Oireachtas Joint and Select Committees
Thursday, 16 November 2023
Select Committee on Communications, Climate Action and Environment
Estimates for Public Services 2023
Vote 29 - Environment, Climate and Communications (Supplementary)
Apologies have been received from Deputy Devlin.
This meeting has been convened to consider the Supplementary Estimate for Vote 29. I welcome the Minister of State at the Department of the Environment, Climate and Communications, Deputy Ossian Smyth.
Before I begin, I will read out the note on privilege. I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. I also remind members that they are only allowed to participate in this meeting if they are physically located in the Leinster House complex. In this regard, I ask those members who are joining us online that, prior to making their contributions, they confirm that they are on the grounds of the Leinster House campus.
I remind members that, in accordance with Standing Orders, discussion should be confined to the items constituting the Supplementary Estimates. I call the Minister of State, Deputy Ossian Smyth, to make his opening statement, which will be followed by questions and answers.
I thank the Cathaoirleach and the committee for this opportunity to present details of this Supplementary Estimate for Vote 29 - Department of the Environment, Climate and Communications. The main purpose of this Supplementary Estimate is to provide the necessary funding of €926.606 million for the electricity costs emergency benefit scheme and €12 million for the business solar scheme in the energy transformation programme area.
The Supplementary Estimate will also provide for the reallocation of a total of €67.4 million to provide additional capital funding in 2023 to the national broadband plan, NBP, as the programme will exceed its planned delivery for the year. The additional activity is allowing the programme to continue to claw back in 2023 delays in roll-out in previous years. This request was considered by the Joint Committee on Transport and Communications yesterday.
On the electricity credit, the Government took steps in 2022 and 2023 to help alleviate the burden on households of the rapidly increasing energy costs when we provided support of €800, including VAT, to be applied to domestic customers’ energy bills under both the first and second electricity costs emergency benefits schemes. However, electricity and gas prices have continued to remain high due to international conditions, in particular the current challenges and volatility arising from the crisis in Ukraine and the Middle East. Indications are that this trend will continue for the foreseeable future.
The Government has decided to further support domestic customers through the winter of 2023-2024 with a third electricity benefit scheme and this consists of a €450 electricity credit to be applied in three instalments between December 2023 and April 2024. This undertaking comes with a cost of €926.606 million. The 2023-2024 scheme takes account of households that may not have an individual meter point reference number, MPRN, and where an existing dwelling has been divided for the purposes of accommodating additional people and submeters are in place linked to the main MPRN.
Moving to the business solar scheme, subhead B5 - other energy efficiency programmes, provides for the grant funding and operational costs for the public and commercial sector energy efficiency programmes administered through the Sustainable Energy Authority of Ireland, SEAI. A sum of €12 million in additional funding is required to support business solar endeavours through the non-domestic microgeneration grant. This grant provides support to businesses and other non-domestic applicants to engage in microgeneration for self-consumption. The initial scheme, in operation since September 2022, had a maximum grant value of €2,400 and both the SEAI and industry representatives indicated it was not having the desired effect in supporting businesses to invest in solar photovoltaics, PV, due to its terms and conditions of operation. The scheme was amended on a pilot basis from July 2023 to support a wider range of businesses and non-domestic applicants to invest in solar PV installations by supporting installation sizes of up to 1000 kWp, which is the equivalent of 1 MW, with a maximum grant value of €162,600. The scheme is being funded by way of a transfer of €12 million from the Vote of the Department of Enterprise, Trade and Employment in 2023. The transfer will go into my Department's Vote. This transfer of funds will be by means of this Supplementary Estimate and the Department of Enterprise, Trade and Employment surrendering the same amount of funding from its Vote at year end.
The expanded scheme supports Ireland’s ambitious 2030 renewable electricity targets as well as providing additional security of electricity supply and contributing to decarbonising non-domestic electricity use. Investing in solar PV offers businesses an enduring solution to manage the impact of high and volatile electricity prices while also reducing their own emissions and supporting the local electricity grid. With the additional challenges identified in the 2023 climate action plan in relation to demand flexibility, supporting businesses to invest in solar PV will also facilitate businesses to be able to participate in demand flexibility schemes in the future.
The reallocation of €67.4 million to the NBP is possible due to savings identified within the following subheads. Under programme A, climate action and environmental leadership, there was €600,000 in A4, environmental and climate research, and €3.1 million in A8, just transition. In programme B, energy transformation, there was €27.7 million in B4, residential-community retrofit programme; €700,000 in B6, other energy programmes; €10.6 million in B7, energy research programmes; and €2.3 million in B15, residential retrofit loan guarantee scheme. In programme C, circular economy development, there was €2.5 million in C4, Geological Survey of Ireland, GSI, services, and €10.8 million in C6, waste management programme. In programme D, connectivity and communications delivery, there was €2.7 million in D4, other communications infrastructure; €3.5 million in D6, National Cyber Security Centre; and €2.9 million under D7, emergency alert system.
I am happy to take questions from the committee on any aspect of this Supplementary Estimate as it relates to the electricity credit and the business solar schemes.
I thank the Minister of State for his presentation. I welcome the electricity credit under this provision. According to my sums, a total of 2,059,000 homes will benefit from this €450 credit. It will be very welcome over the winter months when the high cost of energy will continue to be a real problem in terms of the cost of living of ordinary families. I welcome this measure and I am very pleased to see the provision being made in a timely manner.
I also welcome the move to put microgeneration on a more substantial footing. I would be very interested to hear from the Minister of State what is the new capacity he expects to be built by the non-domestic sector under this grant scheme. A sum of €12 million is being set aside, so it sounds like it could be approximately 5 MW of power generated. It does not sound like it is a huge number, but I will be interested to see the scope in this regard. I say this because it certainly seems to me that, at a time when many businesses are coming under pressure and there is a significant need for transformative change, this is an area where there could be significant cost savings realised for the running of those businesses that seize the opportunity. How ambitious is this undertaking? Has the capacity of the small-and-medium-sized sector to take this up been assessed?
We recently had representatives from Enterprise Ireland, the SEAI, Skillnet Ireland and the local enterprise offices, LEOs, in with the Joint Committee on Enterprise, Trade and Employment. What was staggering was the very low take-up by enterprise of the various schemes to undertake a green transformation. The take-up rate of these opportunities was running at about 1% of businesses. This suggested to me, and this was confirmed by spokespersons for the SEAI, that very often cost-saving measures, which do not cost businesses anything, are being missed because of the very low take-up in this regard.
It brings to my mind the problem we have not just in this area but also with the circular economy and many of the other transformative changes we are trying to deliver. The Minister of State is working with might and main, it should be said, to try to introduce strategies for transformative change, but there is a big swathe of businesses to which this message is not getting through and for which the take-up of these measures is very low. We need to think differently about how we are going to approach this context. I commend the Minister of State on the schemes. I also commend Enterprise Ireland on its green audits and so on. There is lots of stuff out there. We need, however, to find a way of bouncing more enterprises into taking on this challenge.
The Minister of State, with his Government colleagues, ought to confront the fact that undertaking this transformative change in a timely manner will actually make our enterprises more competitive. We need to find a way cross-government to mobilise and build momentum for this change.
This is an excellent example but we need to create greater expectation within the sectors. I previously advocated - the Minister of State would probably be tired of listening to it - that we should have sectoral compacts that look at the transformative change, particularly built around the circular economy, and that we should integrate the circular economy into the climate action plan with the same level of scrutiny and monitoring from the Taoiseach’s office that has been a significant element of climate change planning and execution.
I ask about some of the sources of savings. One area is the just transition fund. We need to see the legislation for a just transition commission come forward. It would be good to hear where that currently stands. There is a genuine need to have the principles of what just transition is going to be all about because we are trying to mobilise change in a deep way. I was just talking to Deputy Kenny before the Minister of State came in about the challenges for farming to undertake that. We do not really have the line of sight on what a prosperous farm will look like in ten years’ time. If we do not have that, it will be hard to mobilise change. We need to bring not just the Bill itself but also the principles.
Savings are being made on waste management at the same time as the Environmental Protection Agency, EPA, reported during the week that two thirds of what goes into municipal waste should not be there at all. We have a problem in waste management. Again, rapid change will be necessary. Many of our established practices are not matching that and it comes back to the same issue of how to mobilise change.
I see savings are to be made on the loan scheme. That triggers a question as to when we will actually see the loan scheme up and running, which is key to leveraging the one-stop shops. As far as I remember, there are 20 one-stop shop operators in place now. To make the funding circle complete, we need this loan. I am interested to know what the interest rate is likely to be. Clearly, it has to be pretty low in order to deliver.
The other area is the national broadband plan. I wish to say - I heard the Minister of State say this - that, at the time, there was much scepticism that this was the right thing to do. I note the Department did a benefit-to-cost ratio and the benefit now estimated is double what was estimated at the time we made the decision, which I think vindicates that decision. Many such courageous decisions are resisted in many quarters. It is heartening to see this. We made a decision about future-proofing our economy and stuck our neck out and, in this case, we have been vindicated. We need this sort of infrastructure for the long-term success of the rural economy, particularly, and to make remote working, remote delivery of service and vibrant towns and villages. It is impossible to conceive of a successful rural life that does not have high-quality broadband. This has been vindicated by Covid and the uptake that we have seen since.
Working through the many things the Deputy drew attention to, the first is the solar scheme. I think he is asking what the €12 million will produce and what we will deliver from that. This enhanced solar scheme began in July of this year. Since then, €7.8 million has been spent and 36 MW has been delivered. I expect that if we are at the same ratio, if we do €12 million, we should have about 50 MW of delivered power. It is not just for industry and commercial; it is also on non-domestic, non-commercial buildings such as community centres and so on.
The demand for this is huge. When I go out and visit sites, such as recycling factories or supermarkets, I have not met anybody who tells me they are not doing a large programme of solar. Every major supermarket chain has assessed all of their roofs to see what solar they can put on. Often, it is not 100% but rather 40% or something because perhaps the roof is not strong enough to take the solar panels and, in strengthening it, you would actually lose the benefits of the decarbonisation. In other cases, there is not a roof, somebody is upstairs or so on. Generally, there is huge enthusiasm. Massive work is going on to deliver that. I am informed that one of the major factors in making the decision to put in solar was not the grants but the fact they do not have to apply for planning permission anymore. Therefore, the planning exemption was absolutely critical to that.
The Deputy also said we should promote the benefits of solar more to businesses, consider areas where there is low take-up and so on. I absolutely agree that we should look at that through the SEAI, and make sure we are providing the information people need. There is also an element of a trend starting. People see their competitor businesses are doing it. Solar installations are a very visible form of climate action. A person may see that the farm next door has solar panels on the roof and think they should put solar panels on their own shed. There is that trend effect that happens. We should make sure we are doing everything we can to promote it. It helps from the point of view of our energy security, it is energy efficient, it reduces the load on the grid and it gives people a sense that they are contributing and taking part in climate action directly themselves. It gives people a sense of ownership of what is going on and not a sense that all of this climate action and renewable energy is being delivered by large corporations and the profits are being exported elsewhere. People are genuinely taking part. The enthusiasm for solar is absolutely huge and much more than I expected.
The Deputy mentioned the possibility of separate compacts and I think he is talking about sectoral compacts, which is an area he mentioned before with regard to the circular economy. He would also like to see the circular economy plan knitted or in some way integrated with the climate action plan. Legislatively, they are separate. There is a legislative requirement that we produce a climate action plan and a circular economy plan or strategy. We are putting in sectoral targets. Sectoral compacts is a different idea. It is more voluntary or it is a scheme. We are putting sectoral targets into our next circular economy plan. Am I following the Deputy correctly?
It mobilises every part of the supply chain to look at what they are doing. It starts voluntarily but, over time, as the targets become compulsory, they get greater teeth. The merit of it is that it has everyone playing a role - the farmer who produces, the processor who processes, the retailer who packages and creates space and then the creation and disposal of waste. In food, there is a million tonnes of food waste. There is very significant loss on the supply chain. It gets everyone thinking about those challenges.
The more that I talk to people about it, the more enthusiastic they are about it. There is a general acceptance that this is the right thing to do and efficiency is a good thing, particularly in the area of food waste, as the Deputy mentioned. Supermarkets are interested in that. There is much innovation going on in this space. I was at Dogpatch the other day and there were many start-ups focused on sustainability and the circular economy.
The Deputy mentioned just transition. There are some savings from just transition projects mostly because they have not drawn down at the rate we expected them to. One of the Deputy’s questions was on new legislation, so I will give him an update on where we are with it. The Government committed, through the climate action plan, to establish a just transition commission. The Minister has now established the just transition task force, which comprises representatives of key social dialogue pillars. The task force will provide independent advice to the Government regarding the establishment of an enduring structure for the just transition commission.
The task force's recommendations will focus on the functions and mandate of the commission and resourcing requirements to support the just transition commission in its work.
I understand the savings on waste management relate to landfill remediation projects. The Deputy will be familiar with the landfill remediation programme. We have historical landfill sites around the country that were illegal or historical dumps, some of which have polluted the land and it needs to be restored. The best known is the Kerdiffstown site in Kildare, which was an illegal dump and is now being turned into a park. The remediation of those sites has cost tens of millions of euro in a multi-annual programme. It is positive. The savings under the landfill remediation programme are due to revised timelines in the implementation of some of those projects. Funding has been allocated to progress works on 125 different landfill sites across the State under the programme and it is anticipated that 60% of the funding will have been drawn down by the end of the year. A significant proportion of funding, €7.5 million, was allocated to the Kerdiffstown project, which is finally coming to an end. The site has been fully remediated and the remediation management infrastructure has been installed.
The scheme for low-cost loans for retrofitting has taken much longer to implement than we expected. It is a European Investment Bank, EIB, scheme and the EIB had not previously done domestic or consumer-orientated financing. Everything it had done in the past related to commercial and non-domestic financing. We are now at a point where we have asked the lending institutions to take part in the scheme. I expect them to be ready in the first quarter of next year. Homeowners will be able to borrow between €5,000 and €75,000 on a ten-year loan and those loans will be unsecured. It is an innovation in the market. A ten-year unsecured loan cannot be easily obtained. It is a loan of between €5,000 and €75,000 at an interest rate which is several points below the market rate. The EIB and the Government are helping to de-risk the loans for the institutions so they can offer them. At the same time, the Government will subsidise the interest rate so that it will be several points below what people would pay in the market. It will be an attractive rate.
I am told it will be available across all schemes. Loans will be for a minimum of €5,000 up to a maximum of €75,000. It fills the gap for people who do not qualify for the better energy, warmer homes scheme. People, who will not get a 100% free upgrade from the State because of the type of welfare they receive and cannot afford to pay half the cost of the retrofit on the basis that they do not have the capital lying around or cannot borrow it for some reason will be able to obtain the money they need for their portion of the cost from a low-cost loan and the other portion from the grant.
We will need to illustrate it. As the Deputy said, the basic idea is that people who do a €40,000 retrofit of their home will get €20,000 from the State and borrow €20,000, but the repayments on the €20,000 over ten years will be matched by the drop in their home heating and electricity costs. We will need to illustrate that when we communicate with the public. We have found that there is a huge demand for retrofitting. People are interested, especially because of the high energy prices and because there is more awareness of the need for climate action. A big part of what is driving it is simply comfort and the knowledge that a retrofitted home is a more pleasant and comfortable place to be.
The national broadband plan was a long time coming. An ambition to carry out such a project was announced by former Deputy Pat Rabbitte, as Minister, in 2012 or 2013. Later, as Minister, Deputy Richard Bruton signed the contract in 2019 and I know from my Department that he did not rush in and sign it right away. He took a good amount of time to ensure it added up. A degree of scepticism is healthy but too much scepticism becomes cynicism or pessimism. It was clearly the right thing to do. It is one of those projects for which the business case has massively improved. The project means that people who live in rural Ireland can get the benefit of foreign direct investment. They can live in Ballyhaunis and work for Apple. The provision of fibre to every home, farm and business under the national broadband plan is a clear and understandable social guarantee. It tells people they will be able to live closer to where they are from and closer to their families. They will be able to come home to their home towns and villages and be able to work, study and have their social lives to the same standard as in the cities.
Although the project progressed slowly at the start because of the Covid-19 pandemic and because of the contractor's inexperience, it is now running at pace. It will be completed on time and under budget. The reason I am asking for an additional allocation - the €67 million I am looking for - is that we are doing more homes that we expected to do this year. The rate of passing homes has far exceeded our target for the year. We only pay out subsidies to the contractor for the homes it connects or passes. We need more money because we are passing more homes, but the overall budget for the project has not changed. It is €2.1 billion with a contingency of €500 million. We do not expect to have to use the contingency money. We have a €2.1 billion project over seven years and I need some additional money this year because we are connecting more people than expected.
A future Minister is an unknown quantity.
I thank the Minister of State for his opening statement and the detail he has gone into so far. I will go back to the business solar scheme, which there is great interest in. As the Minister of State said, a whole range of places, including even community centres, are looking at it. It is one of the things we can do that creates great buy-in from communities because people feel they are part of it. To get into some detail, the Minister of State is looking for an additional €12 million. The maximum grant is €162,600. From a simple calculation, I think it probably represents a few hundred projects, 300 at most. It is not earth shattering from that perspective. What level of funding is available through the grant? How many people have applied? Is there a waiting list?
The previous scheme provided a much lower grant of only €2,400. The enhanced scheme began in July and since then we have had 425 applications and distributed €7.8 million. That was to support the installation of 46 MW of solar panels. Those are the numbers. As the Deputy said, the additional €12 million will support a number of projects in the high hundreds, but below 1,000. That is the order of magnitude of what we are doing.
For a business, that is fine, but it is not feasible for many community projects. I had a conversation with a community project that has a large roof area and was interested in this. It said the level of grant caused a difficulty for them. The low-interest loan is something it will have to consider. Is that available to projects such as that? It is only for residential.
One of the difficulties is that when we get into the detail of some of these schemes, we see that people who really want to do it are excluded. Every scheme needs to have criteria, understandably. However, to give an example, a farmer would very easily run up a cost of €30,000 in putting a decent-size solar project on the roof of his or her sheds. The farmer would have to find more than €20,000 of that cost. That could be a difficulty for the farmer.
Many dairy farmers have invested in this. They found that by orienting their panels on an east-west arrangement, they are able to get sun and evening sun for their milking machines. We now have significant experience in that area. I would be interested to hear from farming organisations regarding their experience of how the grants are working in that type of farming.
It has been designed as residential funding. It took a long period of negotiation with the European Investment Bank to make the scheme. I do not expect the scheme will extend to the non-domestic sector. The Department of Rural and Community Development has a scheme for community centres, however, and the Department of Agriculture, Food and the Marine has a solar scheme for farmers as part of the targeted agriculture modernisation schemes, TAMS. I am not sure how those interact-----
The difficulty is the amount of funding available and the criteria farmers have to meet. It is arduous. Anyway, it is all progress. I am not here to nitpick. It is good to see there is extra money being put into it. We also need to consider where the savings have been made. Reference has been made to the just transition and why it has not happened at the pace expected. There are delays. There are projects that have not yet been able to draw down funding. Are some of those projects finding it difficult to navigate the system? Is that part of the reason-----
It is that phenomenon where initially there is a period when people get used to what is involved in drawing it down. Things can take longer than expected. This is multi-annual funding, however. It is not a one-year project. The just transition funding projects are not single-year projects. Rather, they are multi-annual projects. In many cases, it is a timing issue. The applicants do not have everything in place. They were not able to hire the people required or get through the paperwork in the first year and so things happen later in the year than they expected. I understand that €7 million in grant payments has already been made for just transition funding projects and another €2.5 million of payments is scheduled for the rest of this year. Projects are expected to conclude by June 2024 and all remaining payments should be made by the end of next year. The total expected underspend from EU just transition funds between 2021 and 2027 has been estimated at €1.6 million. It has taken time for the projects to get used to the new schemes and to ensure compliance with regulations and governance requirements. Some applications are being sent back and the applicants told they must get their governance in order.
There are three areas in which underspend has happened to which I wish to draw attention. The first is lower than estimated payments to the Eastern and Midland Regional Assembly to support the managing authority role. Second, there were lower than estimated payments to Pobal for the administration of the local and regional economic strategies support scheme as part of the just transition fund programme. Third, there have been no payment requirements to date for the beneficiaries under the local and regional economic strategies support scheme.
I thank the Minister of State. It is useful to go through these matters. The big issue is that the ambition of the public is not matched with the support they need. That is not a criticism; it is just reality. If we were able to find better mechanisms of designing these schemes, such as the business solar one, we could get more small businesses in particular to engage with them. There is a positive attitude towards all of this.
The difficulty is that when people actually get into it, they start scratching their heads. They may have thought they would get certain funding but they cannot access it and they cannot afford another loan as they already have so many loans. People are put off by all that. We need to find a better route to ensure we can deliver for people who are interested and enthusiastic.
SME representative organisations and other organisations, including Irish Small and Medium Employers, ISME, the Small Firms Association, SFA, and IBEC, as well as farmer representation organisations, all have a role in this. Any support we can offer them in terms of information or education in respect of how to get grants and so on would be beneficial. Working through those representative organisations is probably the best route.
I am wondering about the experience on retrofitting. It is picking up. The combination of 100% grants, 80% grants and 50% grants is a good package. I hope the loan scheme will put the last brick in the wall. Does the Department do anyex post evaluation? The Minister of State made the point that many people do this to get more comfort. Obviously, that is a great thing for people living in cold homes. In the context of the impact on emissions, however, how well is retrofitting performing in terms of reducing emissions? Is that sort of ex postanalysis carried out? The risk is that people heat spaces they did not heat previously and the benefits are dissipated in that way. There have been critiques suggesting that in other countries a significant amount of the benefit has been lost in that fashion.
The Deputy is hinting at the paradox where something is made more efficient but then people use more of it. It is known as Jevons paradox. A home is retrofitted but then the homeowner turns up the dial or starts wearing a T-shirt while in the house and the same amount of energy is used. The Deputy is asking about the extent to which that is the case. Of course, it is not a 100% effect. There is an amount of it but it does not completely remove the benefit that comes from carrying out a retrofit. The Deputy is asking about the types of studies that are done on this. First, there is the actual performance levels of these buildings compared with what was predicted beforehand. The SEAI carries out emissions savings surveys and research. It is a common theme for academic research as well. I can revert to the Deputy with ex postresearch studies. I would be happy to provide that information to the committee.
I thank the Minister of State. If he provides that information, we will circulate it to members. Are there any more questions? That concludes consideration of the Supplementary Estimate for Vote 29. I thank the Minister of State and his officials for assisting the committee with our consideration of the Supplementary Estimate.