Energy
"There will be new investment screening legislation, anticipated to apply to transactions that directly or indirectly relate to, or impact upon, one or more of several matters"
ENERGY
Energy Transition - Very Rapid Legislative Change
2023 will see the adoption by the EU of significant legislative changes to drive decarbonisation of key sectors including energy, buildings and transport. These were developed in the Fit for 55 and REPowerEU packages.
Changes will include new mechanisms to speed up the delivery of renewable energy projects in a Recast Renewable Energy Directive III. Short periods for transposition into domestic law are envisaged but, even so, the Council of Ministers agreed an emergency Regulation (EU) 2022/2577 laying down a framework to accelerate deployment of renewable energy, to apply in 2023.
In addition to a Recast Renewable Energy Directive, there will be revisions to the EU Emissions Trading Scheme, the Energy Efficiency Directive, the Energy Performance of Buildings Directive, and the Energy Taxation Directive. There will also be new or revised Regulations, which apply directly from the date they specify. These will include the Carbon Border Adjustment Mechanism, the Effort Sharing Regulation, the Alternative Fuels Infrastructure Regulation, and the Land Use, Land Use Change & Forestry Regulation. The changing world of natural and renewable gas markets and infrastructure will be regulated through a Recast Regulation and a Recast Directive, expected to be adopted in 2023.
Now that much of the Clean Energy Package has been transposed into Irish law, the challenge of implementing it will be a feature of 2023. This will involve continuing work on energy market rules and grid systems to support higher volumes of renewable power, resourcing public bodies to facilitate the permit-granting process, and developing regulatory structures to support consumer interaction with markets.
Testing of Climate Commitments
Ireland now has a multi-layered climate governance framework. 2023 takes us to the mid-point of our first five year carbon budget, the statutory intent of which is to get to the end of 2030 with greenhouse gases reduced by 51% compared to 2018. 2023 also takes us into a second year of sectoral emissions ceilings. We have a new Climate Action Plan 2023, which will carry over some of the actions not yet closed off under the ambitious 2021 Plan.
Our overview of the Climate Action Plan 2023 is here.
In terms of renewable energy support, there will be another auction for onshore renewable projects (RESS 3) and a first for offshore wind projects (ORESS 1). The success of the scheme so far will become more apparent through levels of project delivery.
Market Intervention
War in Ukraine prompted interventions in electricity and gas markets uncharacteristic of EU regulation. Electricity interventions will be applied in Ireland in 2023 to cap infra-marginal rent of non-gas generation and to require temporary solidarity contributions from surplus profits generated by businesses with activities in the crude petroleum, natural gas, coal and refinery sectors. While these interventions are billed as emergency and temporary, the EU intends in 2023 to carry out a more comprehensive, long-term review of wholesale electricity market design.
"A further driver will be the objective of reducing the whole-life carbon emissions of construction projects."