Mr. Denis O'Sullivan:

Gas Networks Ireland develops and operates the natural gas network in Ireland, with 700,000 business and residential customers relying on natural gas every day. We recognise that what is at the heart of this Bill is the urgent need for Ireland to address climate change. While we strongly support climate action, we believe the measures proposed in the Bill will not assist Ireland in achieving climate change targets but instead will potentially commit Ireland to importing the vast majority of its energy needs. We believe there are more effective ways of tackling climate change while maximising the potential for cost efficiency and ensuring supplies of energy from indigenous sources.

As an energy source, natural gas is of key strategic importance to Ireland, representing 30% of the country's primary energy mix and, importantly, 52% of Ireland’s electricity is powered by natural gas. Natural gas underpins the Irish economy and is a key driver of job creation and economic growth. As it is clean, flexible and cost efficient, it is the fuel of choice for employers in Ireland’s key economic sectors such as food, pharmaceuticals, information technology, IT, tourism and leisure and a key consideration for foreign direct investment companies coming to this country.

The development of the Corrib gas field significantly enhanced Ireland’s security of supply. Approximately 50% of our current natural gas is supplied from the Corrib field. According to current estimates, this field will be substantially exhausted by 2025, albeit it will continue to produce thereafter. The Kinsale gas field has already ceased meaningful production. If the Bill were passed, within a decade, Ireland’s gas supply could potentially be 100% imported, a situation not seen since 1978. It should also be noted that the Corrib project supported over 1,400 jobs in construction and development and continues to directly employ about 150 people. Having an indigenous gas supply such as the Corrib gas field gives us greater security of supply and diversification.

Where possible, all our energy should be indigenous, supporting Irish jobs and ensuring security of supply.

As it stands, approximately 10% of Ireland’s total energy supply is renewable and 90% is based on fossil fuels. All current research and projections on energy demand envisage a substantial requirement for natural gas up to and beyond 2050. In the committee's session two weeks ago, Mr. Gould, the expert witness from the International Energy Agency, IEA, stated that in a scenario which achieved key environmental, health and social objectives, natural gas use will grow.

The 2015 White Paper on Energy, which lays out a pathway for decarbonisation, identifies the importance of natural gas and the gas network in decarbonising Ireland’s economy. Natural gas is the cleanest fossil fuel and should not be seen in the same light as coal, oil and liquified petroleum gas, LPG.

As such, we strongly advocate the continued replacement of more heavily polluting fuels, such as coal, peat and oil, with natural gas to help lower Ireland’s emissions.

Natural gas has proven to be an essential enabler for renewable energy. While Ireland has excellent renewable energy sources and potential, such as wind and solar, renewable energy is intermittent and needs the reliability of gas. EirGrid’s target for renewable growth is predicated on having natural gas to support this target. The members are probably aware that within the past fortnight, wind generation has fallen as low as 24 MW, which equates to approximately 0.5% of required supply at the time.

Ireland will require, for the foreseeable future, power generation from gas. Our challenge is to reduce the carbon intensity of that generation to the greatest possible degree. The International Energy Agency, IEA, has indicated that one third of global carbon reductions can come from carbon capture and storage, CCS. CCS is a technology which takes the carbon from the generation process and injects it into storage facilities. CCS can reduce the carbon emissions from gas power generation by up to 90%, while still ensuring a secure and flexible energy supply. Ireland has an ideal storage point in the depleted Kinsale gas field, which has some unique advantages as a potential carbon store. Much of the infrastructure is in place and a number of gas fired power stations are located in close proximity. CCS could capture emissions from gas power stations saving 2.1 million tonnes of CO2 per annum. We are currently undertaking a feasibility study on the potential to use the Kinsale gas field for CCS.

Ireland has the highest potential in Europe for the development of renewable gas. Renewable gas not only provides an indigenous and sustainable energy source, it also provides a significant boost to the agri-sector. It can provide revenue streams for rural communities and it has the potential to create up to 6,500 jobs. Importantly, it can significantly address the emissions from Irish agriculture.

This year, 2018, will see the introduction of renewable gas onto the Irish gas network for the first time with the development of our first renewable gas injection facility in County Kildare, which is currently under construction. This facility will have an initial capacity of 90 GWh per annum, enough renewable gas for approximately 9,000 homes. The renewable gas will be produced from agricultural and food wastes through a process of anaerobic digestion. Over the next five years, we plan to construct additional renewable gas injection facilities, with a total combined annual capacity of 1,450 GWh or 145,000 homes. By 2030, we are targeting 20% renewable gas in the network, a figure supported by a recent Sustainable Energy Authority of Ireland, SEAI, report on renewable gas potential. Achieving this target, however, will require support and policy change.

A recent KPMG study commissioned by Ervia has established that using renewable gas in the State-owned gas network can dramatically reduce CO2 emissions generated by heating 1 million homes located near the gas network and at one third of the cost of electrification. In addition to the existing 700,000 homes and businesses connected to the gas network, there are a further 300,000 homes within 20 m of the gas network. Converting these homes from oil to natural gas would result in a 30% reduction in CO2 emissions, with the potential of making these homes carbon neutral through the use of renewable gas.

Transitioning to a zero carbon society requires a shift in demand as well as supply. Another area where significant change can be made is transport. Currently, commercial vehicles using diesel account for 3% of the vehicles on Irish roads but 20% of the total energy used and 30% of the total transport emissions. Gas Networks Ireland is developing a network of compressed natural gas, CNG, refuelling stations for public and private transport operators. The first public station, located at Dublin Port, has been commissioned and will open to the public in the coming month. It will have the capacity to fuel up to 70 large commercial vehicles per day with an average fill time of less than 5 minutes, similar to that of diesel. Moving our public transport fleet to renewable gas should be a key priority and a key policy goal and can make a real contribution to Ireland’s climate change objectives.

While this Bill is laudable in its goal of tackling climate change, we believe it is flawed and, in many ways, counterproductive. It could reduce our security of energy supply and will not contribute in any meaningful way to emission reduction. Gas Networks Ireland’s view is that the best means of addressing climate change in a secure and cost-effective way is to promote policies which will support a seamless transition to low carbon.

We support the committee in its endeavours and we would welcome its support for the initiatives we are undertaking. Addressing climate change is a key priority for our business. Ireland’s natural gas network can play a major role in decarbonising our society, while still maintaining the security and cost-effectiveness of our energy supply.