Renewable Heat Obligation Scheme to be in place next year
The government has also given its approval to commence drafting of the Renewable Heat Obligation Bill 2025.
The bill will provide a legislative basis for administration of the scheme next year - 2026.
Set to be in place until 2045, the RHO will obligate suppliers of fossil fuels used for heat to demonstrate a proportion of the energy they supply is from a renewable source.
This will support emissions reductions in Ireland's heat sector and contribute significantly towards meeting national climate and energy targets.
As Ireland imports most of its fossil fuels, the heating sector is a significant contributor to the country's high energy import dependency.
The RHO aims to help to reduce reliance on imported fossil fuels and strengthen energy security.
A secondary objective of the RHO is to support the delivery of government's commitment for up to 5.7 TWh of biomethane to be produced in Ireland per annum by 2030.
In addition to approving priority drafting of the bill, the government also reaffirmed its commitment to supporting the indigenous biomethane sector.
Identified as a key renewable fuel under the scheme, biomethane will provide a significant contribution as the country looks to diversifying gas supply.
Biomethane production activity will largely occur in rural areas, with the potential to develop a sector of significant scale to benefit the rural economy in Ireland, the Department of Climate, Energy and Environment said.
The bill includes a specific measure to provide support to indigenously-produced biomethane, encouraging obligated parties to procure supplies from domestic producers.
This measure will be subject to formal notification at EU level and require justification for its inclusion.
In tandem with the drafting process, the Department of Climate, Energy and the Environment will engage with the EU Commission to ensure compliance with EU Single Market rules.
The RHO heads of bill sets out the necessary functions and provisions of the recently appointed scheme administrator – the National Oil Reserves Agency.
The bill provides detail on opening obligation rates of 1.5% in year one, and 3% in year two.
While no final target level has been set, obligation rates are expected to increase ambitiously following a full scheme performance and market review in year three, the department said.
Minister O'Brien said: "I welcome the support shown for the introduction of the RHO, and input received from key stakeholders as part of the design process across the last number of years.
"Insights shared have provided valuable information – ensuring we provide the required level of support to our newly emerging renewable fuel markets and appropriately manage the resulting impact on end-consumers.
"As we begin the drafting process over the course of the next few months, my officials intend to maintain ongoing engagement at EU level – to ensure the scheme is fully aligned with EU trade principles.
"Approval of the general scheme by government will now aid investment in our domestic renewable fuel industry, leading to indirect job creation, particularly across the rural economy in Ireland, helping to stimulate and sustain rural communities.'
While biomethane production has been deployed across Europe at significant scale, it is at a nascent stage of development in Ireland.
Currently, Ireland has only two operational biomethane facilities injecting biomethane into the national gas network.
The volume of biomethane injected is small, equating to circa 75 GWh per annum, which is equivalent to 0.001% of Ireland's current gas demand.
The 5.7 TWh biomethane target would equate to 10% of Ireland's current gas demand.
While much of the emissions savings of biomethane used in the system can be counted in the energy sector, clear benefits from the production of this renewable gas can also be achieved in the agricultural sector, according to the Department of Climate, Energy and Environment.
Biomethane production provides significant opportunities to reduce agricultural carbon emissions by offering diversification options to farmers, reducing the consumption of chemical fertiliser through the production of the biomethane by-product digestate.
As set out in the National Biomethane Strategy, government has committed to a biomethane sector support package of two capital grant programmes, and the introduction of the RHO, which was identified as a key demand side incentive to support delivery of approximately 10% of Ireland's current gas demand.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Irish Examiner
32 minutes ago
- Irish Examiner
Trading principles for predictability — what the EU gave up to avoid a tariff war
In the hours following the announcement that the US and EU had struck a deal last weekend on tariffs, European reaction was mixed. European Commission President Ursula von der Leyen said the deal, which imposes 15% tariffs on most items going both ways, "creates certainty in uncertain times" and "delivers stability and predictability, for citizens and businesses on both sides of the Atlantic" as she tried to sell the deal to the 27 EU member states. But if Ms von der Leyen expected a lap of honour to ease her troubled start to her second term, one was not coming. "It is a dark day when an alliance of free peoples, brought together to affirm their common values and to defend their common interests, resigns itself to submission," French Prime Minister Francois Bayrou wrote on X of what he called the "von der Leyen-Trump deal". German Chancellor Friedrich Merz himself initially appeared satisfied, saying that the agreement "succeeded in averting a trade conflict that would have hit the export-oriented German economy hard". But by Monday, amid cross-party criticism, Mr Merz said the deal would "substantially damage" his nation's finances, but acknowledged that the negotiating team "couldn't expect to achieve any more" as Mr Trump's willingness to enter into a 30% trade war was apparent. Hungarian Prime Minister Viktor Orban, an ally of Mr Trump, said the US president "ate von der Leyen for breakfast" while Spanish Prime Minister Pedro Sanchez said he would support it "without any enthusiasm". Across the bloc, there has been criticism of Europe's perceived capitulation, with many echoing Mr Bayrou's sentiments that it poses fundamental questions about the cohesiveness of the project. German Green MP Sandra Detzer told her parliament that the EU "has agreed to a deal that abandons fundamental principles of rules-based global trade, instead of long-term stability". Ms Detzer's alarm is representative of a particular sharp end of the deal. According to one think tank, the deal will cost the German economy around €6.5bn in terms of its GDP in the first year, while experts have slashed the country's growth forecasts in recent months. Fabio de Masi, a German MEP, told EuroNews this week that not only was the deal bad, it was "a betrayal" for which Ms von der Leyen should resign. The bloc is set to face 15% tariffs on most of its goods including cars, semiconductors, and pharmaceuticals entering the US, and 'zero for zero' tariffs on a number of products including aircraft, some agricultural goods and certain chemicals – as well as EU purchases of US energy worth €643bn over three years. But as the tariffs were set to kick in on Friday, the two sides had not agreed on all of the details, which Ms von der Leyen's commission has stressed will be a "set of principles" and not a trade deal. On Thursday, commission spokesperson Olof Gill said that "from there will flow the additional negotiated exemptions that we're looking to bake into our agreement with the US". Drinks tariffs What shape those carveouts take is still to be decided, with a 15% tariff applying until they are. That is of particular concern to the drinks industry across the continent. From Irish whiskey to French and Spanish wines, exporters across Europe have been arguing for a carveout on their products. The US tariff on European spirits is currently 10%. Brussels is keen to reduce that to zero or, for wine at least, to the Most Favoured Nation (MFN) rates that are set on a fixed cost per litre basis, rather than in percentage terms. Until recently, spirits had benefited from zero tariffs between the US and EU following an agreement in 1997 that also included other countries such as Canada and Japan. That lasted until 2018, when the EU response to US steel and aluminium tariffs included increased duties on US bourbon and other spirits. These were suspended in 2021. From Irish whiskey to French and Spanish wines, exporters across Europe have been arguing for a carveout on their products. File photo US most-favoured-nation rates for wine are 19.8c per litre for sparkling and 6.3c per litre for most other wine, which equates to very low rates in most cases. But as Mr Trump signed an executive order overnight into Friday, there was no movement on the exemption and the drinks industry will, for now at least, pay the 15% rate. With EU officials privately briefing Reuters that negotiations could run into late autumn, that will mean financial pain for those businesses in the short-term, at least. Speaking to journalists at a press conference on Thursday, commission spokesperson Olof Gill said: 'The commission remains determined to achieve and secure the maximum number of carve-outs, including for traditional EU products such as wine and spirits. 'It is not our expectation that wine and spirits would be included as an exemption in the first group announced by the US tomorrow, and therefore that sector, as with all other economic sectors, will be captured by the 15% ceiling.' Motor tariffs In Germany, a number of car manufacturers revised down profit guidance on the back of the tariffs, which will face a 15% tariff as well, but for BMW, the impact of the agreement was "exaggerated". 'I think this tariff discussion is way exaggerated and also its effects on the industry,' chief executive Oliver Zipse told the Financial Times. 'What's more important is the question, are the products attractive?' Carveouts At Tuesday's Cabinet meeting, enterprise minister Peter Burke updated ministers on the detail of the weekend's agreement, telling journalists that there will be exemptions to the tariff regime, with aviation one for which Ireland had successfully argued alongside others. 'The key thing is that there will be a number of carveouts. Obviously, aviation has been cited as zero-for-zero, but also in relation to agri-foods and potentially spirits.' Ireland, like many other countries, is banking on the carveouts agreed protecting key sectors like agri-foods and that the rate for pharmaceuticals would not exceed 15%. Like many countries across Europe, ministers here are privately saying that the deal is far from ideal, but also query what else is to be done. By Friday, they could point to Mr Trump's executive order, which imposed tariffs on many countries with whom he had not negotiated. But there is also acceptance that the tariff regime brings with it a new reality, one with which the EU needs to grapple. If countries are arguing for exceptions, how does the European negotiating team balance those interests? And what will the reaction be when the final deal is reached?
RTÉ News
34 minutes ago
- RTÉ News
Stress test shows AIB and BOI could withstand an economic shock
An EU wide bank stress test has found that the country's two largest banks currently hold enough capital to withstand an economic shock. The European Banking Authority exercise was conducted on a sample of 64 banks from 17 EU and EEA countries, covering 75% of EU banking sector assets. The results indicate that the largest EU banks would be resilient to a severe hypothetical stress scenario over a three-year period from 2025 to 2027. It assumes a simultaneous and prolonged recession across the EU and other advanced economies, driven by severe global disruptions. Under the scenario, the disruptions are caused by escalating geopolitical tension, particularly in the Middle East, and a rise in protectionist trade policies worldwide, including tariffs. It concluded AIB's transitional Common Equity Tier 1 (CET1) capital ratio - an important measure of a bank's financial strength - would stand at 13.4%. While the CET1 capital ratio for Bank of Ireland would stand at 13.9% under the adverse stress test scenario. Both are above the average 12% CET1 capital ratio, which is up from the avearge 10.4% in the 2023 exercise. AIB's Chief Financial Officer, Donal Galvin, said the bank's result of 13.4% fully loaded CET1 in the EBA's hypothetical adverse scenario "demonstrates our high capital base and capital resilience in the EBA adverse scenario". "AIB continues to be very well-capitalised with a CET1 ratio of 16.4% (1) at H1 2025 which remains substantially in excess of regulatory requirements," he added. The EBA said the strong performance of the EU banks in the 2025 stress test "is reassuring, nonetheless, this should not lead to complacency among banks or supervisors". The Director of Banking & Payments Supervision at the Central Bank, Domhnall Cullinan said: "On balance, the scenario in use for the EU area is broadly aligned with the 2023 exercise but the impact of the stress test is milder than the results from that exercise. "This is mainly due to banks entering the exercise with stronger profitability, and stable asset quality," he added. Mr Cullinan said despite prevailing uncertainty, "the benefits of resilience built up in recent years are evident, with banks having sufficient capital to absorb the impact of the severe scenario." "Given the uncertainty, there remains a need to maintain and continue to build resilience, both financial and non-financial."
Irish Independent
3 hours ago
- Irish Independent
European banks would weather an economic shock, stress tests find
The EBA tested how 64 European banks, including 51 in the euro zone, would react to a prolonged recession across the EU and found none would breach their core capital requirement, and only one would breach its leverage requirement. AIB, Bank of Ireland, Barclays Bank Ireland, Citibank Holdings Ireland and Bank of America Europe DAC were among the banks subject to the stress test exercise. Domhnall Cullinan, the Central Bank of Ireland's director of banking & payments supervision, said: 'On balance, the scenario in use for the EU area is broadly aligned with the 2023 exercise but the impact of the stress test is milder than the results from that exercise. This is mainly due to banks entering the exercise with stronger profitability, and stable asset quality. 'Despite prevailing uncertainty, the benefits of resilience built up in recent years are evident, with banks having sufficient capital to absorb the impact of the severe scenario. Given the uncertainty, there remains a need to maintain and continue to build resilience, both financial and non-financial.' The Central Bank of Ireland pointed out that the stress test is not a pass or fail exercise, and no threshold is set to define the failure or success of banks. Instead, the findings inform the 2025 Supervisory Review and Evaluation Process for banks, which is conducted by joint supervisory teams made up of staff from the European Central Bank as well as the Central Bank in Dublin. The EBA concluded that the results indicate the EU banking system could withstand a severe but plausible macroeconomic scenario, reflecting the resilience built up in recent years, but it urged lenders to maintain adequate capital. European and American banking authorities introduced stress tests after the global financial crisis of 2008 which led to costly bailouts of banks, with Irish taxpayers among those left to pick up the tab. Some elements of the adverse scenario used in the stress tests have already begun to materialise, the EBA pointed out, citing US President Donald Trump's tariffs and the heightened conflicts in the Middle East. Lenders accounting for three quarters of EU banks' total assets took part in the exercise, which simulates the losses they could incur by looking at their performance over a three-year period, using both a baseline and an adverse scenario. Under the latter, worsening geopolitical tensions and protectionist trade policies lead to an increase in energy and commodity prices, disrupt supply chains, and depress consumption and investment. This all leads to a 6.3pc contraction in EU economic output between 2025 and 2027.
