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Minister for the Environment Eamon Ryan arriving at a Cabinet meeting this morning Sam Boal/
Energy Crisis

New energy security plan outlines how Ireland will offset prices and 'potential shocks'

Reduced VAT, extra fuel allowance, and €20 million towards solar panels for households with medical equipment are among the new measures.

A REDUCTION IN VAT, an extra €100 fuel allowance payment and the elimination of the PSO levy are among measures confirmed today aimed at offsetting the burden of energy price hikes.

A new National Energy Security Framework examines Ireland’s energy needs amid Russia’s war on Ukraine and how it will deal with ‘potential shocks’ to the energy system.

The framework, published by the Department of the Environment, sets out measures to manage the impact of price increases on consumers and businesses in the short-term, maintain a secure supply, and reduce dependency on imported fossil fuels in line with the EU’s plan to cut out Russian energy.

VAT on gas and electricity will be reduced from 13.5% to 9%, as previously reported by The Journal, from May until October and recipients of the fuel allowance will receive an additional €100 payment.

The Public Service Obligation Levy, which is charged to all electricity customers through their bills, should be fully removed by October 2022.

Currently, the levy is €4.30 per month (excluding VAT). Inclusive of VAT, it adds up to €58.57 per year.

The existing reduction in excise duty on petrol, diesel and marked gas oil will continue until October 2022 when the next Budget is announced instead of ending in August.

€20 million is being allocated to installing solar panels for households with a heavy dependence on energy supply, such as people who need energy for at-home medical equipment. 

Measures will be implemented to increase protections for financially vulnerable people and customers in debt, such as asking suppliers to work more closely with people in debt and provide options like an extended payment plan. It will look at where customers can get a lower price on their bills by renegotiating with their current supplier rather than needing to switch.

The framework references actions that are already planned under other strategies, such as developing a national policy statement on heat with a focus on decarbonising buildings and developing district heating.

It also reiterates the government’s plans to retrofit homes and invest in the transport sector to reduce reliance on fossil fuels.

Electricity customers with a smart metre are to be given better access to their data and consumption patterns to select the tariff that’s most appropriate for them.

Additionally, the Commission for Regulation of Utilities will examine charges within its remit to ensure the differential between peak and off-peak tariffs allows customers to save money by moving some energy use to off-peak times.

The war in Ukraine

Ireland has established an Energy Security Emergency group in the wake of Russia’s invasion of Ukraine.

The emergency group is reviewing and testing Ireland’s oil, natural gas and electricity emergency plans and procedures to examine how they would stand up if the conflict in Ukraine escalates further.

In March, the European Commission presented a plan to rein in Europe’s dependence on Russia for fossil fuels by two-thirds before the end of 2022.

The outline of the REPowerEU plan said the measures could cut 155 billion cubic metres (bcm) of Europe’s fossil gas use, which is the same volume that was imported from Russia last year.

The EU imports 90% of the gas that it consumes, with almost half (45%) typically sourced in Russia, as well as 25% of oil imports and 45% of coal imports.

The latest round of EU sanctions banned Russian coal imports into the bloc, though an embargo on gas and oil remained more contentious given some members states’ heavy dependence.

This morning, Ireland’s Climate Change Advisory Council published a letter to the government telling it that Ireland must reduce its reliance on fossil fuel imports.

In the letter, which was addressed to the coalition leaders with the finance and public expenditure ministers CCed, the Council said the crisis in Ukraine “further emphasises the urgency with which we need to reduce our reliance on imported fossil fuels”.

It told the government that “length and delayed planning timelines” are impeding renewable energy projects and “critical” grid infrastructure.

“The Council is concerned that the current timelines for delivery of core measures [in the Climate Action Plan] are too long and the procedures to facilitate the delivery of these measures are not progressing fast enough.”

The Council said it supports the carbon tax being charged and the revenue being used to fund climate plans and emphasised that people most vulnerable and most impacted by energy issues must be protected.

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