Connie Hedegaard visits Dublin

The Danish Commissioner for Climate Action was in Dublin this week for a number of engagements. I met her at a dinner hosted by the Danish Ambassador, Neils Pultz, and at a presentation she made to the IIEA’s Climate Change Group, which I chair. Connie Hedegaard is one of Denmark’s youngest politicians elected to Parliament and served as a Minister for Climate and Energy and Environment. She hosted the UN Climate Change negotiations held in Copenhagen last December. She visited Ireland to get an insight into Government and stakeholder thinking on climate change and used the opportunity to speak at several public engagements.

On the science of climate change, she said that the past 12 months have been the hottest ever since records began. While the effects of the recession may have caused greenhouse gas emissions to fall somewhat the harsh reality is that the basic problem of global warming has not gone away.

The Commissioner was encouraged that so many developed and emerging economies (Russia, Japan, Brazil, South Africa, India etc.) had set targets for emission reductions after the Copenhagen COP. She was expectant that China would soon announce further more ambitious cuts but did not anticipate that the US would enact its climate legislation anytime soon. Therefore the prospects for the Cancun COP were not great. However, agreements might be reached on some technical issues such as forestry and adaptation frameworks. The recent meeting of the European Council agreed that the EU should consider a second commitment period under the Kyoto Protocol (only 30% of global emissions are covered by this agreement) and on the EU’s negotiating position at Cancun. A key aim is to keep the momentum going post Cancun.

Early next year the Commission will publish a strategy for a low carbon society in Europe by 2050 as well as a White Paper on Transport and a long term energy roadmap. Most importantly, the Commission will be seeking, in the context of the post-2013 budget negotiations, to link payments from the EU budget more closely to the EU’s climate change objectives; a sort of climate proofing of EU policies. Thus some CAP payments might be linked to more environmentally friendly activities such as planting forests.  In addition, the Commission will bring forward its proposals on adaptation early next year. The Commission is seeking to wrap climate change policy around the wider but linked issues of energy and resource efficiencies.

Climate change jargon also mentions NAMA; but this covers national appropriate mitigation actions.

The Commissioner gave a very assured and confident presentation and one can see why the word ‘Action’ is including in the title of her portfolio.

Steven Chu – US Secretary of Energy – is in Dublin next week

He is the keynote speaker at an energy/climate change conference to be held next Friday 5th November at the CCD.

Other international speakers at the event which has the theme Pathways to 2050 include Nobuo Tanaka, Executive Director of the International Energy Agency, Marie Donnelly, Director, DG Energy, European Commission, Alle Weinstein, President of the European Ocean Energy Asspociation and Ben Taylor, Shell 2050 scenarios.

This is ‘must attend’ event for anyone interested in what Ireland must do to become a low carbon economy.

Contact jackie.odowd@seai.ie for registration details.

The Story of the Ouzel Galley

315 years ago, in the autumn of 1695, set sail a merchant galley called Ouzel (which is a type of blackbird by the way). A certain Eoghan Massey of Waterford was captain of the vessel whose owners were the Dublin shipping company of Ferris, Twigg and Cash. A year’s voyage to Izmir in Turkey was the intended plan. However, when the Ouzel Galley did not return some three years later – with the crew of 40 men presumed lost at sea – a panel comprising the city’s most respected merchants was set up to settle the question of insurance, which they duly did.

Five years after the Ouzel Galley set sail she returned laden down with booty and riches from her travels and docked at the then Customs House, which is now the Clarence Hotel. It was likely she set sail for the West Indies and some suggest piracy was in fact the real intention of the venture. The ship’s return caused something of dilemma. At a personal level, the crew’s wives and partners had found new companions; there were many young ouzlers running the streets of Ringsend.

As plunder, the cargo could not be legally divided amongst the crew. So what became known as the Ouzel Galley Arbitration Board was re-convened to inquire into the matter. As the owners and insurers had already been adequately compensated, the merchants presiding over the arbitration decided to set up a fund for the alleviation of poverty among Dublin’s decayed merchants; a modern day equivalent of a corporate dig-out. In 1705, the panel of merchants was formally established as the Ouzel Galley Society. Almost a century after the Ouzel had set off on its voyage, in 1783, and after many more arbitrations and dinners, the Society was subsumed into the newly formed Dublin Chamber of Commerce, which is one of the oldest chambers in the world.

The Ouzel Galley Society still exists. It comprises the past Presidents of Dublin Chamber who, like their counterparts centuries ago, played their part on a voluntary basis to help the progressive development and growth of this great city of ours. More

Metro North Approved

An Bord Pleanala has approved the construction of Metro North (MN) from Swords to St. Stephen’s Green in a decision published earlier today.

Apart from shortening the route, very few significant conditions have been imposed; the preferred route and all stations selected have been approved.

 The detailed design of all the proposed stations will have to be approved by Dublin City and Fingal County Council as the Planning Authorities. This will allay fears about possible fire safety risks at the St. Stephen’s Green station that will be shared with the DART and which may have a passeneger footfall of 35,000/hour at peak.

The RPA is required to update the environmental risk management programme to take into account additional geotechnical information made available to ABP through the application by Irish Rail for the DART Underground, in particular in relation to St. Stephen’s Green. This relates to expert evidence submitted to ABP about the probability of the collapse of a least one protected structure should the proposed works be undertaken as planned.

Several protected structures are specifically mentioned and will be the subject of a stage 3 assessment by the contractor. The assessment will included a detailed ground condition survey and will be undertaken before the commencement of the main works. Appropriate mitigation will be agreed in writing with DCC (not the RPA). Monitoring will include the observation of cracks in walls and ceilings.

Specific standards have been set for vibration impacts, ground borne and airborne noise. It can be assumed that these limits will also apply to the DART Underground works.

ABP acknowledges that there will be ‘serious impacts’ in particular adjacent to the city centre Metro stations and ‘substantial’ traffic impacts. However, ABP concluded that ‘such impacts were an inevitable consequence of the scale and nature of the project.’

The Government is now expected to approve Exchequer spending of €1 billion towards the project, including €240 for enabling works. It remains to be clarified if these enabling works will be delayed until such time as the contractor has secured project finance for MN. It is arguable if that a decision about the commencement of enabling works should not be taken until it becomes clear that the project is bankable.

A key and over-arching concern of Dublin business – that the combined MN/DART/LUAS BXD works should be limited to five years -  has been ignored by ABP as it now appears both projects will be constructed sequentially thus resulting in an eight year construction period in the St. Stephen’s Green/Grafton Street area. Some 750 jobs in companies in the hospitality and lesiure sector are at risk as a consequence.

A major flaw of the ABP ruling is that the revised cost benefit assessment completed by the National Transport Authority has not been published. The business community was not consulted about its findings.

Nor has a comprehensive strategic environmental assessment of the cumulative impacts of MN/DART/LUAS BXD works been completed.

ABP did not give clear guidance about the need to guarantee the coordination of the enabling and main MN/DART/LUAS works and the protocols that should be put in place.

An important condition which ABP attached was that RPA should put in place a pro-active public information strategy about the proposed works.

DART Underground Oral Hearing

The substantive oral hearing for the DART Underground project begins on Monday 22nd November at 11.00hrs at the Plaza Hotel, Belgard Road Tallaght.

An Bord Pleanala is due to publish its decision on Metro North this afternoon.

Carbon Disclosure Project

Climate change appears to be on the agenda of many of Ireland’s boards – with leadership provided at CEO/COO level – according to the findings of the 2010 Carbon Disclosure Project.

However, Irish companies have not assessed the (mainly regulatory, reputational and physical) risks of climate change to the same extent as their competitors globally. For example, a remarkably high number (86%) of Irish companies covered by the EU Emissions Trading Scheme still believe they are exposed to regulatory risk.

Aer Lingus, one of the respondents to the CDP, indicated that the extension of the EU ETS to aviation is likely to have an impact on passenger ticket costs.

CRH plc recognised the opportunities in gaining emission credits by investing in JI or CDM projects.

While some 80% of respondents reported they had emission reduction actions, only 45% had actual targets in place; again a poor performance when benchmarked against global competitors; some 70% of whom have set emission reduction targets.

With only 40 of the country’s largest businesses participating in the CDP, the report’s findings clearly indicate that climate change is not yet embedded systematically in Ireland’s corporate DNA. As climate change is clearly not a current priority this conclusion is not a surprise.

Ireland’s falling emissions generate windfall profits

The Environmental Protection Agency’s report on Ireland’s greenhouse gas (GHG) emissions in 2009 published last week deserves closer scrutiny, not least because of the unprecedented reduction in emissions of nearly 8% year on year; a fall of 5.4 million tonnes (Mt) to 62.3Mt

This fall has more to do with the effects of the recession than the delivery of targets set by the now totally out of date national climate change strategy. The GHG emission reductions are a sad testimony to lower economic activity in 2009. For example, a fall of 10.7% in the energy sector (primarily power generation) is a direct correlation of reduced economic output. Likewise transport emissions falling by 7.7% is another reflection of the recession. Most notably emissions from cement plants were down 38%.

The good news is that Ireland’s Carbon Fund will not have to buy carbon credits to meet our Kyoto targets (a budget of €240m was set aside for such purchases).

On the other hand, the energy utilities got free allowances for the 1.6Mt they did not emit. If these were sold at the current market price of €15/tonnes this would represent a windfall gain of some €24m. The potential windfall gain for the cement producers could be as high as €19.5m. Food processors too also had reduced emissions (and potential windfall profits from trading carbon).  As the recession continues in 2010, windfall profits will also be generated this year.

Apart from the recession, what is Ireland’s climate change strategy? The Government’s Climate Change Bill is long overdue; the Oireachtas Joint Committee on Climate Change has published its own proposals. The national retrofit campaign is under-performing. It is business as usual for agriculture (which is now the single largest contributor to overall emissions at 29% of the total). A positive is that the share of renewable in gross electricity consumption increased by 14% in 2009 from 11.7% in 2008.

As the Cabinet sub-committee on climate change has yet to meet this year it is not surprising that climate change has fallen off the political radar screen.

How to Reduce the Government Deficit to €6bn by 2014

The Government’s deficit is the in the ballpark of €20 billion.

In 2014, and according to Department of Finance figures, 3% of GDP will be some €6 billion.

How do we find €14 billion?

If the more sensible and economically justified recommendations of Bord Snip Nua and those of the Local Authority Efficiency Review Group were implemented along with restrictions on overtime and improved rates of absenteeism, savings in programme expenditure of at least €5 billion could be secured. These non-pay cuts in public expenditure were identified 15 months ago in the case of An Bord Snip.

I would go further.

If cuts in programme expenditure are not in the process of being fully implemented by the end of 2011 – and given the terms of the Croke Park Agreement – then the pay for the highest paid public servants (i.e. those earning in excess of €100,000) should be reduced and benchmarked against what their counterparts earn in net take-home pay terms in competitor economies.

That leaves €9 billion.

The Government must face down the public sector trade union’s effective veto on the outsourcing of services such as water, waste and debt collection. With greater outsourcing – and a more systematic use of PPPs – the Exchequer component of the public capital programme could be reduced by at least €2 billion over four years as private investors stepped up to the plate.

The deficit then falls to €7 billion.

To balance the books there will have to be a relatively modest increase in taxation and increased user charges. The tax base should be broadened and the measures identified in relation to local finances, as recommended by the Commission of Taxation, should be implemented. Some tax credits could be phased out. In addition, it is not equitable on those who pay income tax that over 500,000 in employment do not. With the help of a bit of revenue buoyancy, let us assume taxation will rise by €3 billion, or by 10%, within four years. Even with this level of increase Ireland will still have one of the lowest taxed economies in the OECD.

The buffer, the contingency provision, to bridge the gap of €4 billion could come from the sale of State assets, and a report from Colm McCarthy on the options will be presented before the budget.

So if we take a four-year view and stop getting hyper over this year’s target deficit figure, it might dawn on us that we can plot our way out of the mess we find ourselves in without doing too much damage to our growth prospects. The measures above-mentioned would have limited impacts on the productive side of the economy.

US Ambassador hosts Dublin Chamber event

US Ambassador Daniel Rooney was the host of the recent Business After Hours event held in his residence in the Phoenix Park. He presented his credentials to President McAleese on 3 July 2009. Since then he and his wife Patricia have attended ‘town hall’ meetings in 17 counties and intend to visit all counties in due course. In his speech he emphasised the importance the US embassy attaches to commercial development between Ireland and the US to our collective and mutual benefit.  Stephen Anderson is the US Embassy Commercial Counsellor.

The residence was constructed by John Blaquiere, Bailiff of the Phoenix Park, in 1776; the same year the United States declared its independence. The Duke of Wellington, Sir Robert Peel and Winston Churchill and many others all enjoyed their stay. For a rent of a penny a year, the Office of Public Works leased the property to the first US Ambassador (Frederick Sterling) to Ireland who took up residence in 1927.

It was a great honour for us – some 100+ members – to have to privilege to hold a Chamber networking event in such a prestigious location. Thanks are also due to the event’s sponsor AON, represented by its CEO in Ireland, Richard Endersen.

Ten Positive Things About The Irish Economy

1. Ireland ranks in the top quartile globally for many issues that affect business competitiveness. For example, 55 IDA Ireland sponsored companies have decided to invest in Ireland since the beginning of the year.  Their boardrooms forensically assess the risks associated with foreign direct investment and have concluded Ireland was their location of choice.
2. The cost of the banking crisis has been determined; a new EU-wide regulatory regime has been agreed; and Ireland like other EU countries has now a banking sector that is fit for purpose. Once NAMA becomes fully operational (in February 2011) development and property activity is expected to increase.
3. Ireland’s economic, budgetary and fiscal policies, like those of other EU countries, will be peer reviewed in considerable detail in order to prevent a repetition of past mistakes.
4. While the scale of the Government’s deficit is huge and the 3%/debt GDP requirement by 2014 is challenging, the €14 billion that needs to be culled from public sector programmes together with a modest increase in taxation will not affect the productive side of the economy provided correct policy choices are made. Ireland will remain one of the lowest taxed economies in the OECD.
5. All of Ireland’s main political parties have broadly similar economic policies. They all accept the 3%/GDP target. A change in Government will not see a major change in policies.
6. Ireland’s 12.5% corporate tax rate is beyond challenge. The European Commission re-iterated this last week.
7. While much reduced, Ireland’s Public Capital Programme is still, relatively speaking, one of the most ambitious in Europe. When potential investments in the green economy are added capital expenditure in excess of €100 billion may be made by 2020. There is a greater willingness in Government to consider outsourcing and the use of PPPs.
8. Overall business confidence, in particular among SMEs, is improving with many companies recruiting again; there has been a 55% increase in job placements in the past quarter compared to 2009.
9. Ireland’s savings ratio (at nearly 12% of GDP) is extremely high. Once sentiment improves consumers will start spending.
10. Export sales are up 12% (July 2010 on previous year) with firms expected to recover some 70% of export earning lost last year.

I am assuming this will get no media attention.