Climate Crisis: The Case For Interest-Free Government Loans

After dragging its heels for far too long, the Irish Government has finally made the installation of solar panels that bit easier for the people of Ireland, after revising planning laws to make exemptions for the installation of solar cells.

This means that anyone can now install unlimited solar panels on their rooftop without any requirement for planning permission, while exemptions also apply to the rooftops of industrial buildings, community and education buildings, places of worship and libraries.

However, the delay in removing these unnecessary obstacles means that, while it is now easier to install renewable energy at home, it comes in the middle of a cost-of-living crisis where the price of solar is far beyond the means of most people.

Today we look at why interest-free government loans could be a crucial catalyst to kick-start the mass adoption of renewable energy, and the implications of this for both Ireland’s energy supply and the monthly expenses of Irish citizens.

In real terms, a typical solar installation still constitutes a third of the median annual household income in Ireland.

As with so many forms of climate action, there may be a huge desire to make it happen and people can see the financial and climate benefits, but they simply cannot afford the upfront costs – and the energy poverty gap threatens to widen even further as a result.

Simply put, it is time for the Irish Government to put its money where its mouth is by offering interest-free loans to citizens to afford upfront renewable energy costs.

This would ensure that the Government shoulders the necessary financial burden of taking important climate action, thereby empowering citizens to afford installation costs and feel the immediate benefit of cheaper electricity and heating.

An example interest free loan of €10,000-€15,000 over 5-10 years for any household with an income lower than €100,000 per annum would enable tens of thousands of people to afford the upfront cost with much less personal risk – while more should be done by local councils to help those living in the worst energy poverty to access solar for free.

Importantly this would break the current cycle of Government incentives, which pay-back those that invest in climate action – be it solar or EVs – but require the individual to pay first and wait six months or more for reimbursement. This approach only benefits those who are already wealthy enough to take action.

Such an approach would only impact national debt over the short-term, and help individuals and families avoid the predatory pitfalls of excessive interest rates from banks. Furthermore, it would create jobs and offer cheaper energy while cutting Ireland’s carbon emissions in a shorter timeframe.

We know that the cost of climate action will only increase for each year that we delay, so incurring a small amount of national debt to empower people to install solar, without facing the pressures of growing personal debt would pay dividends.

There is precedence for such an approach – and not just in larger nations. The Tasmanian Government recently announced that it will offer interest-free loans between $500-10,000 over one to three years to install solar systems.

They particularly noted the importance of overcoming the hurdle of upfront costs, which represent a major barrier for those who want to install solar.

Similarly, the Scottish Government has given £165 million in interest-free loans to support the purchase of more than 6,100 EVs over the past decade, while also offering interest-free loans for eBikes and electric cargo bikes.

This is what progressive politics that values a just transition in the face of the Climate Crisis looks like.

We need the same ambition, recognition and action from our government.

Speaking to the Irish Times, MaREI Senior Research Fellow Paul Deane said: “Advances in solar technology and reductions in cost now make it a very attractive prospect for any homeowner. We don’t associate Ireland as a sunny country but there is sufficient sunlight shining on our Irish roofs to make a meaningful impact on electricity bills.”

Overcoming Energy Poverty

Fitting solar panels could reduce typically household electricity bills by at least €450 each year, as highlighted in MaREI’s study.

The cost of home-heating oil has doubled in a year, putting pressure on the 1.5 million Irish homes which rely on this as their primary means of warmth during the winter. And current Government levies are doing little to increase energy affordability – but they are perpetuating and prolonging the use of fossil fuels.

Not only would a move to heating driven by solar and batteries reduce monthly bills, but dramatically reduce carbon emissions, while also helping Irish people to save money on their healthcare costs – while also reducing the 1,300 avoidable annual deaths in Ireland caused by air pollution.

We cannot overcome the crisis through individual action alone, and the Government has repeatedly failed to meet its own targets on reducing emissions. It is time for our Government to step up and put its money where its mouth is – shouldering the upfront cost of solar installation to kick-start mass adoption, while helping to reduce energy poverty, would be a meaningful step.

For more on this topic, we highly recommend reading Friends of the Earth Ireland’s recent Still left out in the cold report, which details how the Government’s new climate and energy poverty plans are failing to combat both the energy price crisis and household reliance on fossil fuels.

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