{"id":428282,"date":"2026-05-02T06:50:09","date_gmt":"2026-05-02T06:50:09","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/428282\/"},"modified":"2026-05-02T06:50:09","modified_gmt":"2026-05-02T06:50:09","slug":"irelands-moment-of-truth-in-the-energy-crisis-is-fast-approaching-the-irish-times","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/428282\/","title":{"rendered":"Ireland\u2019s moment of truth in the energy crisis is fast approaching \u2013 The Irish Times"},"content":{"rendered":"

A moment of truth is coming for Ireland in the energy crisis<\/a> \u2013 and the Government\u2019s response is going to tell a lot. It has already come forward with a \u20ac750 million plus package<\/a> in two support programmes, trying to hold down fuel costs at the pump and help some of the worst-affected sectors. <\/p>\n

There are calls for a mini-budget<\/a>, but we have already seen something that looks very like one.<\/p>\n

But what happens when household gas and electricity bills start to rise, as they will do before long? PrepayPower<\/a> announced a rise on Friday and the biggest players are set to follow, though probably not for another month or two.<\/p>\n

Understandably, given the uncertainties, Ministers have fudged the likely Government response to higher household bills. <\/p>\n

But as the crisis in the Gulf<\/a> drags on, it is increasingly clear that what happens next is not a binary question between a war with disastrous economic consequences or peace in which oil and gas flow freely. <\/p>\n

The messy middle ground we are in right now, with wholesale oil<\/a> and gas prices relatively high, could continue for some time. Given the turbulence in the region, we could be looking at relatively higher energy costs<\/a> for quite some time. <\/p>\n

The Government faces the challenge of managing all this at a time when the wider political mood is fractious, its own coherence is in question and it will be distracted by the European Union<\/a> presidency, which is already cutting the bandwidth of ministers and civil servants. <\/p>\n

In effect, it has enough spare cash to buy its way out of its problems for another year. After the big increase in the forecast for the budget surplus<\/a> this year by the Department of Finance<\/a> \u2013 from \u20ac5.1 billion at budget time to \u20ac9.2 billion now \u2013 pressure to do just this will be intense.<\/p>\n

What we have seen so far is the Government response to the first phase of the energy crisis \u2013 higher prices at the pumps which hit motorists and sectors such as hauliers and agricultural contractors. <\/p>\n

\"GardaíGarda\u00ed escort the last fuel protesters from O\u2019Connell Street, Dublin, after last month’s demonstrations. Photograph: Alan Betson <\/p>\n

But this is only the start of it. Rising household energy bills will be key to what happens next. The scale of the increase in higher household bills will not be as sharp as 2022, but on estimates from the Minister for Energy Darragh O\u2019Brien<\/a> it could add up to \u20ac150 to average annual electricity bills and potentially more to gas bills. <\/p>\n

And the backdrop, as businesses face higher electricity and gas costs too, will be a general rise in the rate of inflation<\/a>, which could well average above 4 per cent this year on the basis of current wholesale costs. This is not a 2022-style event, when inflation was close to 8 per cent, but is still significant, particularly as the level of prices here is already high.<\/p>\n

Ireland is a bit poorer because energy prices are higher and the question is who pays the bill.<\/p>\n

There are a few principles here and they come back to the role of the State in society. One is that households who are hit hard need some protection, but better-off ones can afford to fend for themselves. <\/p>\n

A report from the Economic & Social Research Institute (ESRI) this week<\/a> estimated that the Government could lift most poorer households out of energy poverty \u2013 struggling or unable to meet fuel bills \u2013 by spending around \u20ac375 million each year. This is less than the \u20ac550 million cost of energy credits of \u20ac250 for every household provided in the 2025 budget. <\/p>\n

Focusing help avoids giving money to households who don\u2019t need it as was the case with the string of energy credits in recent years, often costing \u20ac1 billion plus in a budget package. The politically difficult question is how to help the middle ground who do not receive welfare but where money is still tight. <\/p>\n

[\u00a0Irrational response to Middle East conflict risks slowing transition to renewable energy<\/a>\u00a0]<\/p>\n

Important questions are raised here, too, by the prospect of permanently higher energy bills. A key one is who pays for the large upgrade in energy infrastructure in the years ahead and how this is split between energy bills and general taxpayers. A recent Government report<\/a> warned that this and other costs applied to energy bills but not related to wholesale prices are set to rise further. The Government taskforce that produced this report is looking at this since last year, though its recommendations are not expected until after the summer. <\/p>\n

Barring a deepening of the Middle East crisis, Ireland has the resources to deal with these issues. The question is whether it has the political capacity to do so.<\/p>\n

The Government is dealing with a fractured range of interest groups \u2013 the fuel protests<\/a> were the latest iteration of a culture that dates to the beef factory protests in 2019, bypassing the usual representative groups. The trade unions will be pushing for a generous public pay deal. There will be endless political noise about helping households, particularly as electricity and gas bills rise. <\/p>\n

The risk is the Government gets caught in endless firefights, either buying off groups or promising to do so on budget day. A renewal of the latest fuel supports for hauliers and agricultural contractors beyond summer looks likely, barring a collapse in fuel costs. Budget spending rules introduced this year are under severe pressure. There are unspecific promises of more help to come, including for households, along with tax cuts. <\/p>\n

With cash in the coffers, the previous Government and this one made a few key strategic errors. The last round of universal energy credits in the 2025 budget delivered in October 2024 were an ill-judged election stunt that embedded the idea that these kind of universal supports were normal. Then the Coalition got in a fight over the VAT reduction for hospitality last year and the trade-off for this expensive measure was no personal tax cuts in the budget.<\/p>\n

Now the Government faces choices again. It can dole out the cash right, left and centre or it can focus supports on those who need them and use what has happened to put a new drive behind the transition to renewables and building Ireland\u2019s energy security. <\/p>\n

One choice gives the political sugar rush and does not require a lot of thought. The other considers how scarce resources can be used to build for the future. It is complex and not populist. <\/p>\n

The response to rising household gas and electricity bills will tell which route is chosen. The likelihood is that, amid murmuring about \u201cpolitical realities\u201d, a lot of cash is about to be spent. <\/p>\n","protected":false},"excerpt":{"rendered":"A moment of truth is coming for Ireland in the energy crisis \u2013 and the Government\u2019s response is…\n","protected":false},"author":2,"featured_media":30360,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[5168,48809,15910,1398,69562,5485,37635,5148,171749,61,60,150432,43,6000,187038],"class_list":["post-428282","post","type-post","status-publish","format-standard","has-post-thumbnail","category-ireland","tag-budget","tag-cliff-taylor","tag-darragh-o-brien","tag-department-of-finance","tag-economic-social-research-institute-esri","tag-energy-costs","tag-energy-crisis","tag-european-union","tag-fuel-protests","tag-ie","tag-ireland","tag-israel-iran-conflict","tag-news","tag-oil","tag-prepaypower"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/428282","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=428282"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/428282\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/30360"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=428282"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=428282"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=428282"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}