Mr. Neil Walker:

With regard to certainty, unless we know what the price of carbon will be for the next ten years nobody will build a wind farm. If we look at what happened during the pilot phase of the emissions trading scheme, which was between 2005 and 2007, the price of carbon moved from approximately €20 to approximately 20 cent per tonne. During this period investment in wind in Ireland accelerated because the revenue received by a wind developer does not depend hugely on the price of carbon. It can help, but what is more important is the wholesale price of electricity, which also depends on fuel costs. There is also the safety net of a renewable feed-in tariff which means even if a recession hits, which it did in 2009, and the price of gas in Europe were to fall by half, which it did, and therefore the pool price of electricity falls by 25% to 30%, the wind farm is held whole and has a hedge against energy prices falling too low. Anything above this provides the icing on the cake. There are also other issues with regard to certainty on wind farms, such as the weather and planning permission. The gate process was first come, first served, so many people are sitting on connection offers but do not have planning permission. It is a very complex area.

I will speak briefly about European policy. This week, the European Parliament passed a vote on backloading and the price of EU allowances has shot up from €4.50 to €4.75. It has not had a huge effect yet, but if it is followed by further measures it could increase the price of carbon. The question is whether this will have an impact on the build-out of renewables. Other countries have gone for much more expensive technologies, particularly on the Continent. Some countries have tried to create certainty. In one instance solar photovoltaic energy was being developed at a multiple of the cost of onshore wind but there was no certainty because the government in question then realised how expensive it was and pulled the plug. It has been very damaging to investor confidence.

The way the Department has proceeded has been very good. It has thought things through carefully and is focused on technology, which is where we have an advantage. Having the refit scheme as a safety net is a reasonably cost-effective way of promoting onshore wind. If the price of energy continues to increase the refit will not cost anything because there will be no need for a public service obligation. It will be above the safety net level. We have policies in place which, regardless of the price of energy, of which carbon is only a part, there is sufficient certainty to promote renewables. There is a queue around the block to build onshore wind.