If ever a position statement from an industry lobby failed to read the room, consider the response of the American Chamber of Commerce Ireland last week to regulator plans to bring in electricity tariffs for large-scale corporate users.
In the midst of tightening global energy supplies and an already-constrained electricity grid, the Commission for the Regulation of Utilities has proposed charging data centres and other large energy user businesses – read, mostly multinationals – an extra €70 million for using electricity during peak grid demand periods, starting in October.
The intent is to steer companies away from placing pressures on the grid that could result in blackouts for, well, the rest of us.
Such charges, warns the chamber, have “the potential to damage Ireland’s reputation as a location of choice for inward investment”.
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There’s more. “Measures which result in Ireland becoming increasingly cost uncompetitive could result in future inward investment being diverted to competitor jurisdictions where energy costs are less.”
And just where might those be right now, in a global energy crisis?
The chamber also complains that some companies and “certain large manufacturing operations” will be unable to alter the times when they need to draw down electricity, undermining the intent of the tariffs.
Sabre-rattling
The chamber has the right to articulate its position, as the self-described “collective voice of US companies in Ireland”, representing the concerns of about 900 US companies which, it says, employ 190,000 people in Ireland.
The chamber has long engaged in regular sabre-rattling about Irish policy, not unexpected given its role. But honestly, now is not the time to publicly carp about higher energy costs to wealthy multinationals when tens of thousands of Irish households will be wondering how to cover home heating bills this winter.
And especially not by pulling out the old worn dual-edged threat of “US companies may leave or companies may not ever come again.” Really? Over energy costs? Which big corporates and data centres have had at minuscule add-on tax rates for at least a decade now, compared to homes and small Irish businesses?
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Because while firms operating massive energy users like data centres publicly say they come to Ireland in large numbers primarily because of the “temperate climate”, let me state this yet again: a key unspoken reason has long been the tiny energy rates they pay here compared to many other jurisdictions. Unspoken, because when your business sector is benefiting at such a direct cost to others – especially at such low direct employment, and highly variable indirect economic effects – you are hardly going to shout about it.
The proposed tariffs are a first effort to reverse a decade of government policy in which the energy tax burden was shifted to homeowners and away from businesses. This happened even though corporates were well aware a decade ago that energy supply was already constrained, we had too great a dependence on importing energy from outside the country, and too little investment in renewables, as major parties failed to act.
That homes and small businesses bore the main energy tax burden for so long is scandalous. Ireland has consistently had one of the strongest-performing economies in the world for decades. Ireland’s outlier, incredibly low corporate tax rates for multinationals, plus other perquisites, have played a significant role in generating astonishing wealth for US corporates here.
Even as long ago as 2011, the big pharmaceutical multinational GlaxoSmithKline told The Irish Times that it expected its annual energy bill to rise by more than 20 per cent in a year.
Energy-dependent multinationals
“We are looking to move more and more of our plants off the energy grid and build our own capacity, which also is green,” its Irish director Andrew Witty said then. “These are real opportunities for us to lock in long-term competitiveness for Ireland.
“Because, if we don’t do this and if energy is going to go up 30 per cent every year, then forget it, we’re out of the game.”
So: politicians cannot lament that they didn’t really see grid pressures coming when very energy-dependent multinationals were highlighting a need to move towards renewables – even if on their own – a decade ago. And they have no excuse for continuing over that past decade to give planning permissions to data centres and other facilities that would need to tap a significant portion of the national grid, without the secure energy supply to meet domestic, and not just corporate, needs.
But we’re here, with little that can be done in the short term. Except to ask the business sector to shoulder a fairer share of costs.
The proposed €70 million tariff targets the biggest energy users in a corporate sector that has grown rich off Ireland’s generous inward investment enticements and long-term benefits. The sum is a tiny fraction of the government supports and aids given to multinationals over the years. This is merely a modest, needed energy rebalance, during a full-on national crisis.
