Mr. Tim Gould:

I thank the Chair and Deputy Stanley for the questions. I should probably say upfront that my comments on the Irish situation will be limited and there are a number of reasons for that. At the moment an in-depth review of Ireland's energy policy is under way. The visit took place relatively recently. There is a process that will result, in the not-too-distant future, in the IEA coming up with a detailed in-depth review of Ireland, which will have recommendations attached to it. I do not think it would be appropriate for me to go too much into all that when there is that parallel process, not least because my comparative advantage in this setting will be to frame things rather than go into the detail. I also understand the committee will have subsequent opportunities to talk about those issues in more depth.

The first issue is a very important one. Why, in a world which needs to move away from fossil fuels, do we still see a need for investment at least in oil and gas? The answer is that we start from a position where fossil fuels remain the overwhelming majority of energy consumed worldwide today. In terms of primary energy demand, 25 years ago that figure was around the high 70s in percentage terms. Today, we are pretty much at the same percentage. We have not really moved the needle yet in terms of the share of fossil fuels in global primary energy. What that means in practice is that given the way that current fields decline and given the reliance of the system on those fossil fuels currently, there is a continued need to keep projects coming in even if policy on the demand side is very stringent.

I mentioned the example of oil and it is important to come back to that because we have a demand trajectory and a sustainable development scenario. Global oil demand has been rising by well over one million barrels a day per year for the past few years. What would need to happen in that sustainable development scenario is for that to subside relatively quickly, reach a peak very soon and then start declining by the 2030s by more than 1% per year. Even under that aggressive trajectory for oil demand, there is still a gap relative to where production from current fields is that would need to be filled with new projects.

When gas consumption grows, by definition, new investment is also needed in those fields. It is important to understand the reason companies invest. More than 80% of the investment that goes into the oil and gas sector is not to meet demand growth; it is just to keep us roughly where we are, to keep production flat, due to those declines underlying the system. That is a little bit of the dynamics behind why we still need investment in new oil and gas.

On the issue of exploration, it is well understood that fossil fuel reserves around the world, in aggregate, are more than sufficient to blow a hole in the carbon budget that is consistent with the Paris Agreement. Depending on what assumptions are taken, the carbon budget for Paris is somewhere between 500 gigatons and 1,200 gigatons. The CO2 embedded in today's fossil fuel reserves is around 3,000 gigatons.

It is roughly three times more than we need or would be able to combust in order to be consistent with Paris. There are a number of caveats, however. The vast majority of that is coal, a big chunk of which is not consumed or combusted in any scenario for the future. There are also non-combustion uses of oil and gas, in particular, that need to be brought into the picture because not all the oil and gas we produce goes into those combustions. Some of it goes as a feed stock into petrochemical while some of it goes into the manufacture of fertilisers, for example. There are no direct emissions associated with those. Under those circumstances one also needs to take into account the circumstances of countries which do not have reserves. For that period when fossil fuels are still being used, one could understand the logic of those countries wanting to explore in respect of those fossil fuels if they have a reasonable chance of success and to reduce their import bills and gain revenue as a result. There would also be companies, which may be interested and may have niche positions within the upstream, looking for additional resources to develop. Even in the case of the large players which have a lot of reserves on their books, if there were other opportunities that may be more advantageous, they may seek to explore those as well. Even in a very carbon-constrained world, one can see a justification in many places to try to find new oil and gas even within the constraints of something like the Paris Agreement.

On the question on solar PV, it is one of the cheapest forms of energy on a levelised-cost basis, which means that if one looks at the costs over the lifetime of a project and one compares it with other sources of generation, it works out in many countries as one of the cheapest options. That does not tell one everything about the value of that generation, because it may not come at the right times of day for a given system, so one needs to think through the implications of that when looking at the portfolio of renewables that make sense for an individual country. Where solar PV has done well, it has needed a helping hand from governments. That type of support has tended to change over time. Initially, in many countries, it was in the form of feed-in tariffs. Feed-in tariffs have some advantages in terms of simplicity but what they fail to capture is that they often do not move with the times. One does not capture the dynamism of the market so one can miss the opportunity to get cheaper renewables into one's system. What many countries are doing instead is looking at auctions. A well-designed auction can help to incentivise some of those cost reductions and bring the best-value resources into a system. Typically, utility-scale projects bring the most value. One has to have a very promising resource in order for rooftop projects to be a sure-fire winner. That does not mean that there are not cases when they make sense, but rather those kinds of projects obviously find it much easier to go ahead in California, where they are now going to be essentially mandatory on new builds, than in some other climates.

The question on Brexit is very difficult to answer in the absence of a feel for which way that is going to go. Deputy Stanley made reference to possible implications for supply of energy to Ireland. From an IEA perspective in principle, diversity is a virtue. Looking at alternative ways to bring resources into the country is always going to be a positive from an energy-security perspective, if it passes a cost-effectiveness threshold.

The Deputy asked about countries that we could bring into the comparison that may be of interest for Ireland.

There we run into some difficulties. We can obviously find countries that have moved ahead faster in the share of renewables in the mix or the emissions reductions they have achieved, but the starting points were also very different. As Ireland has quite a distinctive profile in that respect, not least because of the role of the agriculture sector, I hesitate to find a sufficiently precise analogy. However, I think there are plenty of good policy examples from around Europe and even further afield that could be of interest to Ireland. That is one reason why we very much welcome Ireland's participation in things like the peer review mechanisms at the International Energy Agency, IEA. That provides a ready-made mechanism to bring some of those learnings to bear. Likewise we very much value the contributions of Ireland in areas where it has been at the leading edge of some of the work on policy issues within the IEA. Renewables integration is certainly one of those. I refer to the experience with onshore wind.