Saving the planet doesn’t have to be expensive, as EU regulations on the use of low-carbon fuel by ships will have a ‘moderate’ but not ‘dramatic’ effect on the Irish economy, an economist from the University of Galway and Taoiseach’s economic adviser, Professor Alan Ahearne made the forecast.
A study to be published by Professor Ahearne and Daniel Cassidy has found that marine fuel prices will continue to rise due to the trend towards more sustainable energy sources.
However, the impact of ships switching from fossil fuels to more expensive renewable and low-carbon alternatives will not have a major effect until 2050. The research, funded by the Marine Institute, calculates that by then , this will reduce the economic Gross Value Added (GVA). productivity of almost 8 pc.
Consumer goods costs are also expected to rise by just over 1pc by 2040 and almost 2pc by 2050 due to marine fuel regulations, Prof Ahearne said.
As an island, Ireland is one of the most shipping-dependent economies in the world, Professor Ahearne explained at the Navigating to 2050 conference hosted by Irish Lights at Dublin Castle last week.
In total, 90% of Irish imports and exports move by ship through Irish ports, and any change in marine fuel prices is bound to have a ripple effect.
As part of the European Green Deal, a new FuelEU Maritime regulation aims to steer the EU maritime sector towards decarbonisation.
This is in line with the EU’s ‘Fit for 55’ target which aims to reduce net greenhouse gas emissions by at least 55% by 2030. The regulation establishes a fuel standard for ships and includes a requirement for the most polluting ship types to use shore-side electricity. It also places the responsibility for compliance on shipping companies.
“If you’re going to add extra costs to shipping it can also affect the wider Irish economy, so we’ve tried to quantify the impact of Fit for 55 to see if it’s going to add extra costs. to trade,” Professor Ahearne said. .
“The impact on GVA of switching to renewables is calculated at -1.56pc by 2030, but increases to -8pc by 2050.
“Our exports are going to grow quite vigorously over the next 25 years anyway, so there will be moderate effects on the overall economy.
“When we were worried about a hard Brexit, with very high tariffs, the research produced much bigger numbers which could have had a very big impact on our economy.
“In comparison, these numbers are quite moderate. You also need to calculate the impact of doing nothing in terms of more sustainable fuel use and the resulting cost of destroying the planet,” he said.
The article by Professor Ahearne and Mr Cassidy is part of a series documenting research carried out over the past four years.
Prof Ahearne said he did not wish to comment on the cost of living crisis or the impact of recent tech job losses on the Irish economy as it relates to ‘policy areas’ which fall within his government’s purview .
Dutch shipping expert Carien Droppers told the conference that Ireland should factor the shipping risks posed by offshore wind farms into maritime planning.
His job is to develop safety regimes for offshore wind development in the North Sea, one of the busiest sea areas in the world with more than 50 wind farms.