Eamon Ryan (Dublin Bay South, Green Party) | Oireachtas source

I apologise for missing some of the presentations. Energy efficiency is a very important aspect of our efforts to deliver a just transition on climate. The Dáil agreed last week to declare a climate emergency, but we must be careful that our efforts in this area are not merely symbolic. The first practical step could and should be the inclusion of a commitment in the new building regulations, the publication of which, as I understand, is imminent, not to install any more fossil fuel heating systems. That is the first step and it must be done. If the Department has a reason that it cannot be done, its representatives should appear before the Joint Committee on Communications, Climate Action and Environment to explain it. If the Government intends to sign off on regulations that continue to permit fossil fuel systems, it must explain to the Oireachtas in advance why it is doing so. In fact, taking action now on this issue is possible, achievable and prudent and will save citizens the cost of taking existing systems out in ten or 15 years.

I agree that the 70% renewables target for 2030 is a game changer and I am confident that we can and will achieve it. An issue to consider is that it changes the numbers underpinning the bigger picture. Mr. Kenny mentioned that his organisation is working with the ESB on the integration of heat pumps and so on. A 70% renewables target makes the figures different for the low-carbon effectiveness of heat pumps, but is it also the case that if we have a large body of pumps, it may help us to deliver the 70% target? How close are we to providing that type of balanced and flexible demand management capability in the use of heat pumps? Are we doing it yet and is it being done elsewhere? It is a win-win situation in that the 70% target will help to justify the heat pumps and, at the same time, the use of those pumps will help us to achieve the 70% target. It is one of the main demand management flexibilities available to us and I am interested to know if there are any specific examples which back up the case for it.

I agree that there is not sufficient understanding of the scale of the challenge in respect of the deep energy retrofitting project. The national development plan includes a target of having 45,000 houses per year being deep retrofitted by 2021. As I recall, the objective is to get them up to a building energy rating of B1 or higher, which effectively amounts, in most cases, to a deep retrofit. The witnesses indicated that the current figure is 1,000 houses annually. When I asked the Department for that figure a few months ago, I was informed that some 220 deep retrofits are being carried out through the grant schemes. Going from 220 per year - even more so than 1,000 - to 45,000 is a huge gap to cross. The main difficulty, as the witnesses noted, is that we do not have the workers to do the jobs. I am hearing that anybody working in this space cannot get the contractors. At its conference two weeks ago, ICTU noted that 18,000 workers will be needed, which requires an apprenticeship scheme. People need to be trained for this career and anybody going into it is looking at a work stream for 30 or 40 years. We will have to employ tens of thousands of young Irish people to work in the industry.

I am slightly concerned by Mr. Kenny's statement that the likely financing mechanism for the deep retrofitting project will be via blended grants and loans. I am not certain we will have the budget to provide grants for the private property sector. I agree fully that the provision in the national development plan will not be sufficient given the scale of what needs to be done. Our first priority should be to deep retrofit all social housing to ensure social justice as we introduce the carbon tax. That sector should be the target of any State funding and, as owner of the properties, the State may be able to ensure better order in the process than it would in the private sector. However, the social housing stock alone would eat almost all of the budget, leaving very little for grants. At a recent meeting of the Joint Committee on Climate Action, we asked delegates from the Office of Public Works and relevant Departments where we are with the 33% energy efficiency target for 2020 in respect of public sector building stock. It seems we are nowhere near it. There has been a lot of work done on behavioural aspects but, as the OPW delegate observed, we have not touched the actual buildings. After social housing, we will have to look next at public buildings, including every school, hospital, Garda station, departmental building and so on, all of which will require direct State funding. With those two major projects taking priority, there will not be the budget available in the €50 billion deep retrofit initiative to cover much else. Even if moneys were available, there is a social justice issue in that we are seeing so many instances, including with broadband and social housing, where the State is providing huge benefit to private owners from public funding. At a certain point, one has to ask whether such funding would be better used in direct provision. We should be nervous about the feasibility of the grants aspect of the proposed funding model.

There is a debate that must be had in the next five months in terms of how to approach the introduction of a carbon tax system. One of the suggestions from other parties is that we should grant-aid private property in this space. Even if we did that, we are only looking at a maximum income, as the scheme ramps up over ten years, of perhaps €1.5 billion per year. It is not a sufficiently large purse to cover everybody. Again, there is a social justice aspect in terms of the best use of public funding. My instinct is that the majority of the private retrofit will have to be done by regulating the rental market, including by way of such provision, as Deputy Ó Broin suggested, that after a certain time period of renting, people will have to do the retrofit. That will require very solid, low-cost loans for the private rental sector. If we can get that finance packaging correct, we may not need to provide grants. Getting the right loan facility in place means the returns will cover the cost of the loan and a grant will not be needed. That is what we should be aiming to implement.

I agree that the cornerstone of this will be similar to what is being done in other European countries, namely, that one quarter of the loan would be covered by the Strategic Banking Corporation of Ireland, European Investment Bank capital would cover the risk capital for the first quarter of the loan, and the pillar banks or other institutions would provide the remaining finance. It is the most likely financing structure and I agree fully with that approach. My concern, however, is how we can get the loan down to 2% with the pillar banks involved. They do not make money on 2%. Perhaps some of the grant support will be provided by way of a type of loan financing, but I have concerns about the mathematics. Are we looking at a loan of seven years, ten years, 15 years or longer? The longer the loan, the better, and it might be helpful to have it attached to the property so that if it is sold, the loan transfers to the next owner. I agree that the most important thing is to ensure we have the workers to do the jobs, but the second most important is to get the loan financing package correct. We might need to try out different packages in the next year or two until we find one that works with the public.

I am of the view that we should, in the private sector in particular, strategically target houses in rural areas in the first instance for a variety of reasons.

First, if we are to get workers back home to do this, maybe from Australia or elsewhere, it might be easier to get them to live in Kerry rather than Killiney given the cost of rent in Dublin. Second, there is a real issue with carbon tax and justice throughout rural Ireland. We should proactively work against that or mitigate it by targeting rural Ireland. I have a sense from some of the work the Tipperary Energy Agency has done that it may be easier for us to go for deep-retrofit of one-off houses in the country rather than terraced houses. It is far easier with one-off houses in the country. We know we can put heat pumps in as well as an electric vehicle charging point. We should be doing all that at the same time. We should be going in with everything, including putting solar panels on the roof and installing a heat pump and battery storage. Insulation is first and foremost. In some ways, it might be easier to manage a large number of rural houses in that scheme. We do not have the difficulties that we run into in my constituency. Putting electric charging points is not as easy there as it would be in rural Ireland. There might be some difficulties with heat, although I think these are becoming less pronounced as heat pump technology improves. We might make a strategic decision in terms of deciding to target rural housing. I am interested to know the thoughts of Mr. Kenny on that.

Those are the three questions I have. I am sorry for going on for so long. Are we getting flexibility around heat pumps to help us deliver renewable energy and make the case for getting rid of all oil-fired and gas-fired burners? How do we get a 2% loan? Should we target social housing and rural housing first?