Michael Moynihan (Cork North West, Fianna Fail)
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I am grateful for the opportunity to raise this issue. People around the country have invested a large amount of money in growing miscanthus, but they are worried about the future of the industry which may be at risk. The fear is that the sector is in jeopardy and it is believed that the Department of Communications, Energy and Natural Resources has not adjusted the REFIT scheme to allow the entire crop to be sold to the Edenderry power station in the coming weeks. The biggest difficulty is that approximately 300 farmers have invested a significant amount of money in the sector in recent years to develop the industry and grow almost 6,000 acres of miscanthus.

Rightly or wrongly, there was a belief that the farmers concerned would have an outlet for this crop when it was ready to be harvested. It now appears this outlet, through the REFIT programme or any other scheme, is not available. Many people have invested heavily in this crop in the belief they were securing their future. Although almost 100 jobs are associated with the crop from the growers' perspective, they have been informed the renewable energy feed in tariff, REFIT, scheme will come into being only in 2015. While I am delighted the Minister is present in the Chamber to reply to this matter, more than 300 farmers, who are located in nearly every community, but in my own and in west Limerick in particular, have bought into this. They have planted a crop about which there always was an expectation that the outlet for it would be through Bord na Móna and its Edenderry plant. However, this has failed to come to pass and there is a belief among those who invested in this crop that the Department is not coming up trumps in this regard. I believe I have set out the issue without waxing lyrical on it because people are concerned about their investment and their future. The Minister might clarify the position for me.

Pat Rabbitte (Dublin South West, Labour)
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I am glad Deputy Moynihan has raised this matter because it is an issue about which I am concerned and have a little knowledge. Moreover, I met the company directly to try to tease out the issue. The background is that to meet Ireland's 2020 binding targets to increase renewable energy to 40% in the electricity sector, 10% in the transport sector and 12% in the heating sector, the Government is committed to so doing under the 2009 renewable energy directive. At present, to meet its current energy demands, Ireland is importing approximately 90% of its fuel requirements at a cost of approximately €6 billion per annum. Developing robust indigenous renewable sources of energy will help Ireland to meet its 2020 targets and to reduce its dependence on such fossil fuel imports.

In February 2012, I opened a REFIT scheme for biomass technologies to promote the use of renewable energy from biomass. REFIT 3, which is the scheme to which Deputy Moynihan is referring, was designed to incentivise the addition of 310 MW of renewable electricity capacity to the Irish electricity grid. The technologies being supported include anaerobic digestion and combined heat and power, which also will contribute to Ireland's renewable heat targets. It also contains incentives for co-firing of biomass, including energy crops such as miscanthus and willow in existing peat-powered generation plants and the use of biomass for generation of electricity only. The scheme operates by guaranteeing a minimum price for renewable electricity generated and sent to the grid over a 15-year period and the cost of REFIT is borne by electricity consumers through the public service obligation, PSO, levy. REFIT payments are made only to electricity suppliers for the renewable electricity exported to the grid. It was never intended to set out a tariff price for biomass itself and prices paid to suppliers of biomass are a private contractual matter between the supplier and the electricity generator. The REFIT schemes are funded, which is paid for by all electricity consumers.

REFIT 3 was designed, in part, to build on the bioenergy scheme operated by the Department of Agriculture, Food and the Marine, which provides establishment grants to farmers to grow energy crops such as miscanthus and willow for use in renewable energy production. It is, however, important to note that the bioenergy scheme was opened in 2007, long before a REFIT scheme for biomass was mooted. Equally, REFIT 3 does not preclude the use of miscanthus by electricity generators other than those co-firing with peat. Miscanthus and other energy crops can be used as a fuel in both the heating and electricity sectors. While miscanthus has certain advantages over other energy crops in respect of returns, I understand it is not suitable for all applications and its high chlorine content can cause corrosion in some boilers. It also is bulky and expensive to transport and therefore, the economics work better when the plantations are close to where it is required. As a result, the markets for miscanthus is limited at present. I understand that most of the miscanthus is used for co-firing with peat at one of the power plants in the midlands. I also understand that a small proportion is processed into heat logs and used in the heat sector. However, I believe that as new biomass plants supported by REFIT 3 come online, this will create further demand for energy from biomass and miscanthus may have a role to play in contributing to meeting Ireland's renewable energy targets.

Michael Moynihan (Cork North West, Fianna Fail)
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I thank the Minister for the reply. The difficulty is it appears to indicate that a logjam has been reached with regard to those people who have invested in the industry and are now faced with a decision in which they had thought they had an outlet for the crop but are experiencing difficulties. I had not been informed that the Minister had met the company concerned. I really seek to ascertain what can be done to assist these people and to ensure there is some outlet for them in the future. In the last line of his reply, the Minister noted that as REFIT 3 comes online, it would create further demand for energy from biomass and miscanthus. When is this likely to happen and what is the likelihood of it coming on-stream in the short term? Do the Department of Communications, Energy and Natural Resources or the Department of Agriculture, Food and the Marine, to which the Minister referred in his reply, have evidence or details regarding a commitment having been given by Bord na Móna or any other entity when these farmers were investing in the crop? The Minister might clarify these two points.

Pat Rabbitte (Dublin South West, Labour)
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That last point about what was the understanding at the time is critical. I should not say or go as far as saying the company asserts it was seduced into a contract at the time with Bord na Móna and that it now is in difficulty. Bord na Móna insists this is not the way it happened and since I came into the Chamber, I have received a communication from JHM Crops Limited, to the effect that contact is ongoing right up to today between the company and my office about what, if anything, I can do to pull it out of the fire, no pun intended. The difficulty is that it is a private contract between the growers and JHM Crops Limited, the company acting as middleman which organises the farmers and transports the miscanthus to the plant in the midlands. The difficulty is that at present, that contract is not rewarding the company for the costs of the enterprise involved. Even were Bord na Móna to enter REFIT 3 in six months' time, the difference would not be adequate to maintain any kind of viable margin for JHM Crops Limited. I also have spoken to the Minister for Agriculture, Food and the Marine about this issue because, as Deputy Moynihan has noted, 300 farmers have been given an expectation, which is a serious matter, apart entirely from the company that acts as the go-between being at risk. Consequently, I am discussing this matter with my colleague, the aforementioned Minister. It is a very difficult issue when it comes down to a private commercial contract entered into between two parties and the role of the State in this is minimal, if it exists at all. On the point Deputy Moynihan raises, the problem is that even were Bord na Móna to enter REFIT 3 as soon as may be, the difference would be very small. As I noted, the discussion still is ongoing and I would like to see a solution to this issue.

There are issues about which the Deputy will be aware relating to the merits of miscanthus compared to willow, what miscanthus does to the plant, the chlorine problem that arises and so on but that is neither here nor there. There was or there was not a contract. It seems difficult to see where either the Department of Agriculture, Food and the Marine or my Department can intrude to force Bord na Móna to do something if it thinks it is not in line with the contract or with its own commercial interests. There is a dispute as to what happened when the original contract came into being.