Key plank of Government’s climate plan faces legal challenge from oil industry

A key plank of the Government’s plan to reduce energy consumption by 2030 is facing a significant legal challenge, it has emerged.

Under EU rules, Ireland must make a specific amount of energy savings within the next decade, with a large part of these savings being made through a scheme that requires suppliers to support efficiency projects in businesses and homes across Ireland.

The scheme is being revised by the Department of Environment and under new changes, suppliers of energy used in transport will see their targets substantially increased.

It is understood it is now highly likely that Fuels for Ireland (FFI), the industry body representing oil importers and distributors, will bring a judicial review against the plans when the new scheme is unveiled in coming months. The board of FFI is understood to have voted to bring judicial review proceedings against the plan if the Government proceeds with the revised scheme as it is, with legal advice supplied to FFI stating the prospect of success is good.

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It is understood the group was told by a senior counsel that other providers of energy such as gas and electricity may not be subject to the same regime and this would create an “unjustifiable discrimination”.

The group will argue that the only way to make energy savings in the transport sector is by way of Government policy measures and State-backed incentives and that the oil industry cannot implement such change. Because of this it will argue achieving the targets may be impossible.

FFI has also raised complaints that the inclusion of all transport sector fuels in the scheme is disproportionate on its members given it is primarily aimed at petrol and diesel.

The group has received legal advice too that members would have to pass the costs to customers, which could result in an increase in the price of a litre of petrol or diesel of several cents. The group has been advised also by the senior counsel that the increase in the oil industry’s share of responsibility could have negative and potentially discriminatory effects for the largely rural-based consumers of oil for heating purposes to the benefit of the mainly urban-based consumers of electricity and gas.

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The yearly targets for energy savings are a major component of the European Union’s goal of becoming the first climate-neutral continent by 2050, and feed heavily into Ireland’s plans to hit net-zero emissions no later than the same year.

Energy production and use account for 75 per cent of the EU’s emissions. In Ireland, transport was the second largest source of energy demand in 2020, accounting for 34 per cent of final demand. After the final Cabinet meeting of the summer, the Government announced plans to cut emissions in the transport sector by 50 per cent.

The FFI group was advised its members could find themselves in persistent breach of their obligations under the new plan, which would lead to penalties being applied. This would happen if they can not meet their targets.

Under EU rules, member states must cut their energy consumption by at least 9 per cent by 2030 compared to 2020 levels, which could rise to 13 per cent as part of an acceleration of plans to end the EU’s dependence on Russian fossil fuels.

Ireland uses an Energy Efficiency Obligation Scheme (EEOS) to partially meet these binding energy savings targets.

The scheme puts a regulatory requirement on energy suppliers and distributors to help people save energy. This can be done by supporting the energy user, financially or otherwise, to implement energy saving practices or to carry out upgrades in their property.

A spokeswoman for the Department of Environment said: “The Minister is currently preparing to introduce a new, redesigned EEOS, which will be underpinned by new legislation. This is now scheduled to come into effect from January 1st, 2023.”