Ireland may well be a relatively small and unimportant energy market in global terms, but there is no excuse for any complacency on the Government's part in dealing with the emerging "energy gap" that we now face.
Nearly 90 per cent of our energy comes from fossil fuels - oil, coal and natural gas - and most of these must be imported. Indeed, we have become one of the most oil-reliant countries in the world, largely as a result of the economic boom of the past 10 years. Oil accounts for nearly 64 per cent of our overall energy consumption, more than 20 points higher than the EU average. Figures also show that for every 1 per cent rise in economic growth, oil use goes up by 2 per cent - mainly due to the explosion in car, SUV and truck numbers.
As the price of oil rises inexorably, this has become an expensive folly. Since 1995, the price of petrol at the pumps has risen by more than 67 per cent, according to Central Statistics Office figures. More alarmingly, the price of home heating oil has risen by nearly 133 per cent in the same period. The increase for natural gas has been less dramatic, at 53 per cent, but the rise in prices for all fossil fuels has had a knock-on effect on electricity bills, putting them up by more than 55 per cent. With crude oil trading at about $64 per barrel and every indication that its price will continue to increase as worldwide oil production peaks, perhaps as early as 2008, we need to start thinking seriously about where we go from here, particularly in developing alternative sources of energy.
Had Shell E&P not made such a mess of its €900 million plan to develop the Corrib gas field, we would already have natural gas flowing in from that part of the Atlantic to supplement the rapidly depleting Kinsale Head gas field. The best estimate is that the Corrib field would supply up to 60 per cent of Ireland's natural gas demand for at least 10 years. After it runs out, and assuming no other fields are developed, we will have to import all of our gas from Britain via the European grid. Indeed, as early as 2020, it is predicted that the EU as a whole will be importing three-quarters of its gas supply from Siberia and, to a lesser extent, Algeria. And as we at the beginning of this month, when Russia cut off the flow of gas to Ukraine, the Kremlin is not above playing geo-politics with this increasingly important resource.
It is encouraging that Ireland now looks set to meet the EU target of generating 13.2 per cent of its electricity from renewable sources - mainly wind power - by 2010. But we should also be focusing much more on energy efficiency. As the European Commission has said in its latest green paper on the issue, energy consumption could be cut by up to 20 per cent through conservation measures, such as much higher standards of insulation for our building stock. This offers a more sustainable way of reducing our extraordinarily high dependence on fossil fuels than the chimera of "going nuclear", with all of the risks inevitably attached to it.