Speech below presented to the Nuffield Scholars at the Nuffield Ireland Autumn Conference in Mount Wolseley, Co. Carlow on Friday 08 November 2013.
“Mr Chairman, Ladies and Gentlemen
There is nothing more important than leadership.
Within society, change comes from a small number of creative individuals who have the capacity to foresee events and the ability to shape them.
To transform the present into the future is the daily task of leadership.
A leader must have a vision, but must also have a plan, and then have the ability to turn the plan into reality.
That can be the most difficult part; there will always be obstacles in the path of those who set out to effect change. But overcoming them is as much a part of leadership as visioning or planning.
Being an engineer, I’m fortunate I was trained to overcome obstacles. It is said that the motto of our profession is “the difficult we do immediately; the impossible takes a little longer”.
At present, the world is confronted with a task that to many is impossible, but which to others, like me, is an imperative.
That task is to create a low carbon society by 2050.
If we do not, then we are condemned to catastrophic climate change.
On this the warnings are quite clear.
First of all, there is the evidence before our eyes; changing weather patterns, extreme weather events that are no longer rare but commonplace, typhoons, floods and droughts, the melting of glaciers, the desertification of once fertile plains and, most ominously, the disappearance of the Arctic Ice Cap.
Then there is the evidence of the scientific community.
Within the last year, the United Nations Environmental Programme, the International Energy Agency, the World Bank and most recently the International Panel on Climate Change have all issued dire warnings that unless we drastically reduce carbon emissions then global temperatures will soar by 4C or more before the end of the century.
That would be catastrophic, truly catastrophic for us as a species.
So, the aim is to contain the rise in temperature to below 2C, which would be just about tolerable.
But if we continue on emitting carbon into the atmosphere then, as the latest UNEP “Gap Report” said on Monday, the battle will be lost. And so will vast tracts of once habitable land, much of it disappearing under the sea, and so too will many species of flora and fauna.
As late as Wednesday we had another report from the World Meteorological Organisation spelling out the effects of climate change in graphic and frightening detail.
The scientific community is no doubt as to the cause and the effect of climate change.
Some thirty years I became alive to this threat. I had become familiar with the work of John Tyndall, one of the world’s greatest scientists who was born only twenty-two kilometres from here in Leighlinbridge in 1820.
He discovered the greenhouse gas effect by which some of the radiant heat from the sun is captured in the lower atmosphere of the earth. That raises global temperatures and that in turn leads on to climate change.
The gases which cause this effect are largely anthropogenic, resulting from human activities. The principal culprit is carbon dioxide and the direct cause is the burning of fossil fuels for the purpose of creating energy.
The concentration of carbon in the atmosphere started from a pre-industrial level of 250 ppm but has recently breached the 400 mark and is heading towards the danger level of 450 ppm beyond which we will not be able to prevent a rise in temperature beyond 2C.
In a business as usual scenario the concentration will rise to 600 ppm, due to the increased use of fossil fuels, especially coal in the generation of electricity.
If the problem is caused by fossil fuels then the solution is to stop burning them.
That is what I saw some three decades ago as an imperative; but that is what others still see as impossible.
The alternatives to coal, oil and gas are renewable energies, primarily wind and solar power.
When I began to think about it, it seemed to me that the obvious way forward in Ireland was to begin by harnessing wind power, of which we have an abundant supply.
As a source of energy wind is not only clean but free as well, and is not only inexhaustible but indigenous as well.
My vision a quarter of century ago was to generate electricity from wind and so, shortly after becoming Managing Director of Bord na Móna in the late eighties, I decided to build Ireland’s first commercial wind farm at Bellacorick, Co. Mayo, where I had previously managed the ESB peat-fired power station.
Consisting of 21 turbines with an installed capacity of 6.45 MW, the Bellacorick wind farm commenced production twenty-one years ago. And it is still in production.
Five years later, I went into the private sector and founded Airtricity as a developer of wind power here in Ireland, in the UK and in the US.
Besides building on-shore we built an offshore wind farm at Arklow Banks, which was commissioned in June 2004 as the world’s first commercial application of wind turbines over 3 MW in size. It is still in production.
It was, and still is, Ireland’s only offshore wind farm.
Airtricity was later sold for nearly €2 billion and I then founded Mainstream Renewable Power.
Six years later, it is the world’s largest private developer of wind and solar power, with projects in Ireland, England, Scotland, Germany, the US, Chile and South Africa and with 20,000 MW of wind and solar power in the pipeline.
Here in Ireland we have already built a 9 MW wind farm at Knockaneden in Co. Kerry, are constructing an 8 MW farm at Carrickeeny in Co. Leitrim and are examining further possibilities.
But our biggest project is what we call the “Energy Bridge” whereby wind power generated in the midlands will be exported directly to England.
It is well known that Britain will have power shortages later in the decade due to the closure of coal fired plants and the decommissioning of some nuclear plants.
But it is also the case that Britain will find it difficult to meet its green energy requirements from within its own resources.
Britain will not only need to import electricity for security reasons but much of it will have to be green to comply with EU law under the so-called 20-20-20 directive; 20% energy savings and a 20% reduction in carbon emissions by 2020.
Anticipating these developments some years back I foresaw a great opportunity to develop energy exports from Ireland because of three key facts:
1. We had sufficient wind to fill the gap in British power supply,
2. We had the technologies to exploit that wind,
3. And we had a strong energy culture in the midlands that could serve as the foundation for an energy export business.
So I began to vision what we call the “Energy Bridge” and to transform the vision into a plan.
I am now engaged in putting the plan into effect.
In doing so I am conscious that a key feature of renewable energy is the fact that it is geographically dispersed in small units spread over large areas, unlike thermal plant which is usually concentrated in big units in specific locations, like Moneypoint and Poolbeg or the Bord na Móna plants near here at Shannonbridge and Edenderry.
To borrow terminology from economics, power generation based on fossil fuels is industrial in nature whereas power generation based on wind is agricultural in character.
In generating electricity from wind we are harvesting a natural resource and it opens up enormous economic opportunities for rural communities in general and for farmers in particular.
It couldn’t come at a better time given that Irish agriculture is currently facing so many problems, such as the end of the milk quotas, the reform of the CAP and the impact of climate change itself.
Then there are negative long-term trends to be reversed. The number of family farms is in continuous decline and the number of farmers solely engaged in agriculture is falling and stands at only 75,000, while the number of commercial farmers is now down to 30,000.
Income levels are low and the National Farm Survey, which my father helped to inaugurate, estimates that farmers have an average income of €24,000 per annum, with commercial farmers earning around €43,000.
No wonder that half of farm households have off-farm jobs, that the rural population is declining or that the age profile of farmers is so skewed, with three quarters of them over the age of forty-five.
Without being unduly alarmist, it is fair to say that Irish agriculture is under pressure and rural communities under stress.
This is particularly the case in the east midlands where the Bord na Móna operations are coming to a natural end. Unemployment is a major problem and a recent RTÉ survey indicated that one in three males in Rochfordbridge was unemployed.
That would not be untypical of an area I know well.
The “Energy Bridge” project comes just at the right time, especially for you, the Nuffield Scholars, whose mission is to lead positive change in agriculture and inspire passion in people.
In terms of positive change I would like you to think deeply about the potential of wind as a source of energy, as the basis of a new form of agri-business and as the means of saving rural communities.
You will conclude that wind power in general and the “Energy Bridge” in particular represent the sort of positive change that is so urgently needed in rural Ireland.
Great progress is being recorded and already over five hundred farmers have voluntarily agreed to lease land to Mainstream for the erection of turbines under a uniform contract agreed with the IFA.
We will pay an annual rent of €18,000 for each turbine erected on a farmer’s land.
This is not off-farm income but on-farm income. It is a new form of on-farm income and as valid as conacre – and even more valuable.
It goes without saying that this new form of agricultural income is absolutely guaranteed, is not subject to price variations and is more secure than any EU direct payment scheme.
The “Energy Bridge” project is expected to reach 5,000MW when fully built out and we in Mainstream plan to generate 1,700MW in Phase One, which will commence exports in 2017.
Phase One will provide midland farmers with an annual rental income of some €10 million. In addition, farmers will receive an upside of 3% of net revenues for years 1 to 15, increasing to 5% for years 16 to 25.
I believe these figures prove that economic transformation is at hand for the farmers of the midland region.
But the story is even better than it seems because rural communities will also gain as we plan to share the benefits of “Energy Bridge” with those communities in which the turbines are located through a “Community Gain Scheme”.
A sum of €7,000 per turbine will be allocated annually for community purposes to be administered under a legal framework similar to what we operated in Airtricity and analogous to what we currently apply in South Africa.
The “Community Gain” arising from Phase One will result in a €4 million injection into rural communities every year for as long as the turbines remain in place, and I would estimate that to be at least 25 years.
That would amount to €100 million in constant money terms over the projected life of the turbines – a not inconsiderable sum in an era of austerity.
In addition to rents and “Community Gain” there will be further communal benefit in the form of rates payable to local authorities, estimated at €21,000 per turbine.
That would come to €12 million annually at a time when the ratable base of the midland counties is shrinking and their receipts from the central exchequer static at a much reduced level due to the financial crisis.
Quite simply, the increase in rates will ensure the continued provision of many essential services that otherwise would have to be abandoned by the local authorities.
Between rents, rates and “Community Gain”, the first phase of Energy Bridge will lead to an annual injection of €26 million into the midlands economy and so stabilise, even revitalise, rural communities, saving many of them from the irreversible decline that now threatens them.
Let me assure you this is not a pipe dream.
Paying rents to landowners and rates to local authorities, as well as sharing revenue with communities, is the norm for wind farms and an example of what I term the philosophy of decentralized energy.
This is a new way of looking at power generation because we have become accustomed to centralised energy based on burning fossil fuels in a few big power stations, of which there are only fifteen in Ireland, with most of them operating under a single owner based in Dublin.
On the other hand, the generation of electricity from wind is a decentralised activity and creates a new social dynamic, which involves many stakeholders who are living within their own local communities close to the source of power.
This calls for a new approach. The philosophy of decentralized energy has been put to work in Denmark, a country with a long agricultural tradition and a strong sense of communal identity. There, the philosophy of decentralised power has been expressed in the right of local people to 20% of the equity in any wind farm built in their locality.
It is up to decide if they wish to take up the option and the Danish experience is profoundly interesting because it indicates that there is a strong appetite for equity participation and, as a result, provision has been made whereby would-be participants can borrow, if they have to, in order to avail of the investment opportunity.
Equity participation is a very popular development in Denmark, one in keeping with its strong social values, and one which we should copy so as to democratize the ownership of the energy system.
We could do that by giving people a similar legal right to a 20% equity stake in wind projects based in their own localities. The formula for dividing up that stake could be based on the Danish model so as to ensure fairness and transparency.
The Danish approach is close to the concept of crowd funding which is becoming popular in the US and the UK and has made an appearance here.
It is certainly a way of spreading ownership, enhancing the social acceptability of projects and of raising finance at a time when equity is a scarce supply.
If introduced, it would extend the possibility of ownership among the wider community, complement the local equity stake system and spread the economic benefits of renewable energy throughout society.
It would also strengthen our efforts to combat climate change by mobilising the financial resources of the nation.
I hope the government will give serious consideration to introducing crowd financing, perhaps drawing on the US experience as an exemplar. I will be writing to the Minister for Finance in that regard.
But the Danish approach has another valuable lesson for Ireland.
Since the oil shock of 1973 the Danes have set their eyes firmly on securing energy independence.
Ever since fighting climate change became an imperative they have set themselves the goal of becoming a low carbon society by 2050, with fossil fuels completely eliminated from power generation, ground transport, heating, cooling and power.
In this new low carbon world their preponderant source of energy will be wind, both onshore and offshore, backed up by massive interconnection with their neighbours.
For the past thirty years they have been consistent in creating a critical mass in renewable energy technologies with the result that they are one of the world’s leading economies in green products, systems and services.
They are also one of the most competitive economies in the world and have created a whole new economic sector in green tech, giving rise to massive job creation and major new export markets.
By analogy, the “Energy Bridge” would have a similar kind of effect here. Obviously it will create many jobs in the construction phase and will provide 1,700 full time jobs in operations and maintenance when completed. They will be permanent, highly skilled and well paid jobs located in the local communities.
Export sales will be around €2.5 billion, similar to our dairy exports, and the total investment will exceed €10 billion.
Given the scale of “Energy Bridge” it would also attract inward manufacturing investment especially if international business was convinced the “Energy Bridge” project was going ahead on the basis of an agreement between the Irish and British governments.
Now it should be said that we can confidently expect an Intergovernmental Agreement within months to facilitate the import of Irish green electricity into the UK market. In my view, such an agreement will act as a signal to leading foreign companies to establish themselves here for the manufacture of turbines and components.
This is not just good news for the IDA but for the communities in which the factories will be based.
I am also convinced the “Energy Bridge” will stimulate Irish companies to expand or set up new businesses in the green tech area, not least because we have a strong engineering tradition, especially in the Midlands and particularly in this county of Carlow.
That will be good news for Enterprise Ireland, and for the communities in which new Irish businesses will spring up.
The number of manufacturing and service job will clearly depend on the extent to which we capture the supply chain and while it is impossible to predict what the success rate will be it is safe to assume that it will be significant.
Coming on top of the direct income flowing into the rural communities, the manufacturing of components and the provision of services will help copper-fasten rural Ireland, as it has rural Denmark.
It will also help the country by providing tax revenues, lay the foundation of a green tech sector for the Irish economy and pave the way for the complete displacement of fossil fuels imports for power generation.
This is my vision for wind power. I have given you my plan. And I have told you how I am implementing it.
This narrative is my response to your kind invitation to provide an account of my personal journey in rural Ireland.
It is indissolubly linked with my father, Professor Bob O’Connor, who pioneered agricultural statistics in the Central Statistics Office and initiated the study of agricultural economics in the Economic and Social Research Institute, where he was Deputy Director General.
With my family background I could not avoid being involved in rural affairs. Indeed, my professional career as an engineer brought me to various parts of the country, ranging from Mayo to Kerry and from Galway to Kildare.
That is why I like your mission statement about engendering passion in people because I feel passionate about the future of rural Ireland, about the midlands and about the “Energy Bridge” project I have just described.
I also feel passionate about the need to combat climate change and the need to face facts, however difficult or unpalatable, about the necessity to transform our economy and our society by achieving the goal of a low carbon society by mid century; a goal many regard as impossible but which I believe to be essential.
I am sure that as Nuffield Scholars you have your own personal passions which drive you forward and that you possess the ability to provide inspiring leadership in your own communities.
Please put both to use in the broad battle to combat climate change and in the particular task of promoting wind power in the localities where you live.
I know that an integral part of your philosophy is knowledge transfer. Well, I wanted to use this address to transfer some of the knowledge I have gained on my journey through life.
For that reason, I hope it may have proved of some value and that its message will help strengthen your resolve to overcome the challenges that will inevitably be part of the future.
I like the whole concept of the Nuffield Scholars and I commend the sponsors who make it possible.
We need leaders like you in farming, in agribusiness and in rural life. Providing that leadership will be its own reward and I wish you well in your future endeavours.
Thank you for listening.”