Dr. Neil Walker:

I thank the committee for the opportunity to contribute to its consideration of the recent EU legislative proposal for a green deal industrial plan and, in particular, a net zero industry Act. I propose to expand on key points set out in an earlier written submission by my IBEC colleague, Mr. Conor Minogue, who administers our energy and climate policy committee.

First, I reiterate that IBEC members broadly support the objectives of the net zero industry Act, which are to improve the European Union’s economic resilience as it decarbonises its industries and transport systems over the coming decades. There is a growing sense of urgency on this. Other major economies are capturing an ever-higher share of global investment in low-carbon technologies. The EU risks becoming vulnerable to disruption of supply chains that are critical to the sourcing and processing of materials needed to manufacture net zero equipment and renewable fuels.

The Commission proposal singles out several categories of net zero strategic projects for special treatment by planning and regulatory authorities in member states. There are no surprises on the list. Solar photovoltaic, PV, and thermal, onshore and offshore wind, energy storage, heat pumps and geothermal, electrolysers, fuel cells, biogas, biomethane, carbon capture and storage and smart grid technologies all have the potential to improve the EU’s technological resilience and to stimulate the creation of highly skilled employment.

On employment, the investment in upskilling and research required to avail of these opportunities will be enormous but it will pay dividends. Irish businesses will be investing huge sums in some or all of these technologies and the State must embrace the opportunity for citizens who live and work here to capture a share of the value added.

There also needs to be investment in regulatory and delivery capability. IBEC supports the idea of a one-stop shop for project permitting that is envisaged for these technologies. We hope it can be provided for in the forthcoming planning and development Bill. Indeed, if Ireland’s cumbersome planning system can be streamlined for some industries, why not for the rest? That said, it is a pity the European Commission did not believe it possible or necessary to undertake a proper impact analysis of the proposed legislation. There is considerable potential for unintended consequences, some of which may be difficult to mitigate retrospectively.

For example, the emphasis of the Commission appears to be on manufacturing of the technologies, but barriers to their deployment can be equally significant. The Commission envisages designating some strategic projects as being of overriding public interest but the imperative reasons of overriding public interest, IROPI, route requires compensatory measures that may be difficult to conceive, let alone implement, particularly if it relates to the seabed for offshore projects.

Likewise, as experience shows, picking winners requires a very good crystal ball and it involves making judgments that do not always work out. Some years ago, I recall the Commission created a new entrants reserve comprising 300 million EU allowances, which were worth close to €2 billion at the time, with a view to kick-starting the demonstration of commercial-scale carbon capture and storage deployment. It was not a success. A technology-neutral approach can be more flexible in allowing member states to develop solutions tailored to local circumstances.

The selective relaxation of state aid rules is an understandable response to the competitive threat emerging from other regions of the global economy - China and the US in particular. However, there needs to be safeguards, as it could undermine the coherence of the EU Single Market. Temporary measures, once in place, have a habit of becoming more enduring than originally intended.

Last but not least, given limits on the resources available to regulatory and delivery agencies in Ireland, there is a risk of deprioritising important industries that are neither on the list nor qualifying as key upstream suppliers for the selected technologies. Traditional energy-intensive industries in particular will need to find new ways of decarbonising their operations while coping with uncompetitive energy costs. Where is the provision for the circular economy, demand management or offsetting?

I mention in conclusion that these views are echoed not only by other national business federations across Europe, but also by its wider civil society. Separately, I have provided the committee with a recent draft opinion from the European Economic and Social Committee, of which I am a member. While welcoming the framework of the European Green Deal industrial plan, it cautions against focusing too narrowly on promoting certain technologies and on picking alleged winners through regulatory actions. Instead, it calls for a comprehensive innovation and research support policy. I thank the committee.