"There are one million buildings out there requiring retrofit and providing job opportunities for thousands"
I am grateful for the opportunity to speak to this important conference on energy and job creation.
Over 18 months ago the people of this country got a new government but they got the same old economy. An economy in deep recession almost submerged in debt, shedding workers by the thousand and crippled by multiple policy mistakes made over a decade. The new government also inherited an economy being directed from outside in particular in respect of the major fiscal parameters. Most people understand that a new government can’t banish the past and start with a blank sheet of paper. The wreckage must be confronted, the economy must be recast, the public finances put on a sustainable path and the banks encouraged to start lending again. The process is a painful one especially for some of our people.
The economic crisis we have inherited is the most serious since the Second World War. It is true that the Irish economy has returned to growth but it is not experiencing the growth rates anticipated by the Programme for Government. It is difficult to grow an economy as open as ours when our trading partners are themselves contracting and when the Eurozone remains in tumult.
Stability in the Eurozone together with the return of the public finances to a sustainable path and a functioning banking system will see the Irish economy grow again.
However there is not yet stability in the Eurozone although the very significant progress of recent months have to be acknowledged. It is crucially important and with the minimum of delay that the refurbishment of the euro architecture is brought to finality. It is urgent that we return to normal banking - especially sound lending to enterprise and in particular to the SME sector.
The first thing to say is that jobs, growth and recovery are critical themes at the heart of the Programme for Government. The responsibility of good government is to recognise the challenges and opportunities that a recession such as the one we are currently experiencing represents, and ensure we build the necessary structures to harness the potential to create sustainable jobs in the years and decades ahead.
As history tells us, we should learn from our past mistakes and never again go down the road of an inflated property boom and catastrophic bust which has unfortunately hit ordinary workers and middle income families worst.
Over the next few minutes I want to outline what I see as the building blocks to sustainable recovery and green growth.
Let me first say a word about the opportunity around training and education with respect to the construction sector that has borne the brunt of unemployment and redundancies in recent years. We should recognise that there is a significant proportion of construction workers who, with a little investment in re-training, could become the foundation for a customer-focused, highly motivated, quality driven workforce in sustainable and energy efficient technology and deployment.
Our core objective is to deliver a major increase in the pace, scale and depth of investment in upgrading existing facilities and to assist Ireland in meeting its 20% renewable and energy efficiency targets set by the European Union for 2020. A professional, skilled workforce will be critical to that delivery.
This will require a cross-government approach most notably with my colleagues Ruairí Quinn in Education and Richard Bruton in Jobs and Enterprise. What we need to do is provide professional, fully accredited targeted training courses to those who are prepared to recognise that quality is going to be the hallmark for installers and building energy rating assessors in the retrofit industry.
We can never again allow a blind eye to be turned to the shoddy practices in some sections of the construction industry which have caused such misery and hardship for some people.
To illustrate the point I would commend to you the Build Up Skills Ireland (BUSI) initiative which focuses on the continuing education and training of craftsmen and other on-site construction workers and system installers in buildings in relation to energy. This exciting project, which is being led by a number of Institutes of Technology supported by relevant government departments and agencies with EU funding, has as its goal the creation of a national qualification roadmap for Ireland. The roadmap will set up-skilling, education and training targets for construction workers to ensure that their qualifications, skills and competences are in line with those needed to meet 2020 sustainable energy targets.
By focussing on quality assurance, codes of practice, continuing professional development and targeted auditing, we can ensure that when a consumer chooses a registered contractor under the Better Energy Programme, they will have peace of mind about the quality outcome they can expect in their home. Quality breed’s confidence and that is what we must strive for. While government has an important role to play in terms of regulating behaviour where necessary, the industry too must shoulder its responsibility for "calling out" bad practices and those operating in the black economy.
Pay-As-You-Save (PAYS)
Last month I engaged with most of the key stakeholders who will be partnering with my Department in the delivery of what could be the most exciting initiative in the energy efficiency sector for many years. PAYS – or Pay As You Save - is about using future energy savings to pay for upfront capital works, by creating a mechanism where people who may not be in a position to afford to upgrade their property are given the opportunity to do so through an innovative financing mechanism.
PAYS can provide the finance for retrofit activity to take place, but it requires us to think of a new way of communicating. PAYS has the important advantage of not requiring the homeowner to put money up front. Rather the homeowner will repay over a period the costs of work done out of savings accrued on their energy bills.
As much as PAYS is important to stimulating activity in the domestic sector, it is equally important that it delivers an energy saving solution to the public and commercial sectors. We have a good track record in this area, with the Better Energy Workplaces programme disbursing €11 million in 2011 to co-finance 85 projects in the public, commercial, industrial and community sectors.
I want to acknowledge the cooperation so far from a number of stakeholders, some of whom are present here this morning and I look forward to their involvement in the design of a project that will contribute to job creation as well as energy efficiency. Last year the grants-incentivised Better Energy Programme employed almost five and a half thousand workers. Under a PAYS model properly constructed and effectively communicated, we can do better than that.
National Framework for Energy Performance Contracting
This is a neat segway to talk about Energy Performance Contracting (EPC) and how it will play a pivotal role in energy efficiency upgrades and energy management plans into the future. During these difficult economic times, when energy efficiency upgrades are essential, a lack of accessible funds may stop us from realising energy savings potential. Energy Service Companies (ESCos) can facilitate financing for investment in energy equipment, allowing the implementation of energy technology projects without upfront capital. Energy Performance Contracts offer a win-win scenario, whereby the energy efficiency investment is paid for over time by the value of the energy savings achieved.
The objective is that the national framework will become the ‘go-to reference’ for public sector and commercial organisations who wish to procure energy service companies to undertake retrofit measures in their facilities. I am pleased to report that my Department has convened the project group who will publish the Framework early next year. The feedback so far is that while there are considerable policy issues to be tackled, there is significant enthusiasm around the table to deliver a model that works, most especially for the public sector.
Energy Efficiency Fund
I want to turn now to my plans to underwrite the necessary investment required to deliver on the policy objectives I have already outlined. It will come as no surprise to anyone that the Exchequer cannot continue to exclusively fund the scale of retrofit that is required for Ireland to meet its European energy targets. A number of years ago a study put the opportunity at 1 million buildings that would require retrofit by 2020. Given the state of our finances, the Programme for Government has signalled a transition away from state supports for energy efficiency grants by 2014 to dovetail with the rollout of the PAYS Scheme.
Nevertheless I, along with my colleagues in the Department, have been working intensively on a proposal to establish a Green Fund to kick-start the type of investment necessary to support the clear opportunity that exists in the public and commercial sectors. While the details are still to be finalised, the idea is that we would put in place a mechanism to allow competitive proposals for energy efficiency projects to be financed. Overcoming this hurdle is the single greatest barrier to economic activity at present. We know there is a pipeline of exciting and innovative projects out there, we just need to unlock these barriers.
We want to prove the concept at scale utilising about 20 pilot projects in 2013. It is not without risk and there will undoubtedly be obstacles along the way but the real objective is to create the environment and structures that will allow us to attract investors to create a far bigger fund, one that will be big enough to realise the multi billion euro worth of economic activity that we know is out there. I believe that the Green Fund can be established in such a manner that it not just attracts private equity investment, but can also leverage funds from, for example, the Pensions Funds industry. My Department welcomes any assistance in designing a sustainable financing vehicle along the lines I have just indicated from any stakeholder interest.
Energy Efficiency Directive
The adoption of the Energy Efficiency Directive last week in Brussels is another milestone on the road to meeting our 2020 obligations and undoubtedly energy management systems will play a key role in the future implementation of the Directive. The Directive intends to help citizens, public authorities and industry to better manage their energy consumption, which should also lead to a reduction in primary energy usage. The framework also creates potential for new jobs in Ireland through the support and development of the energy market and emerging technologies. In particular it contains obligations regarding energy audits and the development of accreditation schemes for energy service providers. These are all areas where we would welcome the input of SIPTU members.
Both the Directive and National Energy Efficiency Action Plan are critical enablers that demonstrate the opportunities available now and in the years that follow. It is however up to all of us in the energy sector to ensure these opportunities are captured and not wasted.
Thank you again for your attention and to SIPTU and the Sustainable Energy Authority of Ireland for hosting this important forum.