The government published a long-awaited climate plan yesterday, with the Taoiseach defending the government’s pathway to the EU target of zero emissions by 2050, suggesting the plan is all about “nudging” people to do the right thing.
The report looks to address this by focusing on a number of sectors including electricity, enterprise, built environment, transport and agriculture, forestry and land use. There are 180 action points in the plan.
The report includes accelerating the take-up of electric vehicles, aiming to have 950k electric/hybrid cars on the roads by 2030, a near doubling of the previous 500k target. There
will be restrictions on oil boilers and gas boilers and a multi-billion € scheme to retro-fit 500k homes by 2030 (currently, around 25k). In the energy sector, 70% of electricity will have to be generated from renewable sources by 2030, up from 30% currently. Five year carbon budgets will be established for each government department.
Climate change issues are on the radar of the Central Bank as well and as recently as last month, the Deputy Governor spoke on the topic at the Department of Finance and Sustainable Nation Ireland Conference. She noted that there is a growing consensus over the channels through which climate change can affect the financial sector, with the most direct link from physical risks through the insurance sector. While there is a role for public investment, a significant part of the adjustment will fall to the private sector.
The Governor, also presented on the topic back in February in an economic letter entitled Climate Change and the Irish Financial System.
Goodbody Stocbrokers believe the risks of climate change call for ongoing monitoring of climate risks, together with the development of climate-driven scenario analyses and stress tests. They note that climate change was one of the factors highlighted by the Governor in April in his Tail Risks and the Irish Economy speech which first floated the idea of a climate change as a possible input into the need for a Systemic Risk Buffer (SyRB) to enhance the resilience of the financial system.
According to Goodbody Stockbrokers, "Climate change factors (and the recent surge in Green Party seats in the European elections) are only going to grow in importance in the years (and decades) ahead. The Central Bank will clearly be cognisant of the risks involved, but it is clear the banks will have a role to play in addressing the risks and providing funding for investment."