products from the agricultural sector, you might have to take methane into account as well. But the first thing is to put a number on it and understand the composition of that number. Doing so allows you to then develop a plan to tackle the number. It’s like any business activity – what’s the number, and what will the cost of investment be? Once you know the cost of investment, you can plan each of the steps on that basis.
I would also say that it isn’t just the accountants that should know the number; it’s important that all others in the business know the number too. Sometimes, the number can be impacted by something as simple as daily routine in the workforce. That kind of information is really the first step, and then you can build various mechanisms to reduce emissions thereafter.
A recent op-ed in the New York Times asked whether we need to shrink the economy to stop climate change. In your view, can economies continue to grow while we rely on “rapid market-led environmental action and technological innovation” to diffuse the threat?
First, we need to consider what we mean by growth. Sometimes people talk about GDP growth and other times, they talk about job growth or quality of life so the metric you use for growth is important in this context.
If I start with quality of life – will that improve in a more sustainable world? To that, the answer is a clear yes. There is no discussion that a more sustainable world will be a healthier world because we will have cleaner air and water. It will be a more comfortable world once we get our houses both comfortable and carbon-free. The world will be sustainable in itself because we will not be depleting natural resources to the point where we won’t have any left, we will recycle them. So, the answer to that is quite clear and obvious – but it is difficult to put a number on it because how do you quantify quality of life? It’s not necessarily a monetary thing.
If I look at jobs, this whole change we are going through will have an impact on jobs. I’m old enough to have lived through the digitalisation process. Way back in the 1990s when we were talking about computers and the internet, the horror was that computers were going to displace people from the labour force as the work would be done by computers. Some of that was correct in that jobs that were there in the 1990s are not here anymore. But we are employing more people today, in different ways and doing different things. The change this time around will be exactly the same. However, we need to focus on those who will be adversely affected and ensure that measures are in place to allow them to be aware of, and access, training and alternative opportunities. Those who will be somewhat impacted – plumbers or electricians, for example – will need opportunities to upgrade their skills. They will still be there, but they will be doing different things going forward. I think it’s a manageable process on the employment side. The positive for Ireland is that we have discovered a natural resource that will power our economy going forward. We can substitute importing that energy with our own, and that’s very positive in terms of jobs.
In terms of the GDP element of the economy, it’s going to cost money. Different numbers are put out there, some people are talking about 2% of GDP into the future but there are two elements to consider. If you look at our capital expenditure, how much additional expenditure will be required? And more importantly, how much of our current capital expenditure should not be spent in the areas in which it has traditionally been spent and should instead be diverted? That will be the challenge in terms of the more macroeconomic considerations.
You spent many years working at a European level to promote energy efficiency and global leadership in renewable energy. Can Ireland do more, in your view, as an island nation to lead the charge in renewables?
Yes, and we are really at the cusp of that right now. When we talk about wind, solar energy and – in time, perhaps – marine, the opportunity is, of course, that it is a natural resource. There is a higher capital investment, yes, but a much lower operational cost and that’s a characteristic of renewables in any context. Take the electric car, for example – a little bit more expensive to buy, but cheaper to run.
The electricity system on this island is unique in Europe in that we have a pooled electricity system with Northern Ireland. It is the only integrated electricity system in Europe. We are an island off an island, and the analogy in size would be Demark. But unlike other countries, we have a very distinct characteristic vis-à-vis Demark in that Denmark is between Norway, Sweden and Finland on the one hand and Germany, the Netherlands and Poland on the other. It’s part of what’s called the Nord Pool electricity scheme, and it means that electrons can float very easily between all of those countries. So if, for whatever reason, the wind doesn’t blow in the North Sea and the Danish offshore wind electricity volume drops, they can source from Germany, for example, and interchange very easily.
Ireland doesn’t have that. We’re an island off an island and at the moment, we just have one interconnector to the UK. So we don’t have what’s called a balancing possibility through a very large electricity system like the one on mainland Europe. We will therefore have to be able to bring variable renewables to our electricity system and balance them on the island. That will require quite a bit of innovation, both in terms of technology and in terms of the management of our electricity system. In order to make that work, Ireland will have to be a real demonstrator of demand management for the electricity system. In that, we will need both industry and consumers to manage their demand. Otherwise, if the peak gets too high, it will break the system. So, we need to spread the demand away from the peak to maintain a stable system. That will be very innovative for electricity systems globally and in that context, I think it’s fair to say that Ireland is a living laboratory.
As the interview nears its end, is there anything you would like to add?
We are in a situation where we are kicking off a very complicated process in Ireland coming out of the Act. We’re a little bit slow because we are already one year into the first set of five-year budgets, so we will eventually have to catch up. I think the single biggest challenge we will face, however, is not money – although money is always a problem. It’s not even innovation or technology. It’s behaviour – our own behaviour and industry behaviour.
That will have to shift because we will not be able to behave in the future as we have in the past. This is what I mean by choices and I think the pandemic has been a forerunner of some of the choices we will have to make. We as individuals will have to think more about the way we live and do things. It’s not that we need to necessarily deprive ourselves, but we do need to box smart as to how we get the services we want.
Mobility is a service, for example. If you want to go from here to there, think for a moment about the most sustainable way of getting there. It’s not to say don’t make the journey – although that might be correct at times! – but rather, what is the most sustainable way to travel and can we change our behaviour a little bit in that context. In terms of the way we heat our homes, is there another way of achieving a comfortable living space other than the way we have done traditionally.
The other issue about behaviour is the more we can automate it, the more likely we will be to succeed. As an example, using various energy-intensive appliances at home can be done in a more sustainable way. With a smart meter and programming capacity, the use of these appliances at times of low demand, which is probably at night, in an automated way is a real support to behavioural change. Nobody wants to manually put a wash on at 2am but if you automate it using technology, that will be a huge support to behavioural change.
Behaviour is the hardest thing to influence, and that is the single biggest challenge we have before us when it comes to tacking climate change.
I couldn’t agree more. I have come to the conclusion that putting a carbon tax on petrol or diesel, for example, isn’t enough to change behaviour. But perhaps the simple act of including the amount paid in carbon tax on each receipt could have an effect. Visibility is vital.
That’s right. And if we were to eliminate all of the subsidies to fossil fuels as a first step, it would go a long way to paying for some of the climate change measures. It seems like a no-brainer to be perfectly honest. Why tax people when all you need to do is remove the subsidies? This is a serious question we will need to consider into the future.
LOADING...