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RR RUEHBL
DE RUEHDL #0907/01 3481604
ZNR UUUUU ZZH
R 141604Z DEC 07
FM AMEMBASSY DUBLIN
TO RUEHC/SECSTATE WASHDC 8785
INFO RUEHLO/AMEMBASSY LONDON 2442
RUEHBL/AMCONSUL BELFAST 0654

UNCLAS SECTION 01 OF 03 DUBLIN 000907 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ENRG EPET ECON EI
SUBJECT: SUSTAINABLE ENERGY: A NEW OPPORTUNITY FOR 
IRELAND'S ECONOMY? 
 
 
 ¶1. (U) Summary: Ireland is moving quickly to increase its 
use of renewable energy and position its business sector to 
take advantage of the boom in green technology. Rising 
dependence on foreign sources of energy, EU environmental 
obligations, and growing energy costs that threaten to 
diminish Ireland's competitiveness have prompted the 
government this year to adopt an aggressive policy requiring 
greater use of new energy sources and greater efficiency. 
While abundant natural energy resources such as wind and 
ocean add to Ireland's advantage, its ability to harness 
their potential for commercially available technology remains 
its biggest challenge and one that will require even more 
government support than is currently available.  End summary. 
 
 
IRELAND'S ENERGY SUPPLY AND CLIMATE CHANGE CHALLENGES: THE 
CONSEQUENCES OF ECONOMIC SUCCESS 
--------------------------------------------- ------------ 
 
¶2. (U) Ireland's remarkable economic and population growth 
over the last decade has resulted in a significant increase 
in the Republic's reliance on imported energy and 
consequently its vulnerability to energy supply disruptions 
and price volatility.  While indigenous gas fields supplied 
over 80 percent of the Irish market in 1996, today 90 percent 
of Ireland's energy comes from imported fossil fuels.  Adding 
to Irish concerns is the fact that Britain, Ireland's largest 
energy supplier, is rapidly increasing its own reliance on 
energy imports amid growing domestic demand and declining 
North Sea supplies. 
 
¶3. (U) Strong economic activity has also complicated 
Ireland's ability to meet its Kyoto Protocol targets for 
greenhouse gas emissions.  A European Commission report 
released this fall predicts that by 2010 Ireland's emissions 
will be 22.6 percent above its 1990 levels -- the benchmark 
year for the Protocol -- meaning Ireland will miss its target 
by 10 percentage points. 
 
¶4. (U) According to data from Sustainable Energy Ireland 
(SEI), the Republic's electricity currently comes from 
natural gas (40 percent), coal (28 percent); oil (15 
percent), peat (10 percent), renewables (3.5 percent), and 
imported electricity (3.5 percent).  With a statutory ban on 
nuclear power generation along with commitments to reduce 
emissions from "unclean" sources such as coal and peat, 
energy economists predict Ireland's dependence on imported 
natural gas for electricity could reach 70 percent by 2020 if 
no steps are taken. 
 
¶5. (SBU) Given this import dependence and almost nonexistent 
indigenous production, Ireland is beginning to look at the 
possibility of liquefied natural gas (LNG) imports as a 
solution to its energy security problem.  Paddy Power, 
Managing Director of Shannon LNG (a subsidiary of Hess 
Petroleum), told us that his company is planning to construct 
a USD 800 million LNG import terminal on the west coast of 
Ireland.  He said that the facility will be connected to the 
domestic pipeline network and could almost completely fulfill 
Ireland's gas import needs.  Currently, Ireland imports 85 
percent of its natural gas by pipeline from the UK.  In light 
of this fact, Irish policymakers are concerned that a 
disruption somewhere in the European supply chain would mean 
the lights going out on the island.  (Note: Ireland is at the 
far western end of the supply chain.  End note.)  Power said 
that it is for this reason that the government deemed the 
Shannon LNG project as of "strategic significance," which 
should lead to a faster approval process. 
 
RENEWABLE ENERGY MOVING UP THE POLITICAL AGENDA 
--------------------------------------------- -- 
 
¶6. (U) While traditional fossil fuels will continue to 
dominate the energy mix in Ireland, many political observers 
have characterized 2007 as a watershed year for Irish energy 
policy with the introduction of a unified Republic of 
Ireland/Northern Ireland electricity market. Moreover, the 
inclusion of the Green Party in Ireland's ruling coalition 
that won the national election in May 2007 has pushed energy 
and environmental issues even higher on the Republic's 
political agenda and facilitated the government's lean toward 
increasingly aggressive policies in this area. 
 
¶7. (U) Even before the ascent of the new coalition 
government, however, Dublin had begun moving toward a 
sustainable energy agenda in line with the EU's common energy 
policy and the need to develop reliable sources for 
indigenous energy.  The Irish government in March released a 
long-term energy plan that commits to boosting the proportion 
of energy from renewable sources to 15 percent of electricity 
 
DUBLIN 00000907  002 OF 003 
 
 
by 2010, and 33 percent by 2020.  This rate of change 
translates into a three percent per year decrease in 
greenhouse gas emissions.  The plan also promised to cut 
emissions by requiring all peat electricity stations to be 
co-fired with 30 percent renewable material by 2015, and by 
requiring all petrol and diesel fuel to have a 5.75 biofuel 
mix by 2009. 
 
¶8. (SBU) To achieve these targets, Ireland's National 
Development Plan for 2007-2017 set aside new funding, 
including 276 million euros in the sustainable energy sector, 
to support renewable energy, energy efficiency, and 
innovation.  The plan designated 150 million euros 
specifically for research into ocean and tidal energy. Morgan 
Bazilian, Special Advisor to the Minister of Energy, told us 
that he hopes to get additional funding in this area of 
energy development. 
 
ECONOMIC BENEFITS OF CLEAN ENERGY TECHNOLOGY 
-------------------------------------------- 
 
¶9. (U) Ireland's move to greater renewable energy use is as 
much an economic decision as political.  Irish businessmen 
and government officials estimate that if the right policies 
and incentives are adopted now, clean energy technology could 
trigger Ireland's next investment boom and reinvigorate the 
now slowing Celtic Tiger economy.  Recent UN data show that 
$85 billion was invested worldwide in developing green 
technology in 2007 alone -- funding that Ireland would like 
to tap. 
 
¶10. (U) The Republic's western seaboard has one of the best 
wind resources in the world and the introduction of an 
all-island electricity market and prospect of a UK-Ireland 
electricity connector by 2012 could enable Ireland to export 
"green" electricity into mainland Europe.  Wind is expected 
to provide the bulk of Ireland's renewable energy over the 
next decade; however, energy experts counsel that improved 
grid connections and efficient electricity storage facilities 
are urgently needed to maximize its potential. 
 
¶11. (U) Ireland's energy sector current employs 12,000 
workers, according to Irish government data, and Minister for 
Energy Eamon Ryan has told the Irish press that this figure 
has the potential to increase four-fold.  Already, 
enterprising Irish companies such as Airtricity and OpenHydro 
have entered the green energy market with success. 
Airtricity has developed into a 1.3 billion euro firm in less 
than ten years and OpenHydro was selected as the first 
renewable energy company to install a tidal turbine at the 
European Marine Energy Center off the Scottish coast. 
 
¶12. (U) In addition to revenue generation, Irish economists 
predict the move to renewable energy will create long-term 
benefits for Ireland. Rising energy costs have placed Ireland 
in the top three most expensive European countries for 
industrial consumers of electricity, hurting the Republic's 
business competitiveness.  Moreover, Ireland already has had 
to set aside millions of euros to purchase carbon credits for 
its excessive emissions. 
 
LOOKING TO DEVELOP A NICHE IN OCEAN ENERGY 
------------------------------------------ 
 
¶13. (U) Irish officials expect that ocean energy may be 
deployed in small-scale demonstrations by 2010, but do not 
expect it will contribute significantly to Ireland's 
electricity supply before 2020.  The prospect of ocean 
energy, however, has keenly interested Irish business as it 
represents an untapped commercial market and Ireland's 
offshore coastline is ideally suited to large-scale wave and 
tidal generation. 
 
¶14. (U) Using the offshore wind market as a reference, Irish 
economists project the value of the domestic market for ocean 
energy could be 180 million euros in 2020, rising to 780 
million euros by 2025.  They estimate by securing 20 percent 
of the European export market, Irish developers could bring 
1.6 billion euros to the Irish economy by 2025 and create 
1,300 new jobs.  SEI projects even greater gains, estimating 
the market for ocean energy may be worth 2 billion euros for 
Ireland by 2025. 
 
¶15. (U) Business officials assess the biggest challenge for 
Ireland will be making the ocean technology commercially 
viable.  While wave energy is close to being able to provide 
commercially available electricity -- a wave energy prototype 
has begun generating electricity during trials in Galway -- 
tidal technology is still prohibitively expensive compared to 
wind turbines and carries with it potential environmental 
 
DUBLIN 00000907  003 OF 003 
 
 
problems such as negative effects on ecosystems.  Ireland, 
too, is likely to face stiff international competition, with 
experimental ocean energy projects currently being tested 
throughout the world including in other European nations such 
as Denmark, Greece, Sweden, Norway, and the UK. 
 
SEEKING U.S. EXPERTISE 
---------------------- 
 
¶16. (SBU) Bazilian told us that the Irish government could 
use U.S. collaboration in a number of key areas, including 
making ocean energy commercially viable, the technology to 
promote energy efficiency, and experience in revenue 
decoupling.  (Note: Revenue decoupling is a ratemaking 
mechanism designed to eliminate the dependence of a utility's 
revenues on sales, thereby allowing the utility to actively 
promote energy efficiency without having to sacrifice 
financial stability.) 
 
COMMENT 
------- 
 
¶17. (SBU) On energy and environment issues, the Irish 
government is looking for ways to ensure security of supply 
and fulfill its Kyoto commitments.  On the latter, Ireland is 
on the hook to reduce its emissions to 13 percent above 1990 
levels by 2012.  However, Ireland will only be able to reach 
this goal through the purchase of emission credits because 
the government has yet to implement policies that will allow 
it to reach its targets for electricity from renewable 
sources.  Alluding to Irish history, one climate change 
economist we spoke to joked that the only way the government 
can reach these targets is to cut the population in half by 
promoting outward migration.  Inevitably, the right policy 
will likely be a mix of initiatives, including building an 
LNG regasification terminal, boosting the ocean and wind 
energy sectors, and improving energy efficiency. 
FOLEY