Mr. Stephen Wheeler:

As the Acting Chairman asked me the first question I will start with the emissions trading system, ETS. It must be remembered that the ETS will continue whether the outcome is a hard or soft Brexit. Ireland will continue to trade in that market. What we will see that is different is that the UK will adopt its own policy. We would look to see that the UK would adopt a policy that is aligned to the European Union ETS. The challenge from a power generation point of view is that, on the island of Ireland, if we have a generator in the South on an ETS and a generator in the North on a UK tax, they are not aligned. They are different. In effect, it becomes cheaper for one side of the Border, whether it is North or South, to emit carbon. On an all-island basis, we would prefer to see an alignment of that. We would prefer to see them equal on both sides of the Border but that is for the UK Government to determine after Brexit. To be clear, I do not believe there will be a major short-term impact in that regard. The Senator asked if we will continue with regard to the climate action plan. In power generation, Ireland has a plan to generate 70% of electricity from renewable sources. The focus now is on delivering that. Whether the UK is in the ETS or outside it does not impact that. We need to be clear about that.

The Senator asked about offshore wind. I have been talking about offshore wind at Oireachtas committees for about ten years. What we have seen in that ten years is a huge improvement in technology. The original machines in the Arklow Bank wind farm, for example, were 4.5 MW or 5 MW machines. In terms of the latest auction that took place in the UK only last week, the results of which have just been published, we are now talking about 12 MW machines. The first wind farm I built in Cavan was 12 MW versus one 12 MW machine now in offshore. The technology advancement in that and the cost reduction in offshore wind now puts offshore wind in poll position to deliver on the scale required for this challenge.

I do not want to take away anything from onshore wind. We are the largest onshore wind operator developer in the country. Onshore wind projects have been hugely successful in the past 15 years. Ireland, in terms of all the different parties, and EirGrid is the industry policy, deserves great credit for the work that has been done on onshore wind but to meet the 70% target, onshore wind projects cannot do that alone. It needs large-scale offshore wind projects to complement that. As a result of the technology advancements and the reduction in price, offshore wind is now a credible option for Ireland to hit its 70% target. Without offshore wind, Ireland will not hit its 70% target by 2030. That is a reality. The key point now is to advance all the strong work mentioned in the climate action plan and deliver on the actions to ensure we get to 2023, 2025, 2027 and, in terms of career milestones, all the way to 2030.

We are talking about involving technologies to support the penetration of renewable energy. We lose sight of this point, and it is a great credit to EirGrid and to the entire industry that we have more than 65% of renewables on the system at any one time. That is ground-breaking and world-leading. The target is that when we get to 70%, that will be up as high as 95%. Ireland deserves huge credit for that when we look at the actual investments and the progress that has been made in our systems and how we have developed renewables across Europe.

The challenge going forward is about the back-up. Renewables now becomes the main power source so instead of gas, coal or peat in the past, it will now be renewables. To back that up, at SSE, we believe the answer is high efficiency combined gas turbines, CGTs, because we believe gas is the transitional fuel. Between now and 2050, and we have to get to zero carbon by 2050, gas will be a key enabler of more renewables and a higher renewables penetration on the system. The challenge then is how we take carbon out of gas. Gas is the lowest emitter of all carbon fuels in terms of what we are burning currently. It is much less than coal and peat. Coal and peat are coming off the system. The timetables for that have been clearly set out. The challenge now is how to decarbonise gas. Gas Networks Ireland has done much work around how we move to potentially green hydrogen, for example. That could become a real element of power generation in the future. The target is to get to 70%. To get to 70%, we need to have back-up and ensured security of supply. That is where high-efficiency CGTs come in, as well as the other advances that are being made in battery technology and other system services.