Characteristics of Business as Usual

Government Policy

The IEA’s reassurances about future supplies have made it easy for governments to continue with their current policies and we assume that this will continue to be the case in Ireland until 2030. During this period, we assume that

• Investment in roads and airports etc will continue.
• Energy prices will be kept low to enhance international competitiveness. Carbon taxes will not be introduced.
• Fossil fuel subsidies will stay in place and will even be augmented in some areas. For example, the government will give loan guarantees to the developers of gas pipelines.
• There will be a continued push to increase exports.
• Electricity will continue to be generated largely from current sources – coal, peat and gas. Renewable sources will only be developed if they become relatively cheaper than fossil sources during the period – no importance will be given to replacing energy imports with energy produced from Irish sources.
• The same will apply to the development of biofuels for transport. In general Ireland will do whatever the EU requires, such as encouraging greater energy efficiency, but never rush to do it.
• Ireland will continue to concentrate on developing knowledge-intensive (i.e. Low energy) businesses. Goods requiring a large amount of energy in their manufacture will be imported.
• Economic growth will continue to be the primary national goal. To the extent that growth is possible, the capital stock of the country will rise. This will require increased amounts of energy to run and to maintain.

Business Sector

Our main assumption here is that the business sector will expect energy prices to rise steadily between now and 2030 and will plan accordingly.

• The level of waste will grow in step with national income. Waste disposal will become even more costly and incinerators will be presented as an energy source. Recycling will develop to the extent that it is commercially viable.
• Firms will do what they can to move incrementally towards environmental and social sustainability but no big changes will occur as they will expect payback within 18 months from their projects. .
• Construction industry energy efficiency standards will meet EU regulations but not to exceed them. Energy-intensive construction materials will continue to be used although the Energy Performance in Buildings Directive will cause a drop in the energy consumption of buildings in use.
• Labour will still be regarded as the major cost of production and reducing the cost of labour per unit of output will continue to have priority over reducing the cost of energy. (Dave: When does the model say that energy becomes the major cost for the economy as a whole? (It will obvious vary from sector to sector and it might be useful to show where each sector switches from one to the other. One problem you will probably find in answering this question is that there is a major difference between the energy costs of an established business, where the energy tied up in capital equipment was invested years ago and a new business which needs to buy capital equipment embodying large amounts of energy now.)

Households

• As energy price rises become news, people become more conscious of the money they spend on energy and try to waste less.
• People take separating waste for granted.
• Houses that have been built to require low energy input increase in value.
• Long commutes increase as people seek a better quality of life and cheaper housing. This is facilitated by road improvements.