We are signing this Memorandum of Understanding today against a background of strong links, geographic, cultural and economic, between Ireland and the UK and of close cooperation and partnership across many spheres.
Our hope is that this signing will be the trigger that enables developers of scale to bring forward projects to trade green power and, in the process, create significant employment in parts of this country where jobs are badly needed.
While both the UK and Ireland have challenging mandatory renewable energy targets to meet, Ireland has thousands of acres of cutaway bog and extensive afforestation, as well as propitious wind resources. Quite simply, this could be a win-win for both our countries.
For the last number of years, our cooperation on energy policy has been intensifying, through bilateral meetings at ministerial and official level, through our liaison and cooperation in various EU forums, through the ISLES project and through our joint participation in the North Seas Offshore Grid Initiative. This cooperation has been guided and given impetus at the highest political level and at the British-Irish Council.
Our cooperation on energy policy is also set in the context of EU legislation on energy market liberalisation, which aims to create regional energy markets first, ultimately leading to single electricity and gas markets in Europe.
A number of years ago, as part of the British-Irish Council, we agreed to establish energy working groups on grid and on marine renewable energy. At the June 2011 British Irish Council summit, a programme of joint work was launched that spans the potential for renewable energy trading between the jurisdictions as well as workstreams on interconnection and market integration.
The Memorandum we are signing today will affirm the two States’ shared commitment to maintaining a strong partnership on energy issues, to achieving closer integration of our electricity markets and to maximising the sustainable use of renewable energy resources.
By way of background, the Renewable Energy Directive was introduced in 2009 as part of an ambitious climate and energy package that aims to secure what is referred to as "20-20-20" by 2020. This means we are working towards a 20% reduction in greenhouse gas emissions, a 20% increase in energy efficiency and a 20% input of renewable energy into our energy mix.
As part of the Directive, each Member State was assigned an individual ambitious and challenging renewable energy target. The UK’s target under the Directive is 15% and is proportionately the largest increase assigned to any Member State. Ireland’s 16% target is proportionately the third greatest increase.
While we are both increasing our renewable energy input, achieving the targets required under the Directive, in the remaining 8 years, will certainly be challenging for both countries. In the case of Ireland, I do not underestimate the significant amount of work required to achieve the necessary increase. We have, however, made good progress in recent years and I am confident that we will achieve our target in the electricity sector.
The Renewable Energy Directive provides for a number of mechanisms that can be used by Member States for international trade in renewable energy. These include joint projects involving commercial developers, as well as what are called ‘statistical transfers’.
Where a joint project is approved, the renewable energy generated by a specified project in one country may be exported to another country and may be counted towards that other country’s renewable energy target. A statistical transfer arises where the excess relating to an overachievement of the target by one country is sold to another country that has fallen short of its target.
Up to now, while electricity could be exported between jurisdictions, the renewable value in terms of target compliance remained in the country where the renewable energy was produced. The Directive, for the first time, introduced the concept of the trade in the renewable value of electricity.
It must be said that, to date, very few countries have made use of these co-operation mechanisms. They raise a number of technical, regulatory and economic issues. The reality is that any agreement on cooperation mechanisms must be cost-effective and must result in benefits for both states and for commercial developers.
The European Commission has recognised the challenges for Member States which are seeking to establish agreements in this area and has signalled its intention to publish guidance on the co-operation mechanisms during the course of the Irish Presidency.
By our agreement today we are committing ourselves to a programme of work that will, I believe, prove the merits of proceeding very quickly to a formal inter-governmental agreement – and a new export industry for this island.