A recent joint report by Ireland’s Fiscal Advisory Council and the Climate Change Advisory Council has highlighted the substantial financial risks associated with failing to meet the European Union’s climate targets by 2030. The cost of inaction on climate change could result in compliance costs ranging from €8 billion to €26 billion, significantly higher than previous government estimates of €3.5 billion to €8.1 billion. Keep reading as we dive into these findings and what they mean for corporate sustainability.Â
Understanding the projected compliance costs
The EU has set legally binding targets for member states to reduce greenhouse gas emissions by 55 percent by 2030. Failure to achieve these targets would require Ireland to purchase surplus emissions allowances from other member states. This would lead to substantial financial penalties. The recent report indicates that despite implementing current climate action plans, Ireland may still face compliance costs between €3 billion and €12 billion.
Several factors contribute to Ireland’s risk of non-compliance:
- Slow implementation of climate policies: Despite ambitious plans, the execution of climate policies has been sluggish, hindering progress toward emission reduction goals.​
- Dependence on fossil fuels: Ireland’s continued reliance on fossil fuels for energy production poses challenges in transitioning to renewable energy sources.​
- Agricultural emissions: The agricultural sector remains a significant emitter of greenhouse gases, and current measures have been insufficient to curb these emissions effectively.​
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Economic implications beyond compliance costs
The cost of inaction on climate change extends beyond EU compliance penalties. Climate change poses broader economic risks, including:​
- Infrastructure damage: Increased frequency and severity of extreme weather events can lead to costly damage to infrastructure. ​
- Public health challenges: Rising temperatures and changing weather patterns can exacerbate health issues, increasing healthcare costs.​
- Agricultural disruptions: Altered climate conditions can negatively impact crop yields, affecting food security and the agricultural economy.Â
To mitigate these financial risks, Ireland must accelerate its climate action efforts by expanding its renewable energy infrastructure to reduce dependence on fossil fuels and lower emissions.Â
Enhancing energy efficiency through the implementation of advanced technologies across sectors can significantly cut energy consumption and emissions. Additionally, promoting sustainable agriculture is essential to addressing emissions from the agricultural sector and ensuring long-term environmental and economic resilience.
Conclusion – Seizing the opportunity for a sustainable future
The cost of inaction on climate change poses a serious threat to Ireland’s economic stability. However, this challenge also presents a significant opportunity – businesses that prioritise sustainability today will emerge as the resilient leaders of tomorrow.Â
Those that delay risk financial penalties, reputational damage, and increased regulatory uncertainty, while those that take proactive steps will gain a competitive edge. Future-proof your business by closing sustainability knowledge gaps and embedding sustainable practices. Explore our sustainability training for employees and stay ahead of the curve.
