Ireland greenlights a Renewable Heating Obligation

In May, the Environment Protection Agency (EPA) published its report on carbon emissions and targets, which made grim reading for the Government.

Ireland’s 2030 target under the EU’s Effort Sharing Regulation (ESR) is to deliver a 42% reduction of emissions compared to 2005 levels by 2030.

The latest EPA projections show that currently implemented policies and measures (WEM) will achieve a reduction of 9.5% on 2005 levels by 2030, significantly short of the 42% reduction target.

So, what can be done about it?

Simple, introduce a renewable heating obligation at a realistic rate that can work alongside electrification and offer off-gas grid homes a solution that is readily available and offers immediate carbon reductions.

A 20% HVO/kerosene blend is equivalent to installing 160,000 heat pumps – something that would take 26 years at the current pace!

That’s the message that the liquid fuel sector has been lobbying on for the past year and we now see that the message is getting through.

The Government in Ireland had proposed to introduce a renewable heating obligation (RHO) in 2026 for the heating sector and, through TAZCH (a partnership made up of OFTEC, UKIFDA and Fuels for Ireland), we undertook an extensive engagement programme regarding RHO and, in particular, to ensure the industry proposal of a 20% renewable heating oil blend is understood.

This has involved direct contact with senior politicians, including the Minister for Climate, Energy and Environment, Darragh O’Brien TD, members of the Oireachtas Climate Committee, as well as senior civil servants directly involved in drafting the RHO. We also published a major policy document on the RHO in late June which received extensive coverage in print and broadcast media.

Good news

The good news is that in mid-July Minister O’Brien secured the support of his colleagues for the introduction of a renewable heating obligation.

The Heads of Bill (which the cabinet has approved) are the outline of the draft legislation which will be fleshed out into a full bill. Once this is completed, our understanding is that it will be sent to the European Commission for a three-month consultation process. Following this, it will return to the Oireachtas to commence its passage through the legislative process. It is envisaged that the Oireachtas Climate Committee will play a crucial role here. TAZCH has had extensive engagement with members of the Committee and will leverage this to ensure that TAZCH can help shape the draft legislation.

The main elements of the Heads of Bill are as follows:

• The RHO will place an obligation on the suppliers of fossil fuels used for heat to demonstrate a proportion of the energy they supply is from a renewable source.
• Year one will have a rate of 1.5% with year two 3% followed by a full review of scheme performance and future rate increases.
• The Government has committed to delivering up to 5.7 TWh of indigenously produced biomethane by 2030.
• The sector will require support to commence biomethane production, which will be facilitated both through capital investment and the introduction of the RHO, ensuring there is a demand side market incentive for biomethane in Ireland.

While a renewable obligation is very good news indeed or the liquid fuel sector, a starting blend of 1.5% is too low and instead of driving the supply of renewable heat, it risks becoming little more than a paper exercise in certificate trading, with negligible impact on fossil fuel use. As a sector, we are fully committed to accelerating the uptake of renewable fuels for heating and made that point to the Minister at a recent meeting.

We said the RHO, if properly designed, could be a transformative milestone, but in its current form, we believed the scheme was fundamentally flawed and would not deliver on its core objective of reducing emissions.

This has been recognised by the Government and we have been informed that the Department is considering a higher rate for liquid fuels from year one, already looking at the cost of 5%, 10%, 15% and 20% blends, and at the availability of adequate fuel stocks.

This is very good news indeed and we will be working to ensure that the policy is shaped towards our objective of a more realistic and viable obligation rate that will ensure the liquid fuel industry can maximise its potential to decarbonise the heat sector. Our solution offers consumers a realistic route to achieving decarbonisation, with no capital cost and real, meaningful carbon reductions.

_{Image provided by OFTEC}