The Single Electricity Market (SEM) is the wholesale market on the island of Ireland where electricity generators and suppliers trade the power used by homes and businesses across Ireland.
The utility regulator claims the SEM is good news and brings significant benefits for all consumers. It provides trading opportunities for generators, suppliers and investors while delivering an efficient and competitive electricity market. The market is designed to support competition, allow increased renewables on the system, encourage new investment and support security of supply, all while placing a downward pressure on prices.
We don’t have a SEM for liquid fuels in Ireland, but the question is, “do we need one if the Republic introduces a renewable heating obligation in 2026?”.
The renewable heating obligation (RHO) is the Government’s proposal to introduce renewable fuels into the home heat mix. It will apply to all fuels and is supposed to begin in 2026. The RHO was thrown into some disarray when Green Generation went into receivership in March, and there were claims that fraudulent fuels were entering the Irish marketplace. Green Generation were the main biomethane producer in the ROI and their demise leaves a question mark over future production.
We have always pushed the Department of Environment, Climate and Communications (DECC) for a realistic blend percentage (20%), but with the biomethane lobby struggling to produce biomethane at a reasonable level, we suspect the original proposal of 2.5% (or lower) will be the starting point, rising to 10% by 2030.
A porous border
While the prospect of an RHO is good news as it gives a continued lease of life to renewable liquid fuels, the prospect of Northern Ireland not introducing an RHO would cause problems. We have a very porous border, and many will understand kerosene and diesel moves North and South depending on the duty and exchange rates!
If a blend is introduced in the Republic and pure kerosene is cheaper in NI, then we will see kerosene move south across the border. In addition, if the blend rate is set at too low a level, importers will not bother blending as kerosene is brought into Ireland as Dual-Purpose Kerosene (DPK) for heating and aviation and a low blend rate will be too much bother and they will likely just pay for renewable certificates. This will be cheaper for them and less hassle. Sadly, that would do nothing for the industry’s decarbonisation plans.
In the North, we have explained the issue of a ‘blend rate for the island’ and the civil servants in the Department for Economy’s (DfE) Energy Department understand the issue. We met them at Warmflow in February as part of the biofuels consultation engagement process. Warmflow is a major local employer and kindly gave several representatives from the Department a tour of the facility and we presented on how the liquid fuel sector plans to decarbonise domestic heating.
The meeting was constructive and informative, and the officials viewed a boiler in operation being switched from running on a 100% fossil fuel (kerosene) to a 20% blend of HVO and kerosene.
A blended approach
During the presentation we suggested that ALL forms of low and no carbon heating will be required if we stand a chance to deliver on the 2030 targets. We acknowledged that heat pumps have their place, in a thermally efficient house, but for most older and off-grid homes, we believe that sustainable biofuels are the right choice.
Johnnie Black from Warmflow said: “The key to the blended approach to decarbonisation is that government can work in partnership with the industry and raise the blend percentage as more sustainable biofuels come on to the market, hopefully through indigenous production. A major advantage of using biofuels is that consumers do not have to make any adjustments to the appliance with a 20% blend, so the transition is seamless with no disruption or additional capital cost.”
As part of the presentation, David Blevings from OFTEC added: “Our USP is that we can deliver carbon savings equivalent to the deployment of c.80,000 heat pumps with a 20% blend and that is a very powerful statement, especially as it can be done in six months, without the need for consumer interaction and we have done it before in the transport sector.”
The biofuels consultation in the North closed on 4 March 2025, and the liquid fuel industry is very hopeful that the presentation and tour gave the Department confidence that the industry is ready to deliver on a blended pathway to decarbonising heat.
In its recently published summary of energy actions in 2024 and plan for 2025, it states: The department launched a Call for Evidence10 on 10th December 2024 to explore how biofuels such as HVO and BioLPG can play a crucial transitional role and provide sustainable heating alternatives in situations where low carbon technologies like heat pumps and heat networks are not currently suitable or feasible.
DfE aim to use respondents’ submissions to help map out the complex challenge of heat decarbonisation and inform our approach moving forward, with a Departmental Response to be issued during Summer 2025.
We read this as a positive and expect biofuels to play a key role in decarbonising homes in the new energy strategy. The full report can be seen at: https://www.economy-ni. gov.uk/publications/energy-strategy- action-plan-2025-and-action-plan- report-2024.
In the Republic we have reached out to the Department of the Environment, Climate and Communications (DECC), which is responsible for the RHO, and by the time this is printed, we will have met them to discuss the proposals, to ensure that any proposal will work for the sector and produce meaningful carbon reductions.
In conclusion, we won’t get a single energy market for liquid fuels as we are dealing with two different jurisdictions with separate taxation and excise policies. However, with a blended pathway to decarbonising heat for liquid fuelled homes firmly on the table we do need to see some joined up thinking between DECC and DfE. The question still to be answered is the rate (percentage of blend) and how it can be introduced seamlessly across the island.
Watch this space.
Image from OFTEC