Link between Energy and Economic Activity: Benefits of Reducing Fossil Fuel Consumption

This report explores the link between energy and economic activity, highlighting the benefits of reducing fossil fuel consumption. It also discusses the measures taken by Ireland to transform into a low carbon economy and provides an overview of Ireland's national performance and future trajectory. Policy changes for achieving a sustainable model by 2030 are recommended.

ENVIRONMENTAL
AND
SUSTAINABILITY

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Contents
INTRODUCTION......................................................................................................................1
Link between energy and economic activity..............................................................................1
Economic benefits of reducing fossil fuel consumption............................................................1
Measures taken by Ireland to transform into low carbon economy...........................................2
Ireland’s national performance till date and future trajectory....................................................3
Energy Trilemma.....................................................................................................................11
REFERENCES.........................................................................................................................13

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INTRODUCTION
Energy has a very close relation with the economic growth of the nation. Without energy no
projects of infrastructural development can run. Since the countries are highly dependent on
the conventional fuels for their economic growth projects hence long term sustainability is in
question marks (Murphy, 2012). This report shows the linkage between economic activity
and energy. It also highlights the benefits of reducing the use of fossil fuel consumption. It
also describes the initiatives taken by Ireland for converting it into low carbon economy.
Along with this, it also represents national performance till today and its future trajectory.
Policy changes done by Ireland so as to achieve a sustainable model by the end of 2030 is
recommended in last section of the report.
Link between energy and economic activity
Energy plays a very crucial role in the economic development and growth of the country. The
energy system is driven by the demand that comes in the economic activities. The energy
demands and economic growth always fluctuates as per the changing global scenario which
in turn varies with demographic and population trends. Energy demands also changes as per
the level of activities going on in any nation, income of people, structural changes and
technological changes. Providing energy services also includes operating cost, investments,
and fuel costs if applicable. Energy empowers economic growth as all the economic projects
are directly or indirectly dependent on the amount of money a country has (Varley, 2016).
Researches shows that energy used per unit economic output has declined but this is possible
due to large shift in the energy use i.e. from direct use of fossil fuels like coals to the use of
high quality fuels. Time series analysis also suggests that GDP and energy cointegrate.
Energy utilisation granger causes GDP when additional variables like production inputs and
energy prices are included. The most significant role of energy is in production. There are
certain factors that strengthen or reduce the linkage between economic activities and energy
use over a period of time. Some of them are replacement among other inputs and energy
within an existing technology, change in technology, changes in the composition of the
energy inputs and outputs.
Economic benefits of reducing fossil fuel consumption
Fossil fuels have been used as a source of energy for many years. It has been seen that
developing countries are highly dependent on such fuels. Since the fossil fuels are getting

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depleted hence the cost of the fossil fuels are increasing day by day. The petroleum and
natural gas which is the major fossil energy resources for any country is costly (Stern, 2011).
The amount of money spent by the country is increasing their budget expenses. This is not
good for the country which aims to develop itself at a faster rate. There are certain economic
benefits that any company can gain due to reduction in fossil fuel consumption. Some of
them are:
 It reduces the overall cost of the expenditure that a country makes for its energy
needs.
 The cost that is saved from purchasing less amount of fossil fuel can be used for
development of technology that helps in harnessing renewable energy.
 It helps the country to maintain a cash crunch which can be used for other social
development projects.
 Fossil fuels produces lots of waste hence reduction in their use can help in bringing
the green economy (Ellabban, Abu-Rub and Blaabjerg, 2014).
 Reduction in the use of the fossil fuel helps the nations in reducing the cost that is
spent on waste management.
 Since only few countries have their own gas and oil reserves hence the have to
purchase it from OPEC countries. Due to this purchase, imbalance gets created in the
value of money of both the nations.
Measures taken by Ireland to transform into low carbon economy
Ireland over the years has taken many steps so as to transform itself into the low carbon
economy. It has made its vision for 2040. Some of the measures taken by Ireland government
are:
 They have invested € 22 billion which is around one fifth of the entire budget to
different measures in the fields like agriculture, transport and the environment that has
been built. This will work as the economy seems to undergo a high growth (Gössling,
Scott and Hall, 2013).
 They plan to stop burning coal for producing electricity at the ESB’s Moneypoint
plant as it considered to be as the single largest carbon emitter by 2025. It is not
working as the progress of the alternative sources is not so much.

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 By 2030, they aim to ban the purchase of all diesel and petrol vehicles 10 years before
what UK has planned for itself. There is also a target of having at least 500,000
electric vehicles which is one third of the State’s private transport fleet. This is
working as the Ireland government has already started to work on it.
 For transformation, additional infrastructure is made to carter planned growth. It is
working as the government has already started to act upon this direction.
 Bus Eireann and Dublin bus will be instructed not to buy anything other than 2019 in
a bid to minimise air pollution in the cities. It is working as some trail projects to run
public transport with electric vehicles has already started.
 Approx. € billion is to be allocated for retrofitting more than 45000 homes and
schools that has been built prior to 2008. This will be done from 2021 so as to make
these infrastructures with materials that are climate friendly. They will be upgraded to
BER B energy rating which is the second highest in this area (Foley, et al. 2013). All
pre-plans have been made in this direction.
 Smart country-side projects has been undertaken so as to reduce the greenhouse gas
emission. This involves projects related to the sustainable food production,
sustainable green jobs, making environment healthier and deepening our energy
security. It is also working.
Ireland’s national performance till date and future trajectory
Ireland has been performing very well in different areas of energy and economic growth. Its
initiatives have focused towards converting Ireland into a lower carbon emitting state. They
want to stay ahead of other nations that include UK also.
The kaya’s Identity explains a formula for Total carbon dioxide emission.

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Kaya Identity for Ireland is
In terms of electricity generation the data for Ireland suggests
Actual electricity demand for Ireland is illustrated in the figure below

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For Ireland economy, energy and related emissions have been illustrated below.

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For energy the dependency on Import of the fuels has been illustrated in the figure below.
Their progress towards renewable targets is showed in the figure below

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In generation of electricity the carbon dioxide that is released by the country is illustrated
below.
In the generation of electricity the composition of fuels has been elaborated in the figure.

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The amount of carbon dioxide generated in the production of electricity has been depicted in
the below given draft.
There is a serious effect of renewables on the generation efficiency.

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Ireland’s greenhouse emission in terms of different industry has been elaborated below.
CHG emission from 1990 to 2016 in Ireland has been discussed in the graph below.

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In this the CHG emission the carbon emission has raised from 3.5 to 3.7% from 1990 to 2016
where the highest was recorded from 2004 to 2007. Energy industries CHG emission was
11% in 1990 which is now 12% and the highest was in 2001 to 2003 where the carbon
emission reached to 17.5 Mt (Carter, 2014). Agricultural CHG emissions between 1990 to
2016 changed from 20 Mt to 19.6 Mt where it reached its highest mark in the year 1998 with
21.95 Mt.
Ireland’s aggregate reduction in terms of carbon dioxide emission is estimated to be done by
80% by 2050 across the electricity generation, transportation sector and built environment
(Burke-Kennedy, 2018). The estimated total carbon dioxide emission is showcased below.

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Sector wise analysis non ETS for the coming years are as follows.
Residential emission in the coming years have been elaborated in the below given graph.

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Future performance trajectory for different sectors have been elaborated as
Overall 16% renewable energy share is targeted till 2020 and as per the current progress
11.9% can be achieved by 2020 (Sullivan, 2018). The trajectory towards decarbonisation in
the longer term is not in the right direction.
Energy Trilemma
Energy Trilemma considers three core or essential dimensions i.e. energy equity,
environmental sustainability and energy security (Wyman, 2018). With the use of renewable
energy sources, this trilemma can be reduced. Countries are accessing households with good

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energy supplies. The energy supplies must be affordable, reliable and under competitive
prices (Sullivan, 2018). Energy trilemma has also become easier to solve as the countries
have understood the importance of not using fossil fuels as their major energy resource.
Policy changes that could help Ireland to achieve sustainable model by 2030 are:
 It is essential that Ireland works on reducing the carbon footprints that is generated
from household activities.
 Country needs to reduce the expenses on different types of fuels so that it can
maintain its economy at sustainable level as the growth of the economy is already
slow.
 Policies such as less use of private vehicles can be beneficial for the country and for
this public transportation needs to be boosted up. More focus must be given on
developing the vehicles that runs on electricity especially subways (Hilliard, 2018).
 A national plan for managing the carbon emission from the companies must be
implemented in an appropriate manner.

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REFERENCES
Burke-Kennedy, E. (2018) Ireland 2040: €22bn to turn State into low-carbon economy.
[Online] Available at: https://www.irishtimes.com/business/energy-and-resources/ireland-
2040-22bn-to-turn-state-into-low-carbon-economy-1.3394805. [Accessed on 22nd December
2018]
Carter, N., 2014. The politics of climate change in the UK. Wiley Interdisciplinary Reviews:
Climate Change, 5(3), pp.423-433.
Ellabban, O., Abu-Rub, H. and Blaabjerg, F., 2014. Renewable energy resources: Current
status, future prospects and their enabling technology. Renewable and Sustainable Energy
Reviews, 39, pp.748-764.
Foley, A.M., Gallachóir, B.Ó., McKeogh, E.J., Milborrow, D. and Leahy, P.G., 2013.
Addressing the technical and market challenges to high wind power integration in
Ireland. Renewable and Sustainable Energy Reviews, 19, pp.692-703.
Gössling, S., Scott, D. and Hall, C.M., 2013. Challenges of tourism in a low‐carbon
economy. Wiley Interdisciplinary Reviews: Climate Change, 4(6), pp.525-538.
Hilliard, M. (2018) Ireland ‘can’t reach’ target to cut carbon emissions by 2020. [Online]
Available at: https://www.irishtimes.com/news/environment/ireland-can-t-reach-target-to-
cut-carbon-emissions-by-2020-1.3576192. [Accessed on 22nd December 2018]
Murphy, K., 2012. The social pillar of sustainable development: a literature review and
framework for policy analysis. Sustainability: Science, practice and policy, 8(1), pp.15-29.
Stern, D.I., 2011. The role of energy in economic growth. Annals of the New York Academy
of Sciences, 1219(1), pp.26-51.
Sullivan, K.O. (2018) ‘Concerning lack of progress’ on sustainable development in Ireland.
[Online] Available at: https://www.irishtimes.com/news/politics/concerning-lack-of-
progress-on-sustainable-development-in-ireland-1.3706168. [Accessed on 22nd December
2018]
Sullivan, K.O. (2018) Global warming: Ireland set to miss 2020 emissions targets [Online]
Available at: https://www.irishtimes.com/news/environment/global-warming-ireland-set-to-
miss-2020-emissions-targets-1.3316805. [Accessed on 22nd December 2018]

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Varley, T., 2016. A living countryside?: the politics of sustainable development in rural
Ireland. Routledge.
Wyman, O. (2018) World Energy Trilemma. [Online] Available at:
https://www.worldenergy.org/work-programme/strategic-insight/assessment-of-energy-
climate-change-policy/. [Accessed on 22nd December 2018]