Oireachtas Joint and Select Committees
Tuesday, 15 October 2024
Joint Oireachtas Committee on Climate Action
Update on the Public Sector Climate Action Mandate: Discussion
11:00 am
Brian Leddin (Limerick City, Green Party)
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I have received apologies from Senator Higgins, although she indicated she may be able to join us at some point.
We are meeting to discuss the public sector climate action mandate. On behalf of the committee, I welcome from the Office of Government Procurement, OGP, Ms Anne Stewart, assistant secretary, Mr. David O’Brien, principal officer, and Mr. Andrew Bogie, principal officer. From the Sustainable Energy Authority of Ireland, SEAI, I welcome back Mr. William Walsh, CEO, and I welcome Mr. Declan Meally, director of business, public sector and transport, Mr. John O’Sullivan, head of public sector and regulatory programmes, and Mr. Alan Ryan, programme manager in public sector. They are all very welcome and I thank them for coming.
Before we begin, I will read a note on privilege. I remind our guests of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. If their statements are potentially defamatory in relation to an identifiable person or entity, I will direct them to discontinue their remarks and it is imperative they comply with any such direction.
Members of the committee are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable. I remind members they are only allowed to participate in the meeting if they are physically located in the Leinster House complex. In this regard, I ask members joining us online via Microsoft Teams to confirm they are on the grounds of Leinster House prior to making a contribution to the meeting.
I invite Ms Stewart to make her opening statement.
Ms Anne Stewart:
I am the assistant secretary in the Office of Government Procurement. We are a division of the Department of Public Expenditure, National Development Plan Delivery and Reform. I am joined by my colleagues Andrew Bogie, principal officer, and David O’Brien, principal officer.
I thank the Cathaoirleach and members of the committee for the invitation to assist them in their consideration of how the public procurement elements of the public sector mandate are being reflected in decisions being made and the work of the Office of Government Procurement. To do this, it may be helpful to set out the role and remit of the Office of Government Procurement.
The OGP acts as the strategic adviser to the Minister on all matters related to procurement. We have two primary roles: first, the development of national procurement policy which aligns to the EU procurement directives and encompasses new legislative Acts; and, second, as a central purchasing body that establishes central solutions for the procurement of general goods and services by contracting authorities. The OGP also performs a number of other functions, which include the management of the national eTenders platform, management of the capital works management framework, as well as developing a national digital strategy and the professionalisation of public buyers. We also directly support key clients through our key account management team and our helpdesk, which supports not only contracting authorities but also economic operators.
With regard to the central purchasing function, the OGP acts as a central purchasing body establishing central purchasing solutions for goods and services which can be availed of by contracting authorities. These solutions are developed based on the identified needs of public sector bodies and are developed with input and expertise from end users and appropriate Departments. The OGP includes GPP, green public procurement, in its solutions where permissible and practically possible. Currently, 47 of our solutions contain GPP, including solutions linked directly to the EPA's 11 priority areas. Key green procurement solutions to note include the re-manufactured laptops framework, recycled paper, managed print services and electric vehicles.
With regard to EU procurement law, in Ireland public procurement is governed by legislation at a European and national level. The OGP has taken into account EU priorities on public procurement which include the wider uptake of innovation; green and social procurement; increasing access to procurement markets; improving transparency, integrity and data; and boosting the digital transformation of procurement. This is evident in policy changes and circulars we have published, in the development of the eTenders platform to collect data and in the updates to central arrangements upon their renewal date.
A plan to update the EU directives is under way and we expect that process will be completed over the next two to three years whereby at that time the updated directives will be transposed into Irish law. With regard to the public procurement elements of the public sector climate action mandate and how these are reflected in the work of the OGP, the public sector has a vital role to play in leading Ireland’s transition to a sustainable and carbon-neutral economy and society. Public procurement is one of the primary ways in which public bodies can achieve this. Green public procurement is a process whereby public bodies can meet their needs for goods, services, works and utilities by choosing solutions that have a reduced impact on the environment throughout their life cycle as compared with alternative products and solutions.
To assist in the provision of green criteria that can be incorporated into public procurement, the EPA published updated green public procurement guidance for the public sector in 2021 and again in 2024. In 2022, the OGP led the development of an online GPP search tool that allows the user to rapidly find, select and download the Irish GPP criteria relevant to specific procurement projects. A website was specifically designed to facilitate use of green procurement in response to the public sector climate mandate, which was action 3.4.
The OGP engaged closely with the Department of the Environment, Climate and Communications in the development of the Buying Greener: Green Public Procurement Strategy and Action Plan 2024-2027 to fulfil action 10.3.7 in the climate action plan. Buying Greener was published in April 2024, and a key action for the OGP is to replace Circular 20/2019. The new circular is expected to be published later this year and will be a key policy instrument for fulfilling procurement elements in the forthcoming climate action plan 2025.
I hope this opening statement gives the committee a high-level view of the OGP as an organisation but, more importantly, assurance of our commitment to shaping a transparent, socially inclusive, environmentally and economically sustainable future through the use of public procurement across the Civil Service.
Brian Leddin (Limerick City, Green Party)
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I thank Ms Stewart for her opening statement and call Mr. Walsh of the SEAI for his statement.
Mr. William Walsh:
I thank the committee for the invitation to be here today. SEAI welcomes the opportunity to be part of this important discussion. The climate action mandate as set out by the Minister and Department of the Environment, Climate and Communications is critical to reducing public sector emissions and in demonstrating climate action leadership. While the public sector has shown a good track record by achieving its 2020 energy efficiency target of a 33% improvement since 2009, the focus now has moved beyond energy efficiency to decarbonisation. This means a 51% reduction in energy related emissions coupled with the absolute reduction in primary energy use.
The new climate action mandate requires the public sector to achieve several energy-related targets and actions relating to environmental protection. The targets set for the public sector are extremely challenging and are agnostic to any public sector growth. They are set by national climate legislation and three EU directives: the energy efficiency directive, the energy performance of buildings directive, and the renewable energy directive.
SEAI maintains the public sector monitoring and reporting system to monitor public sector energy performance. We publish an annual report, and a link to our most recent national record is attached as appendix 2. What this report shows is that since the success of 2020, the public sector as a whole remains static and the challenge of achieving 2030 targets is a lot more difficult. We support up to 350 organisations in the public sector, all with varying levels of competency and ability to decarbonise.
The common denominator is a shared commitment to do more.
On energy use in public sector buildings, since 2017 the SEAI has been providing support through the SEAI pathfinder programme to facilitate building capacity and enable the retrofit of buildings for the largest energy users, which are the HSE, the Department of Education, the Department of Further and Higher Education, Research, Innovation and Science, the OPW and local authorities. These five organisations are responsible for the majority of the estimated 13,000 buildings in the public sector. To date, €144 million has been supported by the Department of the Environment, Climate and Communications through the SEAI pathfinder programme.
The SEAI chairs a public sector decarbonisation working group, which is championed by the Minister of State, Deputy Ossian Smyth, and includes Departments and the five organisations just mentioned. This group reports to the heat and built environment task force chaired by the Department of the environment. One key output of the working group is a public sector building decarbonisation roadmap to 2030 to be published by the end of this year. The roadmap will propose varying levels of concurrent investment action. This is further explained in appendix 4 of our statement. We will provide the committee with a copy of this roadmap in due course.
The working group has identified challenges that need to be addressed to enable the acceleration of a large-scale public sector building retrofit programme. These include: that investment prioritisation in climate action planning can be biased towards smaller more manageable scale projects; lack of project development and delivery capacity for larger scale retrofits; lengthy project delivery timescales; siloed decision-making and procurement; supply-chain challenges and response uncertainly; and complex building portfolios.
Funding is a significant barrier. The EU Commission supported a structural reform support service study in 2020 that examined the scale of retrofitting and investment required in Irish public sector buildings to bring them to a BER B rating. The level of investment required was estimated at €9.4 billion. This figure excludes operational and other costs, including decanting. Our analysis estimates that the cost to achieve all building-related energy targets could be as much as €13 billion, while the five public sector organisations mentioned believe that this estimate is conservative.
Energy performance contracting, EPC, could potentially provide opportunity where energy efficiency improvement investments can be financed from cost savings. Unlocking private finance is critical. However, matters relating to added Government debt and the treatment of private financing of EPC in Government accounts is an obstacle. This will necessitate consensus and policy support through the Department, the Department of Public Expenditure, NDP Delivery and Reform and the CSO.
I am pleased to inform the committee that the Department, the SEAI and the Department of public expenditure successfully secured €48 million through the national recovery and resilience plan and funding from the EU recovery and resilience facility for a HSE deep decarbonisation pilot. This pilot includes ten HSE buildings. With matched funding from the HSE, this represents a total investment of €96 million, excluding VAT. The work has already started on all ten buildings.
Achieving climate action targets in the public sector is extremely challenging, but the SEAI and our public sector partners remain committed to this work. We look forward to members' questions. Go raibh maith agat.
Brian Leddin (Limerick City, Green Party)
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I thank Mr. Walsh for his statement. I will go to colleagues who indicate they will ask questions. We will call on them in order.
I will kick off with a question for Ms Stewart or her colleagues, whoever wishes to take it. The committee has done quite a lot of work. Today, we will publish our report on the circular economy. Deputy Bruton has led the committee on coming up with recommendations for the Government, such that we challenge the situation we currently have whereby we generate a great deal of waste through procurement, especially in the public sector. The SEAI will speak more to scope 1 emissions and the challenge within the 13,000 buildings that Mr. Walsh referenced. However, I am thinking of purchasing done by various entities, including the HSE. We invited the HSE in because we saw it as one of the big buyers in the country of all kinds of materials that have a carbon cost associated with them.
Ultimately, we did not bring in the HSE because it was not available, but many organisations that are public sector by definition have a significant carbon cost associated with their buying practices and protocols. When it comes to the challenge we face, many of the emissions that might be generated by materials purchased by public bodies are generated in other countries. Does the OGP have a way of trying to account for emissions generated outside our borders? If we look at it through the narrow lens of our own carbon law, which is to reduce emissions by 51% by 2030 based on our 2018 level, we might be just outsourcing emissions to other countries.
Ms Anne Stewart:
We provide the OGP criteria search tool to public sector bodies. When they are buying products, they use this tool as a method to determine the green specification they can add to their tender, which encompasses things such as embodied carbon. We are not responsible for the procurement and or involved in any of the tender processes within the public sector bodies directly, but we do it within our central procurement purchasing function for our frameworks. We certainly have inclusion there.
I might let Mr. Bogie speak a little to some of our frameworks where we have done exactly what the Chairman is asking about.
Mr. Andrew Bogie:
We have a number of frameworks whereby we spend a lot of time looking at the whole supply chain, but it is very difficult to encompass it all. For electric vehicles in particular or for any other vehicles, so many components are made in various countries. This goes back to mining and so on. In any event, we are operating only within the context of where they are produced. We are not influential enough to spec a vehicle to be totally circular, for example. We work very closely with the Department of the environment on the remanufactured laptops as well. The latter help reduce emissions because they do not require either the production of new parts or mining. Remanufactured laptops involve taking all the parts that would otherwise be thrown away and remanufacturing them into brand new laptops that are now available on our frameworks. It is a successful framework and there is good demand for it.
Mr. David O'Brien:
We are at an early stage of construction. The data on the embodied carbon constituents in a construction project, as the committee can imagine, is huge and involves myriad materials. We have built the foundations of a reporting structure that we will incrementally introduce over the coming years. We have published new cost-reporting templates, within which we have the capacity to report on embodied carbon. The data sets are missing, but the environmental product declarations that are coming through with the energy performance and building directives will greatly increase the level of data that is out there. We may also look to other EU member states such as the Netherlands, which is light years ahead in some of these areas, and their practices in order that we can start, from the very earliest decisions made in a construction project’s design, to consider those materials, which ones are carbon hot spots and how we can avoid them, if possible, given that materials such as cement and concrete are a necessity in certain areas, but that is at the early stages.
Brian Leddin (Limerick City, Green Party)
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The reporting structures are in place or are being developed for a future direction.
Mr. David O'Brien:
We have well-established reporting structures on costs as a project is developed through the different review gates. Digital will also be a key component in building information modelling to have the data-handling capacity because, obviously, on a construction project there will be myriad different materials. It is hand in hand between the digital adoption, which we have also commenced this year starting with large projects, along with the reporting structures and the increased level of data that will come on stream between the regulatory obligations and as we start to incrementally apply this.
Brian Leddin (Limerick City, Green Party)
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I thank Mr. O'Brien for that. That relates to new buildings, obviously.
Brian Leddin (Limerick City, Green Party)
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It is to these that the EU directive applies. However, I am wondering about existing buildings. Is any work being done to account for or, at least, capture the data relating to embodied carbon in existing buildings? Where a public sector body is looking for a new premises, one option might be to build a new building. That building might be gold standard, but existing buildings will have embodied carbon. If we knew this, it would influence the decisions on the basis of which property should be procured. Is that happening?
Mr. David O'Brien:
What we hope to capture are data relating to retrofitting works and the embodied carbon associated with those works. I cannot speak about the property portfolio overall but what the Cathaoirleach referred to will form part of the decision-making on an individual body's carbon footprint for sure. In the private sector, this is happening. We see buildings being repurposed, deep retrofits and buildings that might previously have been levelled being kept. Certainly, the concrete frames and structures are being retained in many cases.
Brian Leddin (Limerick City, Green Party)
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I thank Mr. O'Brien for that. I do not know if SEAI wants to speak about embodied carbon in existing buildings.
Mr. Declan Meally:
It is a factor that is obviously coming more and more into the scope of those who are considering retrofitting. It comprises a big part of the analysis of the building stock that needs to be done. It is a case of understanding, in respect of the 13,000 buildings, what we will exit with versus saying we are mandated to retrofit them. That is a big part of the analysis that will be done. It is also part of what we are seeing in the roadmap as a key area to take the analysis further.
Brian Leddin (Limerick City, Green Party)
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Does Mr. Meally expect to have the roadmap at the end of this year?
Brian Leddin (Limerick City, Green Party)
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I thank Mr. Meally for that.
Richard Bruton (Dublin Bay North, Fine Gael)
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I thank our guests for their presentations. Let me comment on procurement first. I am a bit puzzled. The witnesses seem to be saying they do not have enough influence over the decisions made. Every public sector body has adopted the commitment to a 51% reduction. Presumably, the first and easiest thing to do is design the things one is now procuring. How can we continue and not be able to say someone is responsible for ensuring acquisitions of new assets will be net-zero compatible? If it is not the OGP, whose door do we knock on? That is the first question, because the matter is very frustrating.
The second question is about data. What is the benchmark today regarding the extent of green procurement and what are we trying to reach? What percentage of vehicles acquired by the public sector this year were electric, for example? The witnesses have principles for allowing exceptions, but it is unclear who is vetting this. Is it entirely devolved? When it comes to buildings, the only target I can see in the documentation is to have some reuse – the level is unspecified – of materials in buildings. There is nothing about lifetime impact, capacity to repurpose, or demolition strategies. It seems to be largely a matter of these concepts being for others to think about. That seems to be no way to run a railway, as they say. While we are all saying the planet is burning and that we need to get to a destination, it seems everyone is picking and choosing their own their own route.
Ms Anne Stewart:
It is a very valid observation and question. To give some context, the OGP and the Department work extremely closely together.
The Department is responsible for the overall green public procurement policy and the circular economy - the broader context of green and sustainability within procurement. Essentially, what it manages within that, in particular through the EPA, is what exactly is to be purchased and what the criteria are for that.
Where the OGP comes into play is we then facilitate that. We are almost the "how", in the sense of how something is bought. We do that through instructions via our circulars. The current one from 2019 will be updated based on the new actions from the Buying Greener strategy that has been outlined by the Department. We do that through the development of the criteria tool. What that does is to allow contracting authorities, when they are putting their tenders together, to buy vehicles, for example, or paper or whatever else. They can go to the search tool and pull the appropriate green specification for the particular goods or services they are buying and include it as part of their tender process. They are working within their budget, so they need to ensure whatever it is they are buying is within their budgetary control. While we will give them the "how", unfortunately, we do not have any oversight. That is not part of our mandate.
Richard Bruton (Dublin Bay North, Fine Gael)
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Is their budget a lifetime budget or is the requirement to stay within this year's budget? There is an entirely different view if you take the lifetime impact and you factor in the carbon impact. As we go along, the price of carbon is heading towards the moon. What budget are they staying within?
Richard Bruton (Dublin Bay North, Fine Gael)
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I would imagine that too.
Richard Bruton (Dublin Bay North, Fine Gael)
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No one is biting with the president's teeth, as they say in America. The reality is the pressure of today's budget squeezes out all the desirable principles. The targets are not even ambitious; they are quite modest targets in a lot of areas. We need to shift something here.
I saw from the SEAI's projection that the cost of securing some of these targets is between €9.5 billion to €13 billion. Where is that in the NDP? Is it the Department of Public Expenditure, National Development Plan Delivery and Reform which factors that in? Is anyone factoring it in or is it left to the individual year-to-year budgets to find that €13 billion? That is the equivalent of nearly a year's capital programme. It is not spare change. I presume this is robust and that someone is kicking the tyres on these numbers. If we are going to have to achieve this over whatever period, is it being factored into some investment plan? Is that the job of the OGP, the Department of Public Expenditure, National Development Plan Delivery and Reform or of the individual Departments? Who has the capacity to do that?
Richard Bruton (Dublin Bay North, Fine Gael)
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The SEAI has presented the evidence of where we are.
Mr. Declan Meally:
In terms of the funding, which is an estimate based on what we are seeing from the programmes, we look at what it might take us to 2050 in terms of the targets. What it might take to 2030 to even decarbonise is between €2 billion and €6 billion. There is not funding in the NDP. The challenge from the domestic point of view is we have a signal in the NDP that was €8 billion for home retrofit but there is no similar signal for the public sector. That is part of the consideration with the roadmap, that we need to identify where funding may come from. There is an indication now that there is an opportunity for the Infrastructure, Climate and Nature Fund to be a pot the public sector can pitch for. We are working on a business case based on the data we have collected through our pathfinder programme to get some funding centrally for the public sector through our Department, the Department of the Environment, Climate and Communications. That is where it is routing.
That will potentially be a good signal. That will come in during 2026 to 2030 for the Infrastructure, Climate and Nature Fund. Currently, there is not an amount in the NDP.
Brian Leddin (Limerick City, Green Party)
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We have targets for 2030, which is five years away, but that has not been budgeted for, essentially. I am not saying it is SEAI's role but it is a political decision to budget for that level of investment to achieve our targets.
Mr. Declan Meally:
That is in terms of the funding that needs to identified. Part of it is that we need to analyse the actual building stock, understand what needs to be done with each target and plan that over the next few years. Currently, there is not the level of funding, part of it being the discussions are that it may not be found within public sector organisations' budgets, but otherwise there is not a signal. The Infrastructure, Climate and Nature Fund has been identified as a source to kick it off and, potentially, the next NDP review would have to look at additional funding coming through.
Brian Leddin (Limerick City, Green Party)
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That is interesting. Is the €13 billion estimate very much aligned with the 2030 target or is it the net zero?
Mr. Declan Meally:
Again, looking at net zero was our calculation, but that is only looking at the consideration in terms how we might get and decarbonise the funding. It could be a higher cost to get to net zero across the full public building stock. That is why we need a full analysis of the building stock and to work with each of the five portfolio owners to see what their estimates are. This is just at the top level but it is an indication of the scale of funding. As I said, €9 billion was the figure presented to the Department of public expenditure in its report a number of years ago.
Brian Leddin (Limerick City, Green Party)
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Okay. Is Deputy Bruton happy?
Brian Leddin (Limerick City, Green Party)
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Deputy Whitmore is next.
Jennifer Whitmore (Wicklow, Social Democrats)
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I thank the witnesses for their opening statements. I was a bit late to the meeting and may have missed something, so I apologise if I go over something that was already spoken about. With regard to the Office of Government Procurement, Ms Stewart spoke about guidance. This is probably following on from Deputy Bruton's question. Are there definitive rules as to what public bodies have to put in? Are there rules that state that if there is a roof space greater than a certain area size, solar panels have to be put in or a certain type of lighting must be used or electric vehicles have to be bought, and while I know there needs to be some flexibility, if an entity wants to go beyond that, it has to specifically request and get approval for that? Is there anything like that in the system at the moment or is it all just guidance?
Ms Anne Stewart:
It is comply or explain. What that means is, for context, when it comes to green or sustainable procurement, it does not apply to everything. When public sector bodies are running tender processes, if green or sustainable procurement is required as part of those particular goods or that service, they are instructed they must use the green public procurement criteria as laid put by the EPA, which comes, by the way, from the EU. While it is not mandated, per se, it says the public sector body has to explain why if it does not use green procurement in its tender. We do not get into specifics in the way the Deputy outlined. We would not have the capacity to do that because the range of goods and services being purchased right across the system is so diverse. That is why we rely on the EPA to do the criteria for us and then, going back to the what and how, we built the tool to make it easier for public sector bodies to put that into there.
Jennifer Whitmore (Wicklow, Social Democrats)
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Then there is the whether, something Deputy Bruton touched on - whether the public sector body has done it. When the public sector body writes and explains, is it to the Office of Government Procurement?
Jennifer Whitmore (Wicklow, Social Democrats)
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Is that made public?
Jennifer Whitmore (Wicklow, Social Democrats)
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Any time an entity goes beyond the guidance, it will be there and reported on.
Ms Anne Stewart:
It is probably also important to note, which might be useful in this context, that the EU is becoming vociferous with its reporting requirements when it comes to the umbrella term it uses of "strategic procurement”, which encompasses green, sustainability and social considerations. As part of the new eTenders platform roll-out right across the EU, we had to implement new e-forms. In essence, these are additional fields within the system to provide reporting details. Each public sector body must report those details in the system. These are fields that cannot be skipped without providing the information. The first iteration of this went live in October 2023, which provides some basic information. Phase 2 will roll out at the start of 2025 and we expect further updates to that. There is definitely a push towards more reporting. It is not the most ideal way, to force or bring people down a pathway, to implement green and social considerations, but certainly, at the moment, that is what is bringing people on that journey because they know they have these reporting obligations.
Jennifer Whitmore (Wicklow, Social Democrats)
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As regards the funding element of it, a lot of procurement is based on the price and that is the overarching criteria. If someone says they can meet a specific price, but I want a green procurement and it is going to cost more, is there an allowance given?
Jennifer Whitmore (Wicklow, Social Democrats)
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A lot of public sector bodies must go with the cheapest price, however.
Ms Anne Stewart:
I know that is something that is out in the ether, but if you look at the numbers, a low percentage of tenders in Ireland are awarded based on price alone. In a European context, a very high volume of tenders are awarded on price only. Qualitative data is used quite a lot in the Irish context. While the most economically advantageous tender, MEAT, sounds like it is based on price alone, it actually means the best overall tender with regard to the qualitative data. That is looked at first and then pricing comes later. I would have had experience of that from my own practitioner days. Something may be more expensive, but it meets the overall criteria of what you are trying to achieve.
Jennifer Whitmore (Wicklow, Social Democrats)
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Great. I thank Ms Stewart. I will ask the SEAI a question. I met Mr. Walsh last week in County Wicklow where Bray fire station is the first county building to be fully decarbonised. It is a very positive project. I understand that was funded under the pathfinder project for Wicklow County Council. That is really welcome.
In the work SEAI is doing, is consideration given to the fact that, with certain buildings, it is not just whether you can just decarbonise them but whether you can make them energy positive? Looking at the schools programme, there was a push for each school to have solar panels installed. The solar panels were only 6 kW, which is less than what would be on a three-bedroom house. It is a very low amount of generation capacity. Is it part of the SEAI’s considerations to look at schools or other large buildings that have large roof space and decide they are good sites for much larger solar projects which would then be able to feed into the grid and be energy positive and perhaps feed into the local communities in certain areas to help them with their energy bills? Is that part of the SEAI’s considerations?
Mr. Declan Meally:
I thank Deputy Whitmore. That is a great project in Bray. We were delighted to support it and to work with Wicklow County Council on it. The short is answer is, yes, we look at it in that way, but what we do in working with our pathfinder partners is to start at the basics. We ask them why they need this energy in the first place and then we strip it back in terms of energy-efficient design. We have worked with the HSE and its designs in this regard. We ask what is the least amount of energy we need. It is then about understating what and how that can be met in relation to the redesign.
We do it with businesses and others. It is a case of asking at the very beginning, before going out to any procurement, whether they are designing right, that they are not just putting in solar panels to meet their current demand, whether they need that pump, whether it needs to be that size and why that energy is needed in the first place. All of that is taken right back to first principles in the very beginning. That is what we are doing in working with the public sector partners, to look at the design of those schools and working with the retrofit there to ask what they actually need.
Going beyond that and asking whether this could be a community project, there are opportunities. We have our communities programme and sustainable energy communities, of which there are a thousand in the country. We have been working together and getting them to ask those types of questions, such as whether we could locate a community project on the roof of a nursing home and whether it would be better there because the home could use it. That is where we are helping to train those people through the communities to look at the wider aspects of this. It is also a matter of getting the public bodies to consider their part in the community and to see how they could contribute. Part of it is, for example, district heating, where there are opportunities, and we have it in Tallaght with the data centre and we are using the energy to heat buildings. It is all about using the energy wisely within the community. That is the way we train and work with organisations.
Richard Bruton (Dublin Bay North, Fine Gael)
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As regards procurement, I do not think the witnesses got around to answering the question about data. If we want to drive change, we have to benchmark where we are and hold people's toes to the fire as to where they are moving. Are the witnesses able to tell us, or is someone able to tell us, the percentage of EVs being acquired where public bodies are acquiring vehicles? What is in 2024 the extent of reuse of materials in buildings in which the State is involved? What obligation or level of performance is there? In food contracts, what is the extent of food waste in school meals and in canteens? Do we have that sort of basic information that would underpin the targets that are published in the appendix to the green procurement thing? If we do not have them and cannot report on them, I do not know how we can progress. I have not seen those figures produced anywhere.
Mr. Andrew Bogie:
To contextualise the vehicles, we have battery electric solutions for cars and vans. It is generally the Garda Síochána that has used the cars. The vans have a broader usage across the public service, be it local authorities, An Garda Síochána, the health sector, etc. Within that context and just on our frameworks, I believe there would be data collected by the SEAI in respect of the fleet size for the clean vehicle directive as well. From our frameworks, for what we have, I can give the Deputy the figures for this year, but there is a bit of a distortion, so I will give him last year's, which are probably better. They are for a full year. In 2023, there were 44 electric vehicles - cars, that is - and 52 electric vans. Some 35% of all vehicles in our frameworks were electric cars then, and 21% of all vans were electric. For just the first half of 2024, there is a little bit of a distortion, as I mentioned earlier, because 91% of the vehicles were EVs because of a large purchase by An Garda Síochána. That will probably drop as the year spreads out, so I would not see that as a trend. As regards the overall trend, however, 12% of the cars purchased in 2021 were EVs, with 20% in 2022 and 35% in 2023.
Richard Bruton (Dublin Bay North, Fine Gael)
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That is illustrative, but at the back of the submission, in one of the appendices, there is a heap of things, like 100% recycled paper and no fossil fuel boilers going in.
Do we get a snapshot? Is there an annual snapshot, a sort of name and shame, if obvious decisions are being made that fall outside what would be reasonable procurement rules? I find on this committee that we struggle to keep up with what is supposed to be our responsibility for monitoring what is going on because the data is very inaccessible at times, or hard to keep up with, so I just think it should be more systematic.
My other question is more directed at the SEAI. Mr. Walsh has said that there have been virtually no progress in the public sector since 2020, which is pretty depressing when we are saying that the public sector is trying to lead by example. What is the SEAI measuring in that regard? What benchmarks does it measure? Are there particular bodies that are offending and doing nothing, and others that are beacons of good practice? What is the sanction for those who are just sitting on their hands? D Where someone persistently fails to make any progress, does the SEAI send in technical support, say "Maybe we will bring in one of these energy-saving companies" and hold their hand?
There was reference to there being some obstacle to the use of energy-saving companies. Maybe the SEAI officials will elaborate on how we can crack that aspect. It seems like it would be a very easy win if we can get a few serious contractors to go into public bodies that probably do not have the time, with all their other commitments, to think about this.
Mr. William Walsh:
My colleague, Mr. Ryan, will first speak to the question on the use of electric vehicles in the public sector because we do have a role in terms of monitoring and reporting so we can add to some of the information that has come from the OGP. I will ask my colleague, Mr. Meally, to speak to the second and third questions.
Mr. Alan Ryan:
The SEAI runs the national monitoring and reporting, NMR, system where 350 public sector bodies report annually. That has been in operation since 2013. We track the individual performance of each of the 350 public bodies against the 50% energy efficiency target and the 51% greenhouse gas target. The system will track future energy efficiency directive, EED, targets.
One piece of functionality that has been added this year, at the request of the Department of the Environment, Climate and Communications, is to track public bodies' compliance with the climate action mandate. The 2023 climate action mandate has about 30 different requirements. From about November of this year the new functionality will be ready. The climate action mandate applies to about 291 of the 350 public sector bodies and they must report their compliance against these 30 different climate action mandate requirements. Three to five of them are energy related and the rest of them are environmental. One of them is green public procurement, GPP. For the procurement of goods, services or works in 2023 for which national GPP criteria is available, they have to show whether the organisation included GPP criteria and publish tender documentation for individual contracts. There are some questions about whether GPP criteria were used in construction projects in 2023. The next CAP mandate, which will come out next year and with which they will have to report compliance, has even more requirements regarding GPP.
At the end of this year and into next year, we will have the data to give some sort of basis of what public bodies are reporting. That will be factored into the NMR report system every year. There is a 99.5% compliance rate. Public bodies are very compliant. We hope to get good figures and a good basis and start-----
Richard Bruton (Dublin Bay North, Fine Gael)
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They are just qualitative things. They are not concrete measures of anything.
Richard Bruton (Dublin Bay North, Fine Gael)
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The SEAI has said that there has not been any progress since 2020. What are the critical things on which we might have expected progress but it has not been made?
Mr. Declan Meally:
Since 2020, we saw a dip, obviously, during Covid in the energy piece but it came back up again. What we are seeing is that we are holding steady and there is some reduction. Benefits are being gained because of electricity becoming more renewable. The public sector has benefited from that but, particularly around heat and buildings, it is keeping steady. We show each public sector a glide path to 2030 and that they need to be progressing.
Again, progress will be lumpy. They will do a project and it may take a jump in a couple of years' time. However, it is giving an indication to them as to where they are on the glide path and that the public sector as a whole, particularly for the heat, is keeping steady. The emissions are coming down but not at the rate that needs to happen. We work with every public sector organisation, which wants to work with us. We provide advice and assistance. As it is qualitative and quantitative information in that report, they can see where they are. The big energy users in the public sector are schools and hospitals. We are leading with those. The HSE and the Department of Education have their own decarbonisation plan. They can see how they can get to the targets. The challenge is often for the smaller energy users. Again, it is about trying to impact on it. It is working right across the public sector. We provide assistance to those who want it. Generally, Mr. Ryan's team is working right across the public sector and we are providing guidance in there.
Richard Bruton (Dublin Bay North, Fine Gael)
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The SEAI is pushing the beacons of excellence. Is that visible on some-----
Mr. Alan Ryan:
To add to that, this year we added a new functionality that you can go in and type in a public body's name on our monitoring reporting system. It will show you their actual performance to date, the target they need to get to and their gap. It will show whether a body is green or red. Green obviously means they are on their trajectory and red means they are not. We have changed our partnership programme a little bit to be more focused on the reality of their situation. We have done some qualitative assessments called critical success factors within partnership, namely, money, resources, dedication, vision and commitment. We assess these factors against what we think is critical, what good public bodies are doing, and then we rate bodies against that. Qualitatively is about whether the body is ready for it and quantitatively is the data saying the body is performing. Public bodies are getting behind that and it shows the power of the targets and all the support Government has given over the past ten years. It is a common language now within public bodies. The previous target of 33% by 2020 was common language. Now the new target common language is the 51%. It is the power of targets.
Richard Bruton (Dublin Bay North, Fine Gael)
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Do the witnesses want to comment on the contractors and why we cannot use them?
Mr. David O'Brien:
It is not directly related to that per it is an expenditure issue. We worked previously with the SEAI on energy performance contracts which are a route to bringing in private finance to reduce or improve the energy performance of any asset whether it is public or private. At that point, there are issues and the SEAI's opening statement alluded to that. Whether on or off balance sheet, there were issues of concern regarding expenditure control and budgetary issues. That is one area where-----
Richard Bruton (Dublin Bay North, Fine Gael)
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What is the problem with-----
Mr. David O'Brien:
I am not an economist, but as I understand it, in the context of Eurotstat reporting, for example, a PPP is considered to be off balance sheet because the project risk sits with the private partner. Whereas in the rules around energy upgrades deep retrofit the asset value does not increase to the extent that the risk sits with the private provider, therefore the entire value of the upgrade comes onto balance sheet. I was chatting with one of our colleagues from the SEAI before the meeting and there have been adjustments made to those rules. There may be better opportunities to look at that. However, it still brings us to the question as to whether the value for money can be achieved through a direct engagement of a contractor. Certainly, with the values discussed here, €13 billion of the overall expenditure to bring those buildings up to that level, it would be challenging from a budgetary perspective to do that directly. Therefore, tools like that may well come into play.
I will comment on the circularity piece as well. In construction, the reporting mechanisms we are looking at will obviously favour the embodied carbon footprint of a building through the reuse of materials, but there are challenges particularly with respect to structural and fire integrity and so on, and reusing construction materials. We have an example of one in the raised access floors that buildings have. The tiles are fairly robust.
There is no great issue with them but the manufacturers of that particular tile were not willing to stand over them if they were to be reused. We have those sorts of challenges to tackle in terms of the circularities, even for what I would describe as fairly straightforward components that could readily be reused. When we consider the obligations in terms of certification of buildings for fire and structural integrity, there are definite challenges to overcome. That is in the broader piece of circularity where construction is concerned. Certainly, it gives huge benefit to the overall embodied carbon levels in a building if we can reuse.
Mr. William Walsh:
I will come in on the energy performance contracting, EPC, point. It absolutely is a challenge. We have seen it work very well in the commercial sector and we have certainly soldiered in that trench over a number of years. I will ask my colleague, Mr. O'Sullivan, who has more subject matter expertise in this to give a few comments from some of the work we have been doing over the past few years.
Mr. John O'Sullivan:
Much has already been said. The key areas are the challenges in understanding how to apply the guidance from Eurostat and the European Investment Bank that was published a few years ago. Obviously, the issue is the treatment of EPCs in Government accounts. To date, we have not been able to understand how to do that. It really comes down to a circle around this whole area of risk benefit and decision-making. If the balance of risk is shifting in the wrong direction or if that autonomy has not been given over to the energy service company, then it does not meet the rules in terms of on-off balance sheet and that creates a problem.
We have engaged with the Department of Public Expenditure, NDP Delivery and Reform and this is very much the issue that has come back to us. We are trying to develop more understanding of the issue. We have the energy contracting support scheme, which is a grant scheme we provide for small-scale projects to try to understand the benefit from an energy point of view and also what or how much is involved from a legal point of view and what type of support is needed to actually establish an energy performance contract. It is a scheme that is open, but it has a fairly low level of uptake. It is just showing the level of uptake that is there. There is a general misunderstanding of this area.
The other thing we are doing this year is engaging quite a lot with the local authorities. We see that leisure centres, particularly those with swimming pools, of which there are approximately 100 in the country, are an area in which there is an opportunity to maybe get a bundle together and try to understand how this can be applied in this area. We have also recently engaged with energy suppliers in this area because they, too, have an obligation to achieve energy-saving targets. We are trying to connect all the pieces and get it working in the same direction to understand how it can be done. There is definitely a role for the EPC to achieve the targets and actually bridge this funding gap; we just need to understand how to do it.
Jennifer Whitmore (Wicklow, Social Democrats)
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I have looked through the SEAI's report. I want to drill down into one of the figures that is really jumping out at me concerning the Department of Children, Equality, Disability, Integration and Youth. I have looked at the data, and I perhaps I am reading this incorrectly, but the report states that the Department's fossil CO2 emissions have increased by nearly 450% since the baseline, and that the total CO2 emissions have increased by 235%. Is that just with regard to its office block or is it the wider Department? That seems like an incredible increase for any Department.
Mr. Alan Ryan:
The Deputy pointed out the power of tracking and the benefits of seeing this data first-hand and, yes, it does it does stand out.
Through our support programme, we work with the Departments to try to find out if their data is correct or if they have reported something that is erroneous. Getting the data right is the first part. The second part is discovering if there is a reason for a particular increase. There might be. There might have been a move between buildings and emissions may have increased or a Department may have taken on a new agency. Sometimes new agencies come in under a Department's remit or new buildings fall under its remit as another Department moves location. If it is not a data issue, there is usually a core technical reason, but the power of the targets and measuring it is that people want to say that they have got to show a pathway and they have got to make sure that operates correctly going forward. We would talk to those involved to find out.
Jennifer Whitmore (Wicklow, Social Democrats)
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Will Mr. Ryan be following up with that?
Mr. Alan Ryan:
Yes. As Mr. Meally says, we have a partnership programme whereby we give lots of supports to those who commit strongly, and then we support all public bodies with general supports. Of course, Departments get a great deal of support under the optimising power at work scheme on behavioural change.
Jennifer Whitmore (Wicklow, Social Democrats)
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It looks like there is a trajectory where it is increasing over a number of years but where there is a quite a steep increase in the final year's data.
Jennifer Whitmore (Wicklow, Social Democrats)
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Yes. It jumped out at me.
Mr. Declan Meally:
As Mr. Ryan said, sometimes - one even sees it with the likes of the NTA - they may have taken on a new role. Responsibility for school buses came from the Department of Education to it and its target changed. This was not taken into account in the year before that and the target has gone up because the other one has gone down. They swap around across the public sector. As Mr. Ryan said, each one then sees what they need to do and how it make sure that it is on track to 2030.
Jennifer Whitmore (Wicklow, Social Democrats)
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When the SEAI is looking at different buildings, the energy demand and the potential for energy reductions, does it ever take into account nature-based solutions such as green buildings? I refer, for example, to having a grass roof or even vegetation on one wall. This has been proven to reduce energy demand by up to 60% in some instances. Is that something the SEAI looks at or is it purely technological engineering solutions?
Mr. Declan Meally:
It is not something that we get down into per se. In terms of a design team asking what is being designed in the context of a school or another public building, however, account must be taken of what is needed and whether there is another way to proceed. That is where design firms, architects and others can bring forward those types of solutions. It is all part of the analysis in terms of energy design on our side.
On nature-based solutions, the type of wall to which the Deputy refers provides additional insulation as well as capturing heat and stopping the build-up of heat in a building. All of those can be factored in when it comes to those design areas.
Jennifer Whitmore (Wicklow, Social Democrats)
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Obviously, it has nature-positive benefits as well. Even from a leadership perspective, if it became more visible within our communities that public buildings had this kind of greening and use of nature as part of their design, other people would look at that and take it on board. There is a need to not look narrowly at these public buildings. These are community public buildings. If there is an opportunity to upgrade solar panels or whatever, we should take a more holistic approach and do what we can to upgrade these buildings as we go.
Mr. Declan Meally:
I totally agree. We have seen the benefits of doing so with the fire station in Bray, but also with other public buildings in the context of what the county council did in respect of car parks and the solar energy. Even in the context of site visits for schools, we encourage people to see that there are opportunities. We started off a number of years ago with the fire stations in Blanchardstown and Finglas. The firefighters in those stations began a process and got the community involved. It is all part of getting the community involved and opening up those types of solutions for people. Through our sustainable energy communities, we push the idea of sharing information and of looking at matters holistically. This is an education process that is increasingly becoming part of the system and of what we are doing.
Jennifer Whitmore (Wicklow, Social Democrats)
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Perfect. I have a sort of random question. It was brought to me by a student doing the young scientist from St. Mary's in Arklow, Aoife O'Neill. She asked about kinetic flooring. I am not familiar with that technology. I do not know whether the witnesses have heard of it. Apparently Coldplay have used it to generate energy. She is wondering whether that is being considered. We were talking about public buildings and spaces. Is there any examination or research being done on that? I had not heard of it previously. I know this is out of the blue.
Mr. Declan Meally:
She was lucky to witness it at Coldplay. It takes a lot of energy and constant movement of people. Through our research programme, we are looking at many types of energy technology. School playgrounds would generate a lot of kinetic energy. Maybe there are some solutions there. The wider thinking on that is something we could look at.
Jennifer Whitmore (Wicklow, Social Democrats)
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It is an early technology, I would imagine.
Jennifer Whitmore (Wicklow, Social Democrats)
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Is Mr. Meally not aware of any research being done?
Jennifer Whitmore (Wicklow, Social Democrats)
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That is brilliant. I will pass that on to her. I had never heard of it before. I obviously was not at the Coldplay concert.
Brian Leddin (Limerick City, Green Party)
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The phone-charging stations at music festivals spring to mind. People queue up to cycle the bike to charge the phones.
Jennifer Whitmore (Wicklow, Social Democrats)
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I think they had those as well.
Brian Leddin (Limerick City, Green Party)
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Those are innovative solutions. People will often find that from what seems a good solution, only a small amount of energy is generated. That is why as a society we are addicted to fossil fuels. They are energy dense and useful but have created a catastrophic challenge for us.
If the witnesses were to change anything or say anything to the politicians, what can be looked at to help the procurement processes the State engages in?
Ms Anne Stewart:
There are a couple of points from the OGP side. A big area is around the central frameworks. A number of our frameworks are already greened and contain the appropriate criteria. The more public sector bodies use those frameworks, the better they are complying with some of the requirements they have. Sometimes it is challenging to get all of them to utilise them in the manner they need to and that is something we are working towards.
The other area is around innovation. Public buyers struggle, particularly in this space where there are new innovative products and services coming on stream, with how to buy those. The OGP is putting huge effort into working with public sector bodies on figuring out how to properly use the innovation procedure available within the EU directives. There are a number of procedures within the directives. A few of them are overused, but there are others like the innovation procedure, which we are trialling in the public sector transformation division within the Department of Public Expenditure, NDP Delivery and Reform for buying new technologies. We have written up new guidance on that and are encouraging public sector bodies to engage with us on that. That allows, for example, more SME participation in goods and services that could be used for environmental issues and provide solutions where none are available at the moment. We are doing an awful lot of work in that space.
We are also doing a review of our eTenders platform and the quality of the data going in there. The e-forms required by the EU are helping us do the work in that space.
We are very committed to that. We see it as a very important space and I certainly know from my colleague, Mr. O'Brien, who is involved in the construction side that it is built into many of the templates. It is also important to Mr. Bogie and his teams across the central procurement function . It really is a key element of what we are doing.
Mr. William Walsh:
From an SEAI perspective, when we look at the public sector in terms of the messages we would like to communicate to the political system, the first is the prioritisation of fossil fuel reduction and a focus on that. Everything we do we put through that lens. It is certainly the way to go to meet our 2030 targets and our public sector target. We have outlined the challenge of funding for the public sector. In the SEAI at the moment, along with the support of other organisations and indeed the five we have identified, we are laying pathways for how we can do what we need to do; we just need to do more of that. That will require funding so the prioritisation of funding is important.
Leadership is hugely important, both politically and from an official's perspective. The public sector is an exemplar in lots of different ways and we have seen that in the energy emergency following Russia's invasion of Ukraine. The first thing we did as a group that was set up by the Department of the environment was figure out what the public sector could do to reduce its energy demand. We then rolled out a reduce your use campaign to our citizens. The public sector went first and showed how things can be achieved and we then rolled it out to citizens. That is hugely important.
Another example of leadership is on the electric vehicle side. We see electrified fleets and the gardaí now have a significant number of electric vehicles. When you see a garda driving an electric vehicle, it helps you to make that decision yourself. The Department of Transport launched a programme for taxi drivers where there is a significant grant for taxi drivers to buy an electric car. It has really activated the market. Given how many people get in and out of a taxi regularly, it is another angle in terms of leadership. There are lots of ways the public sector can lead.
From our perspective, we have seen that the organisations that do the most and the best have top-level support. Every year to 18 months, we hold a public sector conference. Without a shadow of a doubt, they are the most motivated and passionate people we encounter in the SEAI. Across the board, there are always really strong champions within the public sector. We have a lot of people there but, as Mr. O'Sullivan mentioned earlier, we just need to point everything in the right direction.
Finally, resources for the public sector are important to help the likes of the Departments of Education and Health. There have been resources put into that area but more resources are important. Without bums on seats, things do not happen as fast they might otherwise. We need to things to happen fast, given the targets we have to reach for 2030.
Brian Leddin (Limerick City, Green Party)
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Okay. So more money is the answer. I thank Mr. Walsh. We were about to finish up but I see Senator Higgins has arrived just in time if she wants to ask her questions.
Alice-Mary Higgins (Independent)
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I listened to some of the debate. I apologise if I repeat some of the questions that have already been asked. I was trying to make sure I was on the premises in order to contribute.
I will begin with the Office of Government Procurement. Ms Stewart spoke about developing the criteria, which is really important work. She referred to what the OGP will use for assessing green public procurement and the question of the circulars. Given the significance of the climate crisis we face and the extraordinarily narrow timeframes we are operating within, it seems that most of the measures are still in that kind of voluntary space. We are still talking about a voluntary space with a little bit of assistance in terms of looking to shift the culture slightly. We are going up against a very strong and embedded set of practices which can militate against that.
EU law was mentioned in terms of the European legislation. Of course there are three options within the European legislation.
There are a number of options on the transposition. There are options, all of which meet the most economically advantageous tender criteria, but the options in terms of basic approach are lowest price or price only; price-quality ratio, where you look at a balance between price and quality; and life cycle costing; or indeed a combination of the latter two. The witnesses will be aware I brought forward legislation which sought to implement the practice, which is the case in the Netherlands, where price-quality ratio or life cycle costing becomes the default rather than lowest cost, because when you have lowest cost only, that is what ultimately trumps and wins the contract.
You can set technical specifications to ensure there is space for good practices, and maybe Ms Stewart can comment on those because, in our circular economy report, we pointed to specific technical specifications that could be used, for example, reuse of paint, which is something that is being looked at, and there are a few other examples of technical specifications that may be made. You give a wider scope for best practices to be rewarded if you have quality or life cycle assessment, you give that advantage to those companies that are engaging in things that are genuinely thinking in a life cycle way or that are able to offer more in terms of environmental quality in their submission, and you ensure they are not disadvantaged by the underbidder.
Perhaps Ms Stewart could comment on that fundamental choice at the beginning. I know there are supports for those who choose to include quality criteria and suggestions for some criteria they may use, but what shift and move can happen for that fundamental first decision to make procurement be based on quality as well as price? Also, what level of weighting should be given to quality? Perhaps Ms Stewart has suggestions for what weighting she thinks should be given to quality. Should it be 50%? We know in the national children's hospital it was, I think, 75% price and 25% quality, and I think it has probably shown. Also, within quality, what weighting does Ms Stewart believe should be given to environmental considerations?
Ms Anne Stewart:
To bring it up a level, in the context of national tenders, the vast majority - somewhere in the 80th percentile - are based on qualitative data. We know this through the numbers and through our EU review because the EU collected this data right across all 27 member states. In the EU in general, the number of tenders awarded based on price is an awful lot higher on average versus the national average here in Ireland. We are the exact opposite. The vast majority of our tenders are awarded on qualitative data as opposed to price. I will ask Mr. O'Brien in a second to talk about how that works.
In terms of us stating what percentages should be given as part of the evaluation criteria, that is really a question of how long is a piece of string. The diversity and nature of the goods and services we buy right across the public sector are such that it would be impossible to lay down one set of criteria. It is really for each public sector body, based on what it is they are purchasing, to determine what they need in terms of evaluating that correctly. That would be a huge challenge for us. In terms of mandating, it is a matter of policy whether that is reviewed.
Alice-Mary Higgins (Independent)
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Of course there is individual discretion and, even in my legislation, the individual discretion of the procurement officers is there. What would indicate a change? What would give us the shift we need? Ms Stewart might also address the question of the technical specifications. There are two pieces: the technical specification, which is included within the details, and there is the question of, within the criteria, if there are quality criteria, what kind of weighting is given to these environmental factors and what kind of weighting does Ms Stewart believe will lead to the substantive shift we need.
The witnesses might not have the figures with them but it would be great to get them. Quality criteria was mentioned. What kinds of weighting are being given? It was mentioned that there are multiple examples. A few examples would be really good to give us a sense of whether this is really taking root. Is it being added in at the end? Is it one word or is there really a deep application?
The witnesses may not have the figures with them, and maybe we could get them in writing, but it was mentioned that quality is considered often. How much use is there of the lifecycle, which is the third option under EU law? Is lifecycle costing in much use in respect of public procurement?
I have asked a question the technical specifications. I would like a little bit more unpacking of what are the trends on environmental criteria. I asked another question on lifecycle costing and whether it is being taken up.
Mr. David O'Brien:
I will take technical specifications question first as I work on the construction side. Government policy around public works procurement is that we go to market with well-defined projects in the first place. In the majority of cases, we use a lump-sum contract. In order to do that, we have to define to a significant level of detail what we want the contractor to build. The capacity for the contractor to improve on the design is in marginal percentages in terms of what they can do. If they are to undertake significant change, that leads to a delay in the project. If we go to market with a more flexible approach, which is also an option under design and build, the contractor has far more scope to innovate. In those cases the weighting given to quality is much higher then it would be for price for design and build. Where we have a project that is already defined, the technical specifications go into great detail as to what the insulation products are to achieve and what the overall fabric of the building is to achieve in terms of energy performance. The capacity for the contractor to add significant value is smaller so that results in a lesser weighting given to quality.
As to the Senator’s question on cultural shift, earlier we were explaining how we introduced a reporting mechanism around embodied carbon. As the Senator probably knows, the operational carbon consumption in most of our buildings, certainly in terms of new build, is at nearly zero energy and we are heading towards zero energy. However, the embodied carbon is the key area that we need to tackle next. I said earlier we have a lack of data in certain areas around that. Many companies are not producing environmental product declarations, which is where all that important data sits. That is changing and we are seeing a significant shift in the numbers producing those.
As to the Senator's point about environmental performance and particularly the embodied carbon aspect in a tender competition, the difficulty we have is that with all the different products that go up to make a building, we need a significant level of data handling to be able to evaluate whether somebody is making a proposal that they claim is better with regard to its environmental performance. We need to have the data handling capacity to evaluate that in the tender process in as quick a time as possible. If we were relying on spreadsheets, data sheets and so on to do those calculations, it would not be possible.
Combined with the approach we are taking to reporting and the adoption of digital technologies, particularly building information modelling, it opens the scope to apply a much larger degree of scrutiny in the tender process but not currently, or not until we have a level of use in the digital space that we are all comfortable with.
We can focus on certain areas and some contracting authorities do. We might pick key elements of the building - the façade or the roof, whatever that might be, in terms of its energy performance. The technical specifications are where the core intent of the contracting authority are set out.
Alice-Mary Higgins (Independent)
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The witnesses might provide the committee with figures on life-cycle costing and the extent to which that is being done. I know it was touched on a little bit but it would be good to get it in writing, particularly some examples of the kinds of weighting given to environmental criteria and a sense of the extent of life-cycle costing.
I have two specific questions, one of which comes back to the issue of flexibility. Obviously, environmental and climate legislation is moving at pace. We have had 27 new pieces of legislation from the EU and there are a lot of new building regulations.
My other question is on the design of contracts, especially longer-term contracts. We spoke about the idea of the innovative contractor, but I am asking about circumstances in which the State raises the bar over the lifetime of a project; for example, by using the criteria to look for more as legislation and EU directives change. The committee has debated the idea that public delivery can sometimes respond more immediately, whereas a contract can be harder to shift. Is that something the witnesses have looked at? It is one of those areas where the context is probably changing more rapidly than some projects are being delivered. Is the demolition piece of embodied carbon something that is being factored in?
Mr. David O'Brien:
We are looking at those issues. We spoke about that circular piece in terms of the challenges that it presents in construction projects in particular. The theory is good but it is more challenging when it comes to finding materials that are suitable. Somebody has to stand over and certify their structural integrity or fire resistance. That is where we will find the biggest challenge. The theory is one thing but the practice is a lot more difficult.
Senator Higgins is absolutely right with regard to the legislative landscape changing at an enormously rapid pace. It is extremely challenging to try to keep up with the technical implications and the characteristics that push through into construction projects, in particular. When they are brought in, they typically come in through the building regulations and there are transitional arrangements whereby you can opt in if it is sensible to do so. If it has a huge knock-on impact in terms of design specifications and delays, we have to make a call - to decide that we cannot do it this time round and to say we will do what we can to improve that. Generally speaking, the vast majority of public bodies try to go beyond the bare minimum, particularly with regard to current energy performance.
Alice-Mary Higgins (Independent)
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I know another Senator has arrived. On the SEAI, there is something I cannot understand. The witnesses spoke about the €96 million that has been invested in the HSE and the fact that ten buildings are being done. It seems to me that again, we are operating within a particular timescale. It seems that 2030 is almost the bar for how we achieve things. It seems to me that the buildings the Department has the keys to are those we should be working on or front-loading. We should be moving past this kind of pilot mindset within the public sector. It seems like the funding is being used to pilot this and try that. We need to move beyond five buildings or ten buildings. If we have 50 HSE buildings, surely the resources should not be the obstacle to that. When the ten buildings were identified, were there many others that were considered and could have been retrofitted if the resources had been there for the HSE? That is the public piece. It seems to me that when we are front-loading, we can create incentives to encourage individuals to retrofit their buildings but the State's buildings should be a no-brainer as the place to begin. The ultimate goal is not a lifestyle change for individuals but a sum reduction in the amount of emissions coming out of our country. That ultimate target - a physical reduction in emissions - is the piece we are losing sight of.
We heard that the Department is trying to set an example and encouraging households to do the same.
The missing bit in what I have heard is the other large actor in terms of energy demand, namely, the private sector. We know that large energy users represent an increase of more than 200% in terms of energy consumption. Even though we are sending the message that we are doing our best within our buildings, with the lights going off at night, etc., and we are encouraging households to do the same, we do not have stronger measures and regulations in respect of larger corporate actors and large energy users where energy usage levels are going up. Is there space for the SEAI to act here? I know the organisation is in the space of supporting the energy transition, but what other measures, besides incentives, could be employed? Are there regulatory measures or inputs into regulatory measures that the SEAI could be employing to try to address that very aspect? I ask this because people see this situation. It does not sit well with them that they are trying to do their bit, while they see large energy users escalating their consumption.
Mr. John O'Sullivan:
In fact, in 2024 we are supporting stand-alone measures for 300 projects across its full portfolio. Typically, these would be energy-efficiency, low-cost, high-impact types of measures. For a number of years, we have typically been supporting between 200 and 300 projects annually. We have been on this journey. Mr. Meally mentioned a few times our bid in respect of the infrastructure, climate and nature fund. We have been going through a process of strategic assessment and preliminary business case activity to determine the right policy measures and the right way to deliver funding. We have put in a bid for €1.25 billion. We have concluded that we are much better off investing that money in energy-efficiency type measures than in deep retrofits initially. That is not saying we are not doing anything in the deep retrofit space, but the quickest way to achieve progress towards our emissions reductions target is in the easy-to-get, low-cost and high-impact measures. We have just started this work to develop a scheme we are calling retrocommissioning. It will be one that will package together in a structured way a mix of light to standard types of retrofit up to a certain level. Additionally, this approach will be mixed with energy decarbonisation. By that, I refer to situations where fossil-fuel boilers might be being removed and a renewable alternative installed. Typically, this would be a heat pump, biomass or some other biofuel solution. We are going to roll this approach out and this is where we are going to see a great deal of uptake in the public sector for sure. This is because we will be dealing not with ten or 20 buildings, but probably more likely with 500 or 1,000 buildings, or even beyond that figure, very quickly.
The HSE project itself was a long time in development. The body is developing its climate action decarbonisation roadmap. Our targets are split into energy decarbonisation, namely, emissions reduction, and energy reduction. It is also necessary to achieve the 1.9% energy consumption reduction per year. We are coming at the issue from the two sides. The intent of this specific programme was firstly to identify ten buildings representative of the entire HSE estate. The organisation went through a process and selected four acute hospitals, four community nursing units or local hospitals and two administration buildings. Queuing in behind that activity, and the HSE is already working on this aspect, are the next 24 buildings, while after that are another 100 buildings.
Within its decarbonisation roadmap, those 10, 24 and 100 are mapped out in order to best achieve the emissions reduction target.
Mr. William Walsh:
Funding is needed to continue to support these programmes. That is not identified in the NDP. We have put a business case forward for the Infrastructure, Climate and Nature Fund to support projects like this. Mr. O'Sullivan has outlined the progress of organisations like the HSE and their focus on decarbonising and reducing the energy they use. That will continue to require support over the next number of years.
Mr. Declan Meally:
Identifying the funding, including within the Infrastructure, Climate and Nature Fund, helps us build on what we have done with the pathfinders. Accompanying that funding and any funding in the future has to be capacity and resources in the sector, with design teams and all of that to be able to deliver the projects.
Regarding the Senator's question on working with industry, the biggest energy emissions are from our homes and transport. Then it is coming down to industry. Industry is playing its part and reducing emissions and it is being forced to do so through corporate social responsibility. We are working with the largest industry energy users, 250 across the country, which account for about 80% of industry emissions. Each of those sectors are actively working on reducing emissions, and showing employees this is what they are doing. They have to decarbonise. They are being pushed by investors, and from a corporate social responsibility perspective they want to do it as well.
The Senator mentioned an increase. They may be taking on some energy increase but they are looking at doing that in a decarbonised way. As I explained in response to a previous question, we are working with them to design out the energy in the first place in any plants that are coming or refurbishments. We are working with them and the IDA to make sure they are as efficient as possible. Industry is playing its part and we are seeing good responses on that. The priorities are homes and transport, and then onto industry and the commercial and public sector. We are working across each of those.
Alice-Mary Higgins (Independent)
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It is interesting that 80% of industry emissions are from 250 companies. There are two things. One is the business case. A concern I have about the climate fund is that this is where most of the resources are going. When a business case is being made, is there scope in that for preventative spending? Is there a narrative of "We are spending so that the State does not have to spend in other ways?" Profitability may be an issue with many of the things we do to reduce emissions. People's electricity bills may be going down but that is not the primary motivation. The primary motivation is emission reduction. I worry sometimes about really good ideas. There are really good ideas in that queue of ideas from the HSE and others but they have to put themselves through a business case. There is a problem if all the resources are coming through in that way. We should be publicly funding this area rather than public projects having to compete to do something which is a public good. How do the parameters work in the business case? Is there preventative spending? Can equivalent direct public funding be applied?
It was interesting to hear the representatives of the OGP speak of decommissioning. The SEAI is talking about decommissioning and the OGP is on the commissioning side, effectively. I talked about the quality criteria piece because that is a piece I have looked to legislatively. What firmer measures - rather than voluntary measures - could be applied, even in terms of baseline standards, so the public service would not commission, except in exceptional circumstances, things that require a gas boiler, for example?
Technical specifications were mentioned but am I correct that it is still all voluntary? Leaving aside what the EU requires us to do, is there potential for regulatory measures that would allow the State to set a higher threshold or a better example regarding what it commissions? For example, it could expect the default use of repurposed materials where possible or certain approaches to energy through certification. I am referring to the commissioning part, the objective being not to end paying for something because it is cheaper from the OGP’s perspective only for the SEAI, a few years later, to have to give a grant to decommission it and make it environmentally friendly. Could the delegates refer to the regulatory or harder measures? I am concerned that so much still seems to be voluntary or is done just because the EU makes us do it.
Mr. David O'Brien:
With regard to the regulatory side, typically where building is concerned it is the building regulations that determine what occurs. However, the energy performance of buildings directive, the recast one, is beginning to set levels for the global warming potential of embodied carbon. That will find its way through-----
Alice-Mary Higgins (Independent)
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I am referring to what occurs above that level. Let us say it is about the State leading.
Mr. David O'Brien:
It is certainly not for the OGP to set that; it entails a policy decision for other Departments and Ministers. However, it is something we are going to be incorporating within the reporting structures we are talking about so people take a much more holistic view not just of the capital cost of the asset being formed but also of the longer-term aspect. It is complex work to pull through. As I have said, we are heavily reliant on digital means to develop it properly, but we have laid the foundations for this through the new reporting structures we are putting in place. They are optional at the moment because we lack the data sets that are necessary to build up a comprehensive picture of embodied carbon in all the construction materials typically used. We are going to start by asking people to examine the carbon hotspots. I am referring to materials that generally generate a lot of embodied carbon, such as concrete. Our colleagues in the Department-----
Alice-Mary Higgins (Independent)
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With regard to energy choice, for example, surely we should not be connecting anything to gas at this point.
Mr. David O'Brien:
That is not my area directly, but I think we are not permitted to install fossil-fuelled heating and so on in new buildings if there is a certain cut-off. Our colleagues in the SEAI can probably speak more authoritatively than I can on this. I do not have the figures in front of me. The more holistic approach the Senator is talking about will be part of a project from inception. From the point at which a design crystallises, those concerned will be looking at reporting on embodied carbon, the life-cycle costs and assessment. This will be the case much more holistically over the next few years as we develop the metrics for it.
Alice-Mary Higgins (Independent)
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I do not want to pre-empt our report but I will just mention it. The recertification of materials – Mr. O’Brien mentioned certification – is a matter that the committee looked into. It would be of great assistance if there were a recertification mechanism.
Mr. Declan Meally:
The Senator's question was related to the business case for the public sector. She was right in that we are making a business case for a programme and funding right across the public sector, following the infrastructure guidelines in terms of procurement. Each organisation is to make a business case for its own project. There is a certain level of competition in this regard but it is a case of understanding what projects are shovel ready and taking all the relevant items into account. I will let my colleague Mr. O’Sullivan respond in a little more detail to the Senator's question on the aspects that are considered in the business case. It is about deciding whether to deeply retrofit and determining whether the cost of going where we need to go from a European-targets perspective or an emissions-targets perspective could be achieved through low-cost retrofits and the energy management of buildings. That is what the business case helps us to consider. Mr. O'Sullivan might wish to give his point of view.
Mr. John O'Sullivan:
Because we are bidding into the ICNF, there is definitely a commercial side to the business case. We must assess what the return is on the investment.
The Senator asked a question earlier about whether we take preventative costs into account. We do, absolutely. If there are costs avoided later by progressing with this work, then that is taken into account. We also take into account the wider benefits of what is, in effect, a new industry. The labour, VAT, materials and the returns that would come back to the Exchequer are all taken into account.
In saying that, in our work with our parent Department – the Department of the Environment, Climate and Communications – on the ICNF, it is allowing us to ensure that it is not going to be assessed purely on the commercial return, but that there will also be a qualitative element to it. As Senator Higgins says, it is taken into account that the national priority is achieving targets and, even though deep retrofit might be more expensive and does not return very quickly, there may be infringements and penalties at a later point.
What is transpiring is that it makes more sense anyway to focus on those measures that save energy faster because money flows with energy savings and that helps to build a strong business case around this funding. There will be a return there. We are also taking into account the shadow costs of carbon. New shadow costs were announced last year. That very much helps the business case.
The other point relates to what the SEAI is doing. In our pathfinder programme, every body and contracting authority must abide by a principle that whatever they do, it cannot be revisited at a later stage to do a retrograde activity with an additional investment. It must be on a pathway to NZEB. We assess our supports in that way.
As we are developing a scheme that is looking at directing funding towards optimising a building from a retrospective commissioning and a light upgrade point of view, it potentially opens the door for the energy performance contracting that we spoke about earlier. Energy service companies will be interested in that business because it will pay back much more quickly. If we can understand how to get through the obstacle of on-off Government balance accounting of new debt, then this scheme can work and things will move very quickly. We will be working in the whole area of doing things that the supply chain in Ireland is more capable of meeting right now. Deep retrofit is quite a specialised business. It is a relatively small supply chain that is there right now that needs time to develop and grow. It needs the signals Mr. Meally mentioned earlier for the type of investment that will be coming through the public sector. In the meantime, we can focus on the easier-to-do, lower-cost, high-impact measures. The point is that it will return very quickly. There is quite a positive return on these projects.
Alice-Mary Higgins (Independent)
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It strikes me that there is potentially a role for in-house skill development as well. It is not just a case of the public sector being a customer but we need to build in-house skills within that area whereby people could even be employed by the State. Expertise could then be transferred from project to project. It sounds like that might be another way this could be addressed.
My last question is for Mr. O'Brien. The shadow cost of carbon was mentioned. Is that something that is factored into the new digital tools that were mentioned in regard to assessment, or is it something that the OGP is suggesting would be included for now? In the future, I hope it would be required to be included in the assessment of procurement contracts.
Alice-Mary Higgins (Independent)
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Excellent. I asked Mr. O'Sullivan about the potential for a State body which would ensure that we have in-house skills available for some of those areas in which we are going to need people for the next 30 years.
Mr. John O'Sullivan:
To put it a different way, there is an issue in that the public sector bodies do not have the capacity or competency to deliver the scale of projects. Projects have to get bigger, we have to bundle projects together and we have to upscale and mobilise. One of the issues is that we are prioritising the smaller, more manageable projects and that is based on the capacity that we have. The Senator's point on developing internal capacity and competency is correct. It is something that has to be done and it is one of the blockages right now.
Brian Leddin (Limerick City, Green Party)
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I thank Senator Higgins for those questions. I thank the OGP and SEAI representatives for their in-depth answers, which are greatly appreciated. The witnesses’ time has been very well spent in informing us of the work they are doing in both organisations. We are at a point where much progress needs to happen in the next few years. Although we are not the line committee for the OGP, having its representatives here has been very helpful. I would imagine the successor to this committee will look to have them in again to track progress as it is being made in the next few years. The representatives of the SEAI are very familiar guests. We are happy to have them in again and they will be here many more times as we go forward. I thank the witnesses for their time and expertise and for helping us with our understanding of what is going on. Members have raised certain issues that have not been fully considered and perhaps the organisations can take those away and develop them in the work they do.
We will adjourn. The select committee is due to meet at 1.30 p.m. this Thursday, 17 October. The joint committee will meet next at 12.30 p.m. on Tuesday, 22 October.