Emerald Isle’s Green Growth

by MARK MCSHERRY and ANGELA MADDEN

Irish Minister for Jobs, Enterprise & Innovation Richard Bruton addressing the Sustainability Gathering, Dublin Castle, December 2013.

Irish Minister for Jobs, Enterprise & Innovation Richard Bruton addressing the Sustainability Gathering, Dublin Castle, December 2013.

Following Ireland’s remarkable recovery, the Emerald Isle is now looking to the green economy for growth. From MARK MCSHERRY in New York and ANGELA MADDEN in Dublin.

It must be the luck of the Irish! It is difficult to imagine nearly any other country in the world moving from a position of economic crisis forcing it into a €85 billion euro bailout programme to one only a few years later where it is ranked by Forbes as the number one country in the world for business.

Ireland’s most recent economic turnaround – or at least one that has turned the lights on at the end of what was a long tunnel – is pretty remarkable.

However, in a recent televised address to the nation, an Taoiseach (Irish Prime Minister) Enda Kenny acknowledged that despite recent economic improvements, many are yet to feel the benefits.

“This is an important step but it is not an end in itself. Our lives won’t change overnight,” Mr Kenny says. That is true when one considers the magnitude of the problem faced by Ireland, which saw the country endure four austerity budgets and public spending cuts of €9.6 billion ($13.2 billion).

“But it does send out a powerful signal internationally, that Ireland is fighting back, that the spirit of our people is as strong as ever,” adds the Irish leader.

Ireland re-entered the money markets at the turn of the year emerging as the first Eurozone nation to have completed a strict bailout programme imposed by the Troika, led by the European Central Bank, the European Commission and the International Monetary Fund.

The country exited the bailout programme without a precautionary credit line. Irish bond yields fell from nearly 16 per cent in 2011 to under 4 per cent for most of 2013. These relatively benign market conditions resulted in national coffers swelling with €21 billion ($29 billion) in cash, and so the economy is pre-funded up to 2015. The recent healthy demand for Irish bonds showed that international investors have confidence in Ireland’s turnaround story.

National Treasury Management Agency (NTMA) chief executive John Corrigan told the Irish Dail’s (Parliament) Committee of Public Accounts: “The NTMA was able to bring the new 10-year bond to the market at very short notice in the first week of January 2014.

“Having just exited the EU/IMF Programme it was important for Ireland to display that it had full market access and being first into the markets before other sovereign borrowers had announced their issuance plans gave us an early-mover advantage.”

Ireland’s most recent economic turnaround – or at least one that has turned the lights on at the end of what was a long tunnel – is pretty remarkable.

Corrigan says that in practice, market normalization means moving away from the “opportunistic” transactions that characterized Ireland’s engagement with the bond markets last year to a scheduled and regular series of bond auctions.

The NTMA’s working plan for 2014 is to raise, subject to market conditions, a total of around €8 billion ($10.9 billion).

“Although the order book for the 10-year bond sale in January amounted to €14 billion ($19.2 billion), we decided to limit the size of the new bond to €3.75 billion ($5.1 billion) in order to leave capacity for bond auctions later in the year,” says Corrigan. “In that context we announced that the NTMA plans to raise about €4 billion ($5.4 billion) through a series of bond auctions over the course of 2014 with indicative sizes ranging from €0.5 billion ($0.68 blilion) to €1 billion ($1.37 billion). It is planned to hold one or two auctions per quarter with the first auction to take place on Thursday, March 13.”

Now, having emerged from its EUIMF bail out and making a very successful return to the international bond market, Ireland is looking to the green economy for growth to help sustain its ongoing recovery.

With international investors on board, it is crucial that Ireland keeps up the progress on the home front – and makes sure it delivers on the huge potential that exists for future job creation in the green economy.

Ireland wants to make sure its economy grows by the roughly 2-3 percent required to drive down its debt. And, it has been estimated that, up to 10,000 extra jobs could be created in Ireland’s green economy alone by 2015.

Globally, the green economy was estimated to be worth $5 trillion in 2010, employing more than 30 million people worldwide. And, this global market provides significant opportunities for Irish-based companies to export innovative goods and services and for Ireland to attract higher volumes of foreign investment.

Ireland’s Minister for Jobs, Enterprise and Innovation Richard Bruton says that the government is working towards: “a transition to an economy that is sustainable, an economy that is built on enterprise, an economy that is built on innovation and an economy that has the ability to export.”

“The green economy, as an area,” he adds “is clearly is a huge part of making that transition”

And, it has been estimated that, up to 10,000 extra jobs could be created in Ireland’s green economy alone by 2015

The Minister believes it is a sector where Ireland can do exceptionally well. “It represents an area where Ireland has a natural advantage coming from all sorts of areas. Our natural assets are abundant. We have a super skills base, a tremendous strength in key enabling technologies as well as a capacity for innovation and test bedding of new technologies.

“Then there is our funding expertise, which in many ways is the magic piece that stiches together the other capacities. They all give us a competitive advantage.”

One of the areas he feels Ireland has been strong is in its historical financial assistance to innovators. “Ireland, I think, has a strength in that we have a very strong system in Enterprise Ireland (the government organization responsible for the development and growth of Irish enterprises in world markets) for providing seed capital.”

“At the same time, Ireland is exploiting its great natural resource – renewable energy – and thus dramatically reducing its imports of fossil fuels. What has been achieved today shows what is possible, but it is only the start.”

He sums up: “I believe the green economy represents a huge opportunity for Ireland. We have a lot of the sectors and the clusters that can make this a reality in Ireland. We also make it a strong sector from which other companies can invest in Ireland as a base to do business but can also bring the ideas that we test and develop and apply here and bring them to the market internationally.”

Certainly, this is a plan that already appears to be paying off directly in terms of job creation and savings to the country.

The latest report from the Sustainable Energy Authority Ireland (SEAI) reports a significant year of progress in sustainable energy in which 4,000 jobs were maintained in the construction and energy service industries and €35 million ($48 million) worth of energy savings were achieved.

In fact, Dr Brian Motherway, chief executive, SEAI says that wind power has saved Ireland more than €1 billion ($1.37 billion) in energy costs, cut green-house gas emissions and has not added to consumers’ energy bills. Analysis shows that renewable energy in Ireland in 2012 also reduced emissions of CO2 by two million tonnes.

“Sustainable energy is vital to Ireland’s economic recovery and job creation,” he says. “Actions such as home energy upgrades and business energy cost savings are already proving how costs can be lowered and jobs created,” he continues.

“At the same time, Ireland is exploiting its great natural resource – renewable energy – and thus dramatically reducing its imports of fossil fuels. What has been achieved today shows what is possible, but it is only the start.”

SEAI disbursed over €70 million ($96 million) through capital support programmes in 2012 and about 150 homes a day during the year received energy upgrades. About 26,000 homeowners underwent insulation and heating upgrades meaning almost €100 million ($137.3 million) was spent in the construction industry, including €29 million ($39.8 million) exchequer support. In the four years through the end of 2012, SEAI says it dispersed more than €315 million ($432.8 million) in financial support.

Energy efficiency is an important part of Ireland’s focus on the green economy and moves to financial success – and the reason why is clear. Owen Lewis, Chairman of the Irish Green Building Council, points out: “As a nation €6 billion ($8.2 billion) a year leaves this county to pay for oil and gas going to places like Saudi Arabia and Kazakhstan. If we adopted more energy efficiency strategies and made our homes better insulated then less oil and gas is needed and that means people have more money in their pocket to spend in Ireland.”

Comments from An Taoiseach (Irish Prime Minister) Enda Kenny demonstrate the Emerald Isle’s focus on the green economy and what his government believes is a huge opportunity.

He says: “The Green Economy can be a key driver of economic growth and job creation for Ireland. We already have inherent strengths which we can build upon, including world-class renewable energy resources, our excellence in research, development and innovation, an outstanding natural environment and a cluster of Irish companies that are true world-leaders in green goods and services.”

What is clear is that Ireland has turned a corner and is now looking ahead to ensure it is at the centre of the multi-trillion global revolution to a low carbon economy. And, here you would also have to say the country has a marketing edge – it is the Emerald Isle after all.