Mr. Paul Kenny:

It is important to say that. Deputy Eamon Ryan asked a question about working on social housing stock first. It would certainly eat up all the budget. There is a question of social justice. A person who has bought out a social house was incentivised to buy it out. Such houses are private dwellings but there are many private fuel-poor households. I do not think it is right to suggest they would not be looked after in the same way as someone who has not bought out a social house or who has not put as much money or capital into it or someone who has not looked after the house. We need to look after all parts of society in a relatively equal manner.

Deputy Ryan asked a question around the €50 billion cost. That is the cost for housing alone. The figure for commercial building stock is probably the same again. We are talking about €100 billion over 30 years. How the public purse funds and incentivises a programme would require a mixture of regulation, which the committee will hear about today. This will include incentives, penalties, market development stuff and facilitating the market. If the State chooses to incentivise people with a carbon tax or a grant, that represents two sides of the one coin. If we do not have cost-effectiveness, people will not invest. One option is to make regulations to force people to do it. I wish the best of luck to any Government that tries to compel people to spend €30,000 on their houses without any State help. It is a question of whether we have the stomach for the carbon tax to push people to secure the payback loan so that they will make the investment and all the market development stuff that goes with that. Alternatively, we can have an incentive and a lower carbon tax. Let us consider what a grant of 30% does. It is probably cost-neutral to the Exchequer, or near enough to it, because the tax on the workers and the VAT alone on a 100% grant would already make up a major part of the 30% figure. There may be others more qualified in finance who could advise on it, but from the analysis I have seen a 30% grant is effectively cost-neutral to the State if it incentivises 100% of work. In other words, for every €100 spent, the tax revenue is likely to be €30. When we say this we mean that a 30% grant more or less amounts to the State not taking a share out of the renovation. That is what would happen if we had no support.

How do we get to loan rates of 2%? There are some models around Europe. It is always important to look outside of Europe too. The German public KfW bank is a non-profit bank. It gets 2% rates. There is a region in France called Picardy where the regional government has guaranteed the other 20% that the European Investment Bank has not guaranteed. It represents low-cost finance. The money comes from a combination of the equivalent of a credit union and the EIB. The rate is 2.5% or 2.25% over 20 years and is unsecured. That is really difficult. I have been in discussions with credit unions, banks, Ireland Strategic Investment Fund and various other parties. I do not see how we can get a commercial bank to offer 2%. There is no way because it does not make any money on it, as the committee has heard. I am highly in favour of a certain amount of the grant being for buying down a low interest rate, but we need to de-risk first so that people can pull down the actual cost before we start subsidising. Otherwise we will simply end up subsidising private profit.

From a payback point of view, the question arises of how many years the loan is for. That depends on how big the carbon tax is and how expensive fossil fuels are. Denmark has 15 cent per kilowatt hour for oil and 18 cent per kilowatt hour for gas. Thus, the payback is far shorter than 5 cent per kilowatt hour for oil and 8 cent per kilowatt hour for gas in Ireland. The payback period is based on the financial payback. This is a matter of scale. We can decide on the carbon tax and the grant levels but ultimately if we do not have a payback at 10% or ten years or less, we will not incentivise people. They will decide it is not good value for money to do it. That is an important point. We have the slider. It is a public policy lever that we can use but we are currently doing neither one nor the other and that is why we have only 500 or 1,000 retrofits. If we do not get market development right, if we do not have plenty of contractors who are trained and if we do not have easy access to the market, then those numbers will all need to be higher. We will need higher subsidies and higher carbon taxes to get the same output.

Deputy Eamon Ryan asked a question around targeting rural Ireland first.

Burning ten, 12 or 14 tonnes of peat per annum to heat a 50 sq. m mass concrete home, which goes to a heat pump burning 1,900 kW hours of 30% green electricity, soon to be 70%, is a big opportunity, whether it is environmental, health or so on. I come from a rural county and I agree that rural counties should be targeted first. The gas network is in Dublin. It will not be possible to take houses off gas when there are 12 tonnes of peat going into another house if one is limited financially. We hear a lot about the just transition and the workers in Bord na Móna. I would be more concerned about the issues of social justice and carbon tax and people who cannot afford it. The drivers of heavy machinery will get jobs in construction in Dublin in no time. We are constrained in the capacity of workers. I would be less concerned about those issues and much more concerned about the huge impact that one can have from taking out solid fuel systems, particularly in the case of mass concrete ex-local authority cottages that were bought out, rural one-off houses and so on, the savings from which, environmentally, can be huge.

In terms of bringing workers home, there is capacity in rural Ireland to house people but not in Dublin. There is less capacity than we would like but there is still capacity in rural Ireland. We can get staff into the agency. I have a senior engineer coming from Perth next month, which is the only place one will find design engineers because there is no capacity in the market.