Government welcomes publication of NESC report International Trade Dependencies and the Energy Transition

The government welcomes the publication of NESC’s report, International Trade Dependencies and the Energy Transition. This new report from the National Economic and Social Council is the second in a series on the topic of energy policy to be published in 2025.

Ireland’s international trade dependencies in the energy sector are set to evolve over the course of the energy transition, shifting away from our current reliance on imported fossil fuels towards a more complex mix of renewable energy sources and alternative energy carriers. The nature and extent of these dependencies will substantially shape our energy security and economic resilience.

The report highlights the many costs and disadvantages of fossil fuels, including:

• high levels of CO2 emissions, which causes climate change
• air pollution, which negatively impacts upon human health and the environment
• exposure to international supply disruptions and energy commodity price volatility
• financial outflows paid to foreign suppliers of fossil fuel commodities
• financial penalties arising from failure to meet EU greenhouse gas reduction targets

The report calls for a national plan to reform Ireland’s system of strategic energy reserves in order to integrate renewable fuels such as green hydrogen, ammonia and biomethane and align with our climate ambitions. It also calls for fossil fuel subsidies to be reduced in a fair and equitable manner to assist in shifting economic incentives toward investment in renewables.

The report also examines strategic issues in relation to cross-border trade in electricity, including Brexit and the security of undersea electrical interconnection infrastructure. It highlights cost-competitiveness challenges that must be addressed if Ireland is to become a major net exporter of renewable electricity in the future.

The report also examines Ireland’s green hydrogen potential, which presents an opportunity to displace fossil fuels in hard-to-decarbonise sectors. Ireland will need to develop strategies for cost-competitive green hydrogen production while fostering strategic partnerships with countries that will be major sources of green hydrogen demand in the future.

The NESC report provides 5 recommendations to Government:

• review fossil fuel subsidies and redirect fiscal resources towards investment in renewables
• formulate a long-term national plan for strategic clean energy reserves
• enhance structures to monitor and protect subsea energy infrastructure
• engage EU-UK negotiations on the EU’s Carbon Border Adjustment Mechanism (CBAM) to safeguard the Single Electricity Market (SEM)
• assess financial measures to further incentivise the development of green hydrogen projects

NESC's inquiry included an extensive literature review, policy analysis, data analysis, and consultations with over 50 stakeholders. The report and further details can be found at the following link: NESC.