Ireland has two separate legally binding targets for the reduction of greenhouse gas (GHG) emissions by 2030. And according to Ireland's Greenhouse Gas Emissions Projections 2025-2030 report, published by the Environmental Protection Agency (EPA) on 26 May 2026, the State remains significantly off track in meeting either.

• National target: 51% emissions reduction by 2030 (compared to 2018 baseline)
• Projected reduction: 25% (with full implementation of a wide range of policies and plans across all sectors that deliver carbon savings)
• EU target: 42% emissions reduction by 2030 (compared to 2005 baseline)
• Projected reduction: 23% (without the use of flexibilities applied) to 27% (with the use of flexibilities applied)

If EU Member States fail to meet their net zero targets by 2030, they will likely face financial penalties, primarily through the Effort Sharing Regulation (ESR) and related legislation, or other indirect costs.

A joint report from the Irish Fiscal Advisory Council (IFAC) and the Climate Change Advisory Council (CCAC), published in March 2025, projected staggering penalties ranging from €7.5 billion to €26.4 billion should Ireland miss its EU climate target. This could fall to €3 billion to €12 billion if the Government follows through on its Climate Action Plan.

The report also challenges the narrative that decarbonisation is prohibitively expensive, showing that three key actions that would cost less than half of the upper range of costs (€26 billion) could dramatically reduce the costs burden: 

• Upgrading Ireland’s national energy grid (€7 billion)
• Reducing the cost of 700,000 new electric vehicles (EVs) to under €15,000 and ramping up EV charging networks (€4 billion)
• Supporting forestry and the rewetting of peatlands (€1 billion)

These measures – which would cost just one-tenth of capital spending planned out to 2030 –  would not only drastically reduce Ireland’s emissions in line with its legal commitments, but also transform the country into a more sustainable, energy-secure society.

How is the financial risk of missing targets calculated?

GHG emissions are projected to the year 2050 using two scenarios. The primary difference between them lies in the status of the policies and measures (PaMs).

Scenario 1: With Existing Measures (WEM)

• WEM means looking at what emissions are likely to be if Ireland only counts measures that are already in place or have been formally committed to. In other words, it is the “current policies only” scenario, such as a legislated carbon tax rise that is already locked in.

Scenario 2: With Additional Measures (WAM)

• WAM looks at what emissions are likely to be if Ireland delivers not just what is already in place, but also the extra measures set out in its latest climate plans. It is the more ambitious “planned policies” scenario, such as targets for getting 945,000 EVs on the road by 2030.

Financial burden varies across EU Member States

The financial risk sits within the ESR, which sets legally binding emissions targets for sectors such as transport, buildings, and agriculture outside the EU Emissions Trading System (ETS). If Ireland falls short, it may have to buy allowances from other Member States or make financial contributions elsewhere to cover the gap.

Targets are set according to a country’s relative wealth, along with other adjusting criteria. That means countries like Denmark, Germany, and Luxembourg carry much higher responsibilities than countries such as Bulgaria, Romania, and Croatia.

While many Member States are at risk of missing their ESR targets, the financial impact varies. Germany, France, and Italy face large emissions gaps, but the cost as a share of their economies is relatively low at around 0.2% of GDP.

For smaller countries like Ireland, the cost is much higher when measured against Gross National Income (GNI). Multi-billion-euro penalties would put serious pressure on public finances and could divert money from essential services.

Options to offset risks

Penalties for EU Member States party to the Paris Agreement exceeding their emissions caps are not straightforward fines, but rather costs associated with purchasing compliance.

Option 1: Purchasing emissions allowances from other Member States

For EU Member States, emissions allowances are calculated based on a combination of factors, including historical emissions, specific sector characteristics, and the overall EU-wide emissions reduction targets.

If Ireland emits more than allowed, the State will have to purchase the gap from overperforming countries – those that reduce their emissions more than required. Since 2013, auctioning has been the default method for distributing emissions allowances in the EU ETS. This approach implements the 'polluter pays' principle, ensuring that those who emit pollutants pay for the right to do so.

However, when you consider that shortfalls expected for three large Member States – Germany, France, and Italy – could be substantial, and the fact that Germany’s expected shortfall might require more than half of the emissions allowances likely to be available, a shortage of allocations could result in a bidding war. This is a scenario that smaller Member States, like Ireland, want to avoid.

Option 2: Contributing to a climate fund

Making a financial contribution to a climate fund that provides financial and technological support for developing countries to meet their Nationally Determined Contributions (NDCs) is an alternative to purchasing emissions allowances.

Funds are typically transferred through existing channels, such as United Nations (UN) programmes or individual countries' foreign aid offices. The UN has also established central channels for aid distribution, including the Green Climate Fund and the Global Environment Facility (GEF). Both have their own accounting mechanisms to track and audit the funding they disburse.

Strong leadership & decisive action urgently needed

While Ireland has made some progress in reducing emissions, the plan is not being delivered at the scale or speed required.

Government needs to prioritise the acceleration and scaling of decarbonisation efforts as a matter of urgency, with immediate implementation of all policies that have already been approved but not yet enacted. Because beyond the significant financial cost in avoidable penalties, every year of delayed action locks Ireland further into high-emissions infrastructure, increases the risk of stranded assets, and forces steeper, more disruptive emissions cuts later in the decade, whilst exposing communities, businesses, and critical infrastructure to worsening extreme weather, energy insecurity, and long-term environmental damage.

And civil society needs to hold those in positions of power accountable. Because every euro spent on buying compliance will be a euro not spent on education, healthcare, housing, or transport. Simple as.