Investment in actions to counter the effects of global warming in the Republic is weak, which increases the risk that extreme weather events will test the State’s economic resilience, according to fresh analysis.
A joint report published on Wednesday from the Central Bank of Ireland and the Climate Change Advisory Council (CCAC), warns that focus “must also be applied to addressing the impacts of climate change that are already emerging by enabling investment in climate adaptation projects at both national and local levels”.
While there is significant ambition to reduce carbon emissions here, it concludes that investment in adaptation to counter the inevitable effects of human-induced global warming is weak.
“The recommendations within this report come at a critical time with the ever-increasing frequency and impact of extreme weather events, which are wreaking havoc across communities and the economy,” said Prof Peter Thorne, chairman of the council’s adaptation committee.
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The CCAC is an independent body advising the Government on the climate crisis.
Many adaptation projects, particularly at local level, are seen as too small or uncertain to secure funding, though their benefits are clear and enduring, the report has found.
“Deep-rooted barriers to investing in climate adaptation include a lack of locally-relevant climate risk data, high upfront costs of adaptation projects, fragmented access to funding, and the absence of clear investment pathways that can attract private capital,” it added.
The report emphasises the importance of credible transition plans in building resilience in the financial sector and contributing to a resilient economy.
“Actionable solutions” include transition planning that incorporates adaptation, development of scalable, investable project models and a register of successful adaptation projects to build momentum and share solutions, it said.
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Insurance is a key part of adaptation finance, but protection gaps – where businesses, individuals and communities lack adequate or affordable insurance – “pose a significant barrier to resilience”.
The report notes the need to address the “insurance protection gap” as outlined in the action plan for insurance reform.
This requires a long-term strategic approach to flood insurance, with enhanced data sharing and a clear recognition of adaptation measures. Additionally, solutions must be complemented by continued investment in measures such as flood defences to reduce risks and safeguard long-term sustainability.
“The development of resilient infrastructure, storm resistance in coastal defences, drought-resistant crops, nature-based solutions, early warning systems and community resilience building would be transformative for our society, saving lives and protecting livelihoods,” added Prof Thorne.
“By addressing barriers, mobilising public and private finance, and implementing innovative solutions, Ireland can build a more resilient economy and society while reducing risks to the financial system,” he said.
Climate change poses risks to the financial system and long-term stability of the Irish economy, said Vasileios Madouros, Central Bank of Ireland deputy governor of monetary and financial stability.
“We’re already seeing the impact extreme weather has on communities, businesses and infrastructure, and we recognise the importance of addressing climate-related risks, including the growing need for investment in adaptation measures,” he added.
Another challenge in assessing the scale of investment required is the absence of comprehensive estimates of the short- and long-term costs of climate adaptation, he said.
The report proposes a national adaptation finance strategy to attract private and EU funding, which should build on improved estimates of long-term investment needs.
It also sets out actionable steps to build resilience in the economy by increasing deployment of adaptation finance.
“Safeguarding Ireland’s financial stability in the face of a changing climate requires collaboration across public and private sectors, enabling investment at both national and local levels, and further assessing the short and long-term costs of climate adaptation,” it said.
