Eamon Ryan (Dublin Bay South, Green Party) | Oireachtas source

I propose to share some of my time with Deputy Leddin, the chair of the Joint Committee on Environment and Climate Action. I appreciate the chance to outline some of the measures which Government announced last week. I am glad our officials are here. They are responsible for much of the good work that has been done, particularly in the last year or two, to get us into position to launch this national retrofit scheme.

I will put it into wider context before going into some of the details of the various schemes. This is central to the climate change challenge we face. We have to stop the use of fossil fuels within three decades. We have to stop burning oil, gas, coal and peat to warm our homes, to power our transport system and in our power generation system. It is a huge challenge.

There are precedents. I was thinking about whether anything like this has been done and I am old enough to remember the early 1970s, when we switched to central heating. It became all the rage and, over two or three decades, we went from the open fire to central heating systems. It was an improvement and a better system. Some 97% of Irish houses now have central heating systems. We achieved that change and we need to make a similar leap in the next three decades. We will be using many of those central heating systems, maybe slightly bigger and with different radiators but it is the same concept. However, we will be using heat pumps rather than gas or oil boilers to heat our homes. This new heat pump technology has a huge advantage in the innate efficiency gain within it, as it converts the temperature differential between the air outside and inside the house through heat exchange to heat radiators to provide water for the home. That energy efficiency gain would be lost if the house was not also efficient at keeping the heat in. That is why we are looking in this three-decade challenge to bring our entire housing stock to B+ standard, so houses are well insulated, the heat pumps work efficiently at low cost and we reduce emissions.

This work was done cross-party. It does not belong to any one party. We all agreed this was a central objective in our climate plans going back a number of years. We will do it in a systematic way. We will do 500,000 houses this decade, 500,000 the next and 500,000 the one after that. We will be using district heating as well as retrofitting schemes. District heating will have a crucial role so it is not just these measures. Between the two, we need to halve emissions this decade, going from 7 million tonnes in our domestic heating systems to 3.5 million. That is what this plan and investment starts to do. It involves 500,000 homes and 400,000 heat pumps. It is about moving from shallow retrofit, which involves doing a bit of the job here and there, to deep retrofit, where the whole job is done.

The benefits of that are not just in climate. There will be huge benefits in the balance of payments for the country. At moments like this when international fossil fuel prices are high, we will be protected because we will rely on our local electricity rather than imported fossil fuels to heat our homes. Whatever happens on distant shores will have less consequence for us. It will be of huge benefit in employment, as I think Patricia King of the Irish Congress of Trade Unions acknowledged. I was at a conference that congress organised a number of years ago where it estimated that 27,000 workers or so would be needed. Good, well-qualified, well-paid, union-type jobs are expected to deliver this all over the country, distributed in a way that will benefit rural as well as urban Ireland.

It will have a huge health benefit. One part of the national retrofit plan we are working on is analysis of a large number of homes to see the health benefits of living in a home that is well insulated in this way and is not burning fossil fuels, which create all sorts of air pollution problems globally with climate emissions, locally in terms of air quality standards and in the home. The analysis is not complete yet but will be shortly. It is showing huge health benefits.

I have the good fortune that our house moved to this system a few years ago. We were able to do it when we were doing up our house. Living in a warm, well-insulated house that is heated without burning anything is an incredible quality of life benefit that is hard to describe until you know what it is like. You come down in the morning without fear that the house might be cold. It holds its heat. There is none of the hassle. I have not had to touch the heat pump for the last three years. It has been working away the same way a fridge works. It is similar technology. Fridges do not break down and heat pumps, similarly, do not require huge maintenance or cleaning and do not involve the same problems one gets with boilers and, certainty, open fires, where there is all the scraping, cleaning and hauling things in and out. This change will transform our country.

I know people are sceptical. I read Fintan O'Toole in one of the papers yesterday saying this could be the next mica scandal. I do not believe it will be. The Sustainable Energy Authority of Ireland, SEAI, has been at this for 22 years. We have been learning as we have been doing how to get the building energy rating, BER, systems right, how to check that the quality of the work is good and how to register contractors. I am confident that we have learned in those 22 years. We are not arriving at this without experience or backup. The Sustainable Energy Authority of Ireland has real skill and capability.

This is one of the things for which I am proud of the Government. The Minister for Public Expenditure and Reform, Deputy Michael McGrath, has been a supporter of this cause. I went to him last year saying the Sustainable Energy Authority of Ireland would need an additional 50 staff and he agreed straight away. They are in place now and another 50 will be employed this year. That is not an easy thing in government. Anyone with experience will know it is not easy to get agreement for staff in agencies or Departments. It was the same story in our Department. There was a huge increase in the staffing in this critical area of climate, energy and energy poverty alleviation. To allay Fintan's concerns, we are learning as we are doing, we have good people and this has been thought through at length. It is not a heat of the moment response to the energy price crisis but something that has been worked on for ages.

I did not hear it so I have to be careful but I think Tom Parlon from the Construction Industry Federation was on the radio asking if the Irish people would buy into this and suggesting the construction industry may not be interested in it. On both points, we may prove him wrong. The public response since our announcement last week has been beyond compare. There was something like a 13-fold increase in the number of emails we were getting. The SEAI website crashed when we announced this, such was the unprecedented volume of public interest. This is improving people's homes. There is nothing closer to their hearts than that.

The public will buy in, particularly when the grants we are introducing overcome one of the big obstacles in this regard, namely, making the maths work in order to enable this to happen.

Similarly, Mr. Parlon was concerned that the industry might not be interested in this change over. I do not agree. We have seen a similarly positive response in this regard. What we got wrong in the past 20 years was that the initiatives undertaken were all stop-start in nature. Grant allocations were provided in February, contractors worked through the summer and then downed tools and waited to see what money they might get the following spring. That is no way to build up and develop a good contracting business, so those involved rightly stayed small. Now, however, they know that the funding is available year-round and that it is guaranteed for the next ten years. It is guaranteed because we know that €5 billion is going to be made available for these grants to help make this happen. It is stitched into law as a revenue stream, and the contractors know the Government is serious about this undertaking now and that the funding will not be stop-start.

Equally, people raise concerns regarding whether the workers will turn up. The Minister for Further and Higher Education, Research, Innovation and Science, Deputy Harris, came to me yesterday and stated that there was concern about this but that his experience is that there has been a major take-up. Not only was there an increase in calls on the consumer side when this scheme was announced, but the same was the case regarding the apprenticeship programmes the Minister is setting up throughout the country. Young people and old are seeking to retrain and upskill in order to be good at retrofitting. A PhD is not required. It is not a seven-year process. Grants, such as the 80% scheme for attic and wall insulation that we are introducing, will allow people to start learning the basic skills required for this type of work. Their abilities can evolve from there. Once they have mastered the basics, people can move on to learning the skills required to work on exterior insulation, heat pumps and the other technologies that are part of this scheme. I am confident, therefore, that we can and will deliver the ambition of retrofitting 500,000 homes and improve them to the extent where they will be fundamentally transformed and made fit for purpose and healthy. Equally, the upgraded homes will be more efficient to run and protected against fuel poverty through this investment.

I will go through some of the details and then let Deputy Leddin contribute. I start with the key elements of what is new. The first aspect is the national home energy upgrade scheme, which involves moving to a building energy rating, BER, of B2, or above, which is a higher standard. It applies to any house constructed before 2011. Any house built since then should and will be at or above these standards already. There are several elements to this initiative. The first aspect is increasing the grants. The average grant levels were 30% to 35%. To get this scheme kick-started, it was decided to go up to 45% to 50%. It will vary. The grants are set at a certain level for particular technologies. For example, there will be a set grant for a heat pump, and for each element of the scheme. The benefit of this approach is that if people decide not to do a full retrofit, they will get the same grant for the element of the job they do undertake. Equally, if people are part of a community energy scheme, which is a concept that is really taking off and people are coming together on it, they will all know the collective grant amount. Even though there will be different situations in each house, they will be able to work out what the supporting benefit will be. This aspect then is concerned with increasing the grants to make the maths and economics work.

The next facet is the establishment of one-stop shops. Much work, time and thought has gone into this initiative. We expect about 21 such one-stop shops to start up in the weeks to come. Operators will bring together a range of services to make it easier for households to do this work. The one-stop shop, especially in the context of a deep retrofit, is the best way of getting the process right. It is a complex venture. None of us here know much about whether a heat pump is the right one or the right size or has the right energy performance. These one-stop shops will give householders the ability to undertake retrofit projects in a way that is regulated, checked and performed properly.

Turning to the warmer homes scheme, it has been operating very efficiently and effectively in the context of those houses at risk of fuel poverty and receiving fuel allowance payments. It is important that we have a social policy dimension to this and that we are targeting those at risk of fuel poverty the most. In total, we have €267 million from our budget this year. That will increase next year and every year, given the revenue becomes available from the carbon tax, and €85 million from the budget of the Department of Housing, Local Government and Heritage that will be targeting social housing. Between the two, approximately 58% of the overall budget, some €203 million, is going to be spent on grants for 100% of the cost to address the issue of fuel poverty. That is in addition to the range of other measures that we must undertake. The warmer homes scheme is greatly popular because of the 100% grant. Who would not want to avail of it?

We have built up a backlog. In the region of 7,000 households that have committed to and signed up to the scheme are waiting. We are going to clear list that in the next 18 months to two years. The backlog built up because of the impact of Covid-19 because it was not possible to go into people's homes. The registrations were coming in, but it was not possible to get out to do the work. We will clear that backlog, however. We will go from completing 177 houses a month up to approximately 400 a month and clear it that way. We will then focus on those houses built before 1993. The building standards went up in 1991, and from then onwards we would expect most houses to be at the standard of BER D or above. We want to get to those houses with ratings of E, F and G, which are typically older houses. That is where the issues of fuel poverty and health impacts are at their worst, and we really want to get in and do those. As a result, we will be targeting that area. We will also be widening the conditions for eligibility. The disability allowance is now being allowed as a qualifying category for the scheme and that will allow us to target such households. As well as broadening the areas eligible, we are also increasing the funding. The warmer homes scheme has an allocation of €108 million this year to allow us to clear the backlog. As I said, that figure will increase again next year. It will keep going at a steady volume so that the people carrying out the work will know that this business is going to keep growing.

There are other elements to this initiative. One key aspect is a response to the situation where we find ourselves with very high gas and oil prices. This is an 80% grant. It is targeted at those houses that might not have the funding to do the big retrofit, but that might be suffering from particularly high bills. I refer to projects such as deep insulation of the attic, as well as work on the cavity walls of a house, where gaps in the walls are injected with insulation and filled in. It is a relatively straightforward, quick and not that expensive job. It will vary from house to house, but it might cost €3,000 or so between both upgrades. The energy experts tell us that the benefits reaped are a quick reduction in energy needs. It could be up to 25%, and that would counterbalance the increase in prices that we have seen over the last year. We do not expect these prices to run into next year, but even if they did, this project will allow people to cover the costs of this type of project and give them some protection. It would be an initial step in the direction towards better homes and the other schemes available.

Other measures are coming and happening. The community energy grant scheme is the key one. I was out in an estate in Clondalkin where about 40 houses came together. When this type of project is undertaken collectively, it works really well. It is possible to get the costs down, to swap notes and to access expertise. That street in Clondalkin was able to retrofit the local community centre at the same time as they did their houses. They were doing the community buildings as well as the homes. Being able to place an order for 40 heat pumps rather than one makes it possible to start achieving real efficiencies and cost savings. Most of our houses and estates, and even houses in country areas, were built to common designs. That means it is possible to use aggregation, to bring everyone together and to get all the retrofitting done at the same time. People can learn from each other how the process works and what the benefits are. In that context, this community energy grant scheme is critical.

The other key innovation which is coming, and it will be happening in the third quarter of this year, is a new loans scheme. It will be particularly applicable for households opting for deep retrofitting and where they are providing some of the funding. Typically, it is half the funding. The thinking behind this came from the Strategic Banking Corporation of Ireland. It has been applied already in the context of Brexit, particularly for small businesses and farmers as a way of taking the risk out of a loan.

The concept is simple enough. They provide a certain capital. In this instance the capital will come from the European Investment Bank, EIB, and the European recovery and resilience fund. We targeted this as one of the uses of that European funding. We will create a mechanism whereby the risk of default will be covered for, let us say, the first quarter of the loans. That lending will be provided by that EU fund. The remaining loan may be provided by a variety of different lenders, such as An Post, credit unions or banks.

The beneficial and attractive aspect of this is that when a loan like that is de-risked, when the risk of default is removed, the interest rate is lowered. Typical interest rates are 6.5%, but how about if we could bring that rate down to 3.5% because this is such a large capital job and the payback timeframe will probably be 10, 15, 20 years? A low interest rate has a significant transformative effect in making the maths work, as I said earlier. That lending facility will be in place later this year. As it works, we could scale it up as well as use it in other applications. It is quite groundbreaking and it has taken time to set it up. The EIB has, as far as I understand having spoken to it, never been involved in a scheme in which it is involved with a householder. With European systems and funding, there are all sorts of checks required. We have to make sure it is spot on in terms of regulation and to ensure all the systems are in place. That is why it has taken us a few months to get it up and running, but we will get it up and running. It is critical due to the scale of this transition. In the national development plan, we allocated a total of €8 billion towards this. It is only a fraction of the amount of money we will have to spend. It is not just our housing. We have to retrofit our public buildings, our schools, Garda stations, nursing homes, and commercial buildings. There is a huge project in this. Starting with and getting it right in our homes is key.

I will say one final thing I have taken up pretty much all the time allocated. I will leave Deputy Leddin enough time for his contribution. The most important part in getting this right is the public response. Years ago, I had the great fortune to meet a brilliant Danish parliamentarian through EUFORES, the European parliamentarians for renewable energy and energy efficiency organisation. If Members wish to join EUFORES, it is still in existence. My colleague Ciarán Cuffe MEP is chair of the organisation. I had the good fortune to meet the Danish parliamentarian in the early 2000s when she was working on policy in this area. They were probably the leading thinkers in this area. She made a simple point. She said that this subject is very difficult because, by definition, it cannot be seen. If you invest in building insulation, you do not want it to be seen. This new exterior insulation, which works well, gives the effect that it is a new building. It creates a deeper alcove for the windows and it looks very clean. One would not know it was there. How do we get the political will and the public instinct on board, because it is not easy to take this leap by investing in this? Once insulated, we can forget about it. It is in the home forever and a day. It is, therefore, a better home.

We need to win over the public who believe it is a hassle or who say that they do not have the money or that borrowing is risky. It is about getting across that public initiative. I am of the view that we cracked it in the past week. I have never received as great a response from past initiatives we have done, as this initiative. People are realising that at a time when they are exposed to fossil fuel prices, this is the right thing to do. At a time when we want to be a part of tackling climate change, this is the home front and the front on which we can win. At a time when it is difficult for many people to get a home, a critical and significant crisis, could we not retrofit some of our older vacant buildings that are not being used and in doing so bring them back to life? Part of the town centres first plan is the restoration of old buildings that are underutilised. We can do both at the same time. For so many reasons, this is the key, brilliant project that we can all own. It belongs to every party. We need to get our constituents, and others, to fill in the form, go to the Sustainable Energy Authority of Ireland's website, look at and pick whichever options are right for them and make it happen.

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