Ireland’s Climate Targets: Heat Retrofits & Heat Pumps Falling Behind | ESRI Report 2024

Ireland is unlikely to meet its ambitious targets for decarbonising home heating, according to a new report from the Economic and Social Research Institute (ESRI). The findings highlight a significant gap between policy goals outlined in the Climate Action Plan and the practical realities of retrofitting homes and adopting new heating technologies. The core issue isn’t a lack of intent, but a combination of slower-than-anticipated uptake of key measures and a surprising disconnect between predicted and actual energy savings from efficiency upgrades.

Retrofit Rates Fall Short of Ambitious Goals

The Climate Action Plan set a target of achieving deep energy efficiency upgrades – defined as reaching a Building Energy Rating (BER) of B2 or higher – for 500,000 existing Irish homes by 2030. As of the end of 2024, however, only 58,000 homes had reached this standard, representing just 11.5% of the target. While the pace of deep retrofits did accelerate between 2022 and 2024, the ESRI report suggests that even maintaining this increased rate would leave Ireland approximately one-third short of its 2030 goal. The Sustainable Energy Authority of Ireland (SEAI) estimates that an average of 75,000 retrofits per year are needed to stay on track, a figure three times higher than the 2024 completion rate.

The situation is even more challenging for heat pump installations. The Climate Action Plan aimed for 400,000 heat pumps to be retrofitted or newly installed by 2030. By the end of 2024, barely over 14,000 heat pumps were in place – just 3.5% of the target. Extrapolating from current rates, the ESRI estimates only 51,400 heat pumps will be installed by 2030, representing less than 13% of the planned number. District heating networks, intended to supply heat to between 187,000 and 314,000 homes (10% of residential heating demand) by 2030, are also lagging, with current projections suggesting connections for only around 60,000 homes by the end of the decade – between 20% and 32% of the target.

The Cost of Going Green: Financial Barriers for Homeowners

A significant obstacle to faster progress is the financial burden placed on homeowners. Even after factoring in State grants, the median cost of a deep retrofit ranges from €16,378 for an apartment to over €42,900 for a detached house. Financing these costs through a Government-backed five-year retrofit loan translates to monthly repayments of €294.05 for apartment owners and €770.06 for detached house dwellers. These figures represent a substantial financial commitment for many households.

The ESRI report also highlights a concerning level of homeowner reluctance. Over 40% of homeowners appear unlikely to undertake deep retrofits or switch to heat pump systems. Specifically, 21% report having already completed all desired renovations, while another 23% express contentment with their current homes. This suggests a significant portion of the housing stock will remain untouched by decarbonisation efforts under current conditions. You can identify more information about SEAI grants and supports on their website: https://www.seai.ie/

Beyond Retrofits: The “Rebound Effect” and Actual Energy Use

The report also points to a less-discussed issue: the “rebound effect.” Energy efficiency measures often don’t deliver the predicted carbon savings since homeowners tend to increase their comfort levels – and their energy consumption – after upgrades. Perhaps more strikingly, the ESRI found very little variation in actual energy use between homes with different BER ratings. Average energy consumption was surprisingly similar for A-rated and G-rated houses, suggesting that theoretical energy savings aren’t always translating into real-world reductions.

Policy Adjustments and Alternative Fuels

Given these challenges, the ESRI suggests that Ireland may need to consider additional measures to meet its decarbonisation targets. These could include policies to encourage a transition away from carbon-intensive fossil fuels like coal and oil towards lower-carbon alternatives such as natural gas, Liquefied Petroleum Gas (LPG) and zero-emission fuels like Hydrogenated Vegetable Oil (HVO) or biodiesel for home heating. Dr. Muireann Lynch, Senior Research Officer at the ESRI, emphasized the need to focus on households that won’t be retrofitting, stating, “We consider that there might be something to be said for trying to target grants and incentives a bit better. We should also be looking at alternative and complementary fuels and technologies and considering whether they should be included in the mix.”

Ireland’s broader climate action strategy commits the country to achieving climate neutrality by 2050 and a 51% reduction in greenhouse gas emissions by 2030 (compared to 2018 levels), as outlined in Ireland’s climate action strategy. The current Climate Action Plan 2025 (CAP25) builds on previous plans, refining measures to deliver on carbon budgets and emissions ceilings agreed upon in July 2022. You can review the full Climate Action Plan 2025 document on the Department of Climate, Energy and the Environment’s website: https://www.gov.ie/en/department-of-climate-energy-and-the-environment/publications/climate-action-plan-2025/. The ESRI also has a Climate Action Roadmap available: https://www.esri.ie/system/files/publications/CAR2024_0.pdf

What’s Next for Residential Heat Decarbonisation?

The coming months will likely see increased debate around the effectiveness of current incentive schemes and the potential need for revised policies. The Department of Climate, Energy and the Environment is expected to review the CAP25 measures in light of emerging data, including the ESRI’s findings. Further analysis will be needed to determine the optimal mix of retrofit programs, alternative fuel strategies, and targeted financial support to ensure Ireland can realistically achieve its ambitious climate goals in the residential heating sector. A key question will be whether the government will prioritize accelerating deep retrofits, exploring alternative fuels, or a combination of both, and how these choices will impact homeowners and the broader economy.