Alex White (Dublin South, Labour) | Oireachtas source

I thank the Chairman and the members of the joint committee for inviting me here to discuss Ireland's energy policy. I acknowledge that at its meeting on Tuesday, 24 November, the joint committee focused on the topics that were to be addressed at the EU Council of Energy Ministers meeting later that week. The main topic of that meeting was energy union. I welcome the opportunity today to discuss Ireland's energy policy in more detail. As the committee is aware, I intend to publish the energy White Paper later this month. This White Paper will set out Ireland’s energy policy framework up to 2030 in the context of our long-term ambitions to 2050 and beyond. A key element of the White Paper will involve putting citizens and community engagement at the centre of energy policy. This approach was reflected in the extensive consultation process that informed the development of the White Paper.

The joint committee has provided a number of important and interesting questions for me to address today. I would like to respond to them in the context of the three core objectives of energy policy, namely, competitiveness, security of supply and sustainability. Competitiveness is critical to provide the environment for enterprises to grow, invest and create jobs and to provide affordable energy for domestic consumers. As Deputy Fitzmaurice said at last week’s meeting, we all hope to see the current growth in employment continuing in future years and we need energy policy to support that growth. In 2014, Ireland’s economy grew by 5.2% while overall energy use fell by 0.5%. As I said last week, this represented an effective and welcome decoupling of economic growth from energy use. We need to continue to improve the efficiency with which we use energy to support sustainable economic growth in future years. If we are to maintain competitiveness, we must ensure our energy markets work efficiently and continue to invest in energy infrastructure. In this regard, a key investment project for Ireland is the North-South transmission link.

As the committee will be aware, EirGrid made a formal application for the project to An Bord Pleanála on 9 June of this year. I am constrained, therefore, in what I can say about the project other than in the provision of factual information.

I draw members' attention to the significant benefits the North-South project will bring on both sides of the Border through lower wholesale electricity prices in the single electricity market. This is achieved through the combined transmission systems operating more efficiently without the current constraints. In terms of future developments, there is a need for greater interconnection with our European neighbours. In this regard, the economic case for a potential France-Ireland electricity interconnector is currently being studied. Such a development could build on the success of the east-west interconnector between Ireland and Wales which opened in 2012 and has led to enhanced competition and downward pressure on the wholesale price of electricity. An analysis was carried out by EirGrid on the impact of the first year of full commercial operation, namely, from May 2013 to April 2014. This analysis indicates that wholesale electricity prices in the all-island single electricity market would have been 9% higher if the east-west interconnector was unavailable over that period.

As Deputy Colreavy highlighted at last week's meeting, electricity interconnectors are used to both import and export electricity with the flows driven primarily by the relative market prices. To date flows on the east-west interconnector with Wales have predominantly been in the import direction. However, there are periods when electricity is exported. Once again, this is an example of markets operating more efficiently with greater interconnection.

I will turn now to security of supply. Investment in interconnection also increases Ireland's security of supply, which is the second core objective of our energy policy. Ireland's energy import dependency decreased from 89% in 2013 to 85% in 2014 and is expected to fall further in the coming years due to natural gas flows from Corrib and increased levels of renewable energy. This is very positive from a security of supply point of view. However, oil still constitutes almost half of Ireland's total primary energy requirement. In order to mitigate the associated risk, the National Oil Reserves Agency holds 90 days of oil stocks. In terms of consolidating their effort in this area, last month I signed an agreement with the French Minister, Ségolène Royal, in Paris that allows for both Ireland and France to hold emergency oil reserves in the other country. The diversity of Ireland's fuel mix makes a positive contribution to Ireland's security of supply. In this regard, the future of Ireland's only coal-fired power station at Moneypoint is important. The operating life of Moneypoint in its current configuration will continue into the 2020s. Therefore, key decisions on the future of Moneypoint will have to be taken before 2020.

The third core objective of Ireland's energy policy is sustainability, which is encapsulated in our 2020 targets. These targets include increases in renewable energy and energy efficiency and reductions in greenhouse gas emissions. Ireland is over halfway to meeting its renewable energy target of 16% and I believe we can reach our target by 2020. In 2014, 8.6% of energy consumption was from renewable sources. This includes 22.7% of renewable energy in the electricity sector, 6.6% in the heat sector and 5.2% in the transport sector.

Ireland is also approximately halfway to meeting the 2020 target of a 20% increase in energy efficiency. Ireland's greenhouse gas emissions reduction target for 2020 includes all sectors of the economy, the most significant non-energy sector being agriculture. The EPA reported in May of this year that more measures are required in order to meet our 2020 emissions target, including increased use of renewable energy in the heat and transport sectors. In order to address this need, my Department has recently carried out consultation processes on a potential new renewable heat incentive, which I expect to be in place next year, and an increased biofuels obligation. An initial consultation has been carried out on a potential future refit scheme for renewable electricity, which I expect will also be in place in 2016. There will be two further opportunities to contribute at key stages in the design of any new scheme. To date, onshore wind has provided the most cost-effective source of renewable electricity. The process of examining a potential future refit scheme will include consideration of other technologies including solar, biomass and offshore wind.

In conclusion, I will re-emphasise the three core objectives of our energy policy, which are competitiveness, security of supply and sustainability, and the need to strike a balance between all three in the actions we take and the measures we implement. I thank the committee members for their time today and I look forward to their insights and questions.