Mr. Mike Quinn:

I thank the Chair for the opportunity to address the committee. I will go through the presentation we have provided. The first slide I want to mention relates to the challenges the company faces. Bord na Móna currently faces a number of challenges forcing it to transform and diversify. The first of these relates to Edenderry Power Limited, EPL, our power station in Edenderry, that is currently up for a judicial review which has delayed us achieving planning permission. Historically, this station has been a 100% peat burning station but it is now a co-fired biomass-peat station. In the future, this station will co-fire 37% biomass and 63% peat. This creates both a challenge and an opportunity in the realm of biomass, an issue I will deal with shortly.

In view of the scale of the transformations required, we are currently engaged in a detailed LRC review process with the unions. We have a total of 11 issues before the LRC and, where possible, I will explain what is involved in that process. The carbon tax has had a severe impact on our fuel business. Bord na Móna is the largest solid fuel company in Ireland and revenue from the fuel division is currently approximately €107 million. We have a significant market share on coal and on briquettes and the carbon tax in the two tranches that have come in have left us in an uncompetitive position, mainly driven by the enforcement of the carbon tax on a level playing field. Last year, we paid €8.7 million in carbon tax, 51% of the total carbon tax take of €17.2 million, but we only have a 30% share of that market. This is affecting our ability to sell our solid fuel products.

We have significant competition in all our divisions, but the division under the most pressure is the fuel business. I will touch on that shortly. Biomass offers a significant opportunity for Bord na Móna. We have had successful discussions with the ESB in regard to keeping the three peat-fired stations running post-2019 when the fuel purchase agreements and the PSO support run out. I have worked very closely with the CEO of the ESB and we were able to announce this development to our workforce in the past month.

That creates an opportunity for Bord na Móna with biomass supply and we will need approximately 1.2 million tonnes of biomass to supply those three stations plus a significant amount of other biomass for other businesses. I will touch on that shortly.

To do that, the whole business needs to transform, and we are really in the middle of that now. We must take down our cost-base significantly with peat production to allow us to compete on the open market with a commodity fuel, such as coal, oil and gas. Up to now we have had guaranteed pricing under our fuel purchase agreements. The one at Edenderry, EPL, ceases on 21 December and the agreement at the two ESB stations finishes at the end of 2019. We must reduce our cost base significantly to allow those stations to continue to co-fire on a commercial basis.

That is a summary of the challenges facing the business. The backbone of our strategic plan is to remain a major employer in the midlands. Bord na Móna employs approximately 2,200 people today and we believe we have developed a plan that will continue to sustain that level of employment in the region up to 2030 and beyond. We want to become the number one renewable energy supplier in Ireland. We believe we can do that because of the land bank we have, and we have already invested significantly in wind farms. We have three wind farms in operation, including two major investments that came on-stream last year, in Mount Lucas and Bruckana. We also want to become the number one renewable home heating supplier in Ireland and the UK, and I will touch upon that in a few moments. The position of number one landfill operator will become a strategic asset to the State, as a large number of landfills have closed over the past number of years. We will still need landfill going forward for items that cannot be disposed of in incinerators. I will speak to that more when we get to resource recovery. The aspiration to be the number one biomass supplier is an Ireland Inc. opportunity for Bord na Móna and Coillte, and I will touch on that later in the presentation.

Going back to Bord na Móna's roots in growing media, we have a number one position in Ireland and the UK on growing media and we are developing a professional horticultural product on a global basis. I was fortunate enough to visit customers in Holland, Germany and Belgium last month, and Irish peat is regarded as the premier brand in the world. It is a matter of how we get that brand to market. Feedstock consists of all our peat harvesting, with peat used as energy in the three power stations and approximately 500,000 tonnes used in briquette factories. It is also used in our horticulture business. I have spoken about the challenges and the transformation solution, as spoken of in recent days, means we have to take €24.2 million per annum from the cost of the business. That should allow us to maintain the current employment level out to 2030 and beyond.

For the future, as a major employer in the midlands we believe we can transform Bord na Móna by 2030 into a significant producer of biomass as the peat reduces and peat energy runs out. We believe we can sustain up to approximately 1,000 jobs in that biomass industry over the next decade. We already have a skill-set and we have the largest tractor and excavator fleet in Europe. Our employees are used to those skills and the transition, if we can get buy-in from the farming community, will allow Bord na Móna to be a major employer in the biomass industry. The main component of this industry will be around willow and the mobilisation of the private forestry sector. We have approximately 650 acres currently contracted under willow and that is yielding far in excess of our expectations in terms of tonnes per acre. We have a financial proposition that will be attractive to farmers. We have sent a package to the Department of Agriculture, Food and the Marine regarding our proposals to establish willow on a level footing with forestry, and we are hoping to get that included in this year's budget.

The other opportunity for us in biomass is the mobilisation of the private forestry sector. We have had €2.3 billion invested in private forestry grants since 1980, and private forestry is now becoming available for harvesting. Very little has been done to date and through the Government initiative on BioEnergy Ireland with Coillte, and with the addition of strategic partners, we believe we can grow that to approximately 500,000 tonnes by 2020 and 1 million tonnes of biomass by the middle of the next decade.

It will have a significant labour requirement, but we believe our current workforce engaged in peat harvesting is very capable of taking up the role.

We have two briquette factories in Derrinlough and Littleton. Unfortunately, these factories are on an extended lay-off this year owing to a number of factors related to the carbon tax which we have mentioned, the fact that we had a very mild winter and that large stocks were available at the end of the production season. However, we believe that with new products coming on stream, including a biomass briquette which will be 50% peat and 50% wood-based, there is a long-term future for these plants. We hope to invest in two CHP plants, one in Littleton and one in Derrinlough, to replace existing infrastructure as a sign of our commitment. We are also considering a new ovoid facility and will be seeking planning permission in Foynes later this month to get ready for the smokey coal ban if and when it is eventually imposed. The facility will be capable of producing 200,000 tonnes of smokeless ovoid to replace bituminous coal.

On the horticulture side, we have two revenue streams through retail growing media and professional growing media. Retail growing media are products used, for example, in Co Op stores, B&Q and so forth, while professional growing media are high-end peat products used for professional growing, particularly in Holland and France. They are large-scale specialist growers. On the retail side, we are a major supplier both in Ireland and the United Kingdom, while on the professional side, there will be an opportunity into the future to develop our professional brand on a global basis. It is not a skills set we possess, but the board has approved investment in it to allow us to develop the brand globally.

In terms of future investment, we must upgrade our existing facilities. We must also invest in new professional bogs. An energy peat bog is not the same as a professional horticulture bog. We are examining our bank of peat to see which bogs we can develop to allow us to grow our professional business.

With regard to our renewable energy strategy, in 2014, for the first year ever, we produced more power from renewable energy resources than from traditional fossil fuels. A total of 52% of our output came from renewable energy resources. We have three wind farms and EPL which is co-firing at a figure of just over 30%. We also use landfill gas on our Drehid site to generate power for approximately 8,000 homes. It is our intention to invest in one wind farm per year for seven years, primarily on our own land. I can discuss that matter further. We are also ideally placed to capitalise on any roll-out of solar energy projects, for which our land is ideally suited. When peat harvesting is exhausted, we will be left with a relatively flat land bank, with no vegetation, in remote areas. We can roll out large-scale solar farms on this land. I am pleased to announce that we will have a pilot 30 acre solar farm next year at Mount Lucas which will be capable of generating 5 MW. Our plan in the longer term for wind farms is to co-locate solar and wind energy projects in order that during the summer when the wind is light we will maximise our output from our solar facility. Our plan on the renewable energy side is to become a portfolio player by 2030. We also believe we have a pivotal role to play in storage as the technology develops. The ideal scenario for our land bank is that we will end up with wind farms co-located with solar and battery array facilities in order that we can take away the variability in renewable energy output.

On the resource recovery aspect, we have a very significant site in Drehid of 6,500 acres, with planning permission to 2028. We have a number of facilities on site - landfill, landfill gas and a compost facility. Our current capital programme will allow us to invest there. We have planning permission for a 250,000 tonne mechanical biological treatment, MBT facility and are in the very early stages of looking at a gasification plant that will generate 15 MW of electricity.

The picture to the left of the slide is the MBT facility and to the right is the 15 MW power station. A fuel derived from the MBT facility will be passed via conveyor into the gasification plant to generate the electricity.

Another possible major project for the Drehid facility is ash recovery and treatment. This would involve us taking ash from the Covanta and Indaver incinerators and processing that ash to reclaim metals, with further treatment to allow it to be used in aggregates etc. Once Covanta comes on stream, 220,000 tonnes per annum of ash will be processed between the two current incinerators in Ireland.

On land and community, which was our original mandate from the State, we have a significant land asset, with 80,000 hectares now in the ownership of Bord na Móna. As per Government policy, we are working actively with Coillte on a number of work streams, including wind, BioEnergy Ireland, tourism and legal and shared services. We believe there are significant opportunities, particularly in the tourism sector, to grow our relationship with Coillte. Prior to applying for planning permission for any of this large-scale infrastructure, we engage with local communities to ensure there is clarity on all issues in order that we have their support before progressing.

From an employment perspective, as I mentioned earlier, Bord na Móna is a major employer, with 2,200 people spread across four divisions, soon to be five in terms of the division of the horticulture and fuels business. We will only operate in those five divisions because they are our core businesses. We believe we have developed a plan that will secure significant employment out to 2030, when we hope to be a different company, having replaced our peat business with large-scale biomass production.

In terms of our main requirements for the future, the first priority for us was to get the ESB agreement, which we have successfully done. Keeping those power stations open is crucial to the future of employment in the midlands. The two ESB stations support almost 1,000 jobs in Bord na Móna and the region. Transformation is key. We have to deliver savings of €24.2 million if the ESB and EPL stations are to operate on a commercial basis. There are many new business development opportunities within Bord na Móna. If we deliver what we have outlined in our strategic plan, Bord na Móna revenue will grow from approximately €430 million to approximately €700 million over the next five to seven years. This should ensure Bord na Móna remains a major employer in the midlands to 2030. I thank the committee members.