Since the invasion of Ukraine, the primary focus of energy policy has shifted sharply from sustainability and towards security and affordability. All three considerations are important for energy policy and deserve attention.
The “energy trilemma” is such precisely because the objectives of sustainability, affordability and security conflict: the cheapest sources of energy often have high emissions, the most abundant sources of energy are often expensive to harness and so on. In general, any given source of energy meets, at most, two of the three criteria. This means that the optimal energy policy will always involve trade-offs.
There are other aspects of energy policy that are often missed. One is the distinction between demand and supply. Sustainable energy must be achieved primarily through the demand side, by reducing demand for fossil fuels, while secure energy is primarily achieved on the supply side, by diversifying the supply of energy. Commentary on energy policy often conflates these issues.
Tackling climate change by proposing that we “keep fossil fuels in the ground” is a supply-side measure. The premise of the argument is that restricting Irish supply of fossil fuels will reduce Irish carbon emissions. This policy unfortunately simply cannot work as long as fossil fuels are available from elsewhere in the world. The Earth’s atmosphere has no way of knowing if a tonne of carbon emissions originated in Corrib or Qatar – the climate impact is the same regardless. Therefore, the only way to reduce Irish emissions from fossil fuels is to reduce Irish demand for fossil fuels, not Irish supply of fossil fuels. Increasing energy efficiency rather than restricting fossil fuel exploration should therefore be to the forefront of climate policy.
Price security
When it comes to energy security, it is useful to distinguish between two types of security: physical security and price security. Physical security concerns whether we have the actual molecules of gas or oil, or the units of electricity, that we require to meet our energy demand. As long as pumps don’t run dry or the lights don’t go out, we have physical security. Price security, on the other hand, concerns the price we pay for our energy, even if we have physical security. It’s not much good knowing the pump has fuel available for whomever wants it if the majority of people can’t afford to buy it. This distinction is frequently omitted from discussions on energy policy.
There are, of course, some energy options that can both decrease the demand for fossil fuels and increase indigenous energy supply, such as renewable energy. Economic and Social Research Institute researchers using Irish price data have shown that renewable energy suppressed electricity prices, with the reduction in energy bills greater than subsidy payments made to renewable energy producers. So far, therefore, renewable electricity has been a net gain for consumers. Other ESRI research has shown that renewable generation is particularly useful during fuel price spikes. While high fuel prices still lead to high electricity prices, they are far lower than they would have been in the absence of renewable generation.
Both pieces of research suggest that renewable generation contributes to energy price security. Nonetheless, renewable generation cannot yet provide physical security. To ensure the lights never go out, we require power stations that will generate electricity whether or not the wind is blowing or the sun is shining.
Physical security therefore requires fossil fuels, for now at least, and so we must consider how to source these fossil fuels in a secure manner. Research by ESRI finds that a terminal to import liquefied natural gas (LNG) coupled with gas storage could reduce Irish exposure to fluctuations in gas prices, although the impact is relatively small. In the absence of new indigenous sources of oil and gas, however, these may be the only options available to enhance our physical energy security.
New gas infrastructure
It is certainly true that meeting our climate goals requires a rapid reduction in fossil fuel usage. However, all else equal, new sources of fossil fuels will assist in increasing both physical and price security, albeit at the expense of our climate goals. There is nothing to be gained by pretending otherwise. In the long term, new gas infrastructure could even help our climate goals, if carbon-free gas options such as hydrogen and biogas prove viable – currently, their cost is prohibitive.
The hard reality is that there is no silver bullet that will meet our energy requirements in a secure manner and at an affordable price while imposing no environmental costs. We must be realistic about the trade-offs we face. Acknowledging that an LNG terminal would assist in diversifying our fossil fuel supply does not automatically mean such a facility is therefore justified. Similarly, acknowledging that increased renewable expansion will not replace the need for fossil-fuelled power plants does not automatically mean renewable investment is not justified.
The total impact on sustainability, affordability and security of each energy investment option must be considered in the round, and there is no one right answer because the future is uncertain. We cannot afford to allow one energy policy goal dominate over other objectives. A robust energy policy leaves all options on the table, and responds in a flexible manner to ensure security.
Muireann Lynch is a senior research officer and research area co-ordinator for energy at the ESRI