The “exact mechanism” of the Renewable Heat Obligation (RHO), which will support the decarbonisation of the heat sector, will be set out this autumn, Minister for the Environment, Climate, and Communications, Eamon Ryan has said.
The Renewable Heat Obligation will legislate to obligate suppliers of fossil fuels used for heat to ensure a proportion of the energy they supply is renewable, contributing to a reduction in emissions in line with Ireland’s climate ambitions.
The recently published National Biomethane Strategy aims to support the delivery of 5.7 terawatt-hours (TWh) of biomethane by 2030. The strategy states that a biomethane sector in Ireland will be funded through the renewable heat obligation.
While the renewable heat obligation is expected to incentivise the use of biomethane in the heating sector, there will also be capital grants provided, the strategy states. These do not include funding from industry, which is also envisaged.
Minister Ryan was speaking at the 2024 Biomethane Conference held by the Renewable Gas Forum Ireland (RGFI) at Croke Park today (Wednesday, June 12), at which the importance of the Renewable Heat Obligation was highlighted by industry.
Renewable heat obligation
The introduction of the obligation allows the building of anaerobic digestion (AD) plants “quicker”, Minister Ryan said but added that heat on its own “will not kick-start the industry”.
That’s where capital grant supports provided by government come in, he said.
Capital grant supports will firstly come from the European Union. The government has sought €40 million in capital funding under Ireland’s application to REPowerEU which is the bloc’s project to improve energy self-sufficiency.
Minister Ryan said there needs to be medium-term certainty given for the development of and investment into an AD sector in Ireland, by switching from REPowerEU funding to Ireland’s Infrastructure, Climate and Nature Fund.
Some of the surplus corporate tax profits will be diverted to this fund, which is expected to reach €14 billion by 2030.
Of this, €3.17 billion is being set aside for climate and nature projects, including for biomethane production, the minister said.
Heat-intensive sectors such as data centres, the pharmaceutical industry or food production will be willing to pay for biomethane to decarbonise, the minister said but added that it is not just about government support, “there is a business case here”.
Under the Renewable Heat Obligation, an initial introductory rate of 2% was considered whereby suppliers of a 1,000GWh of fossil fuel used for heat would be obligated to demonstrate an initial 2% of the energy they have supplied is from a renewable source.
After a phased introduction, from year four, it is proposed that the annual rate under the obligation increases up to a final target level of 10% by 2030.
A total of 10% of heat demand in 2030 is currently forecasted to be between 2.9TWh-4TWh.