Mr. Fergal Leamy:

I thank the joint committee for its invitation and giving me the opportunity to discuss Coillte's progress in recent years, the very important issue of climate change and how Coillte will play a role in dealing with the climate change agenda. In this statement I will cover four areas. I will give an overview of Coillte and outline the progress made in our transformation in recent years, our vision for the future, where we see Coillte in the next few years and the role we think it can play in dealing with the climate change agenda.

Coillte is a commercial forestry company owned by the State. It manages 7% of the country's land, from which it runs three strong businesses, all of which have significant potential. Our core business is forestry. Coillte is in a leading position in the forestry industry in Ireland and, more broadly, Europe. The forestry resource in Ireland is crucial. It contributes €2.3 billion to the economy on an annual basis and supports 12,000 jobs. Most importantly, these jobs, in the main, are in rural areas. Forestry is also an international business. Each year it is estimated that there are 40,000 international truck movements from Ireland, predominantly to the United Kingdom and other European countries. The industry is forecast to double in size in the next ten years owing to the planting that has taken place in the past 20 years.

Coillte's position in the forestry sector is to support ten large forestry customers, to which we sell 1.7 million m³ of timber every year. Last year Coillte planted 18 million trees. Therefore, it has a key role in addressing the effects of climate change. It also has a key role in mobilising the private supply of wood fibre on the island. In order to do this, we recently launched Coillte Premium Partners. The group is also investing an awful lot in technology to ensure we will have world class estate and forestry management practices in this country.

In addition to its core forestry business, Coillte is a major provider of public goods.

We have several flagship recreational sites throughout the country, and we have a significant role to play in carbon sequestration. We estimate that our estate stores 200 million tonnes of carbon dioxide, and adds 1 to 2 million tonnes per year as the estate grows. We also have large areas contributing to biodiversity and nature conservation.

In our second division, Medite Smartply, we manufacture sustainable and innovative medium density fibreboard, MDF, and oriented strand board, OSB,in two plants in the south east of Ireland that export product to more than 30 countries around the globe. We are a market leader in MDF and OSB construction materials and value added products. We recently invested €59 million in a plant in Waterford, and €68 million in a joint venture with BP and Axis on innovative new products that will be sold around the world, providing a market for the two plants in Waterford and Clonmel.

In our third division, land solutions, we take land that is less suitable for forestry and try to add value to it, in line with Government policy in supporting key infrastructure such as renewable energy, housing, tourism and recreation projects. We have played a key role in delivering the renewable energy targets through our renewable energy portfolio.

Over the past three years, Coillte has been on a transformational journey. We are on a journey to becoming the best forestry and land solutions company in Europe. We are changing from an organisation that did not make any money on an annual basis from its €1.5 billion worth of assets, to one that will contribute €30 million in operating cash this year. Coillte is moving away from depending on one-off land sales to drive the performance of the business, and towards a more sustainable model of leasing land, ensuring that land and recurring cash are coming into the organisation. This year we will have doubled the dividend that we pay back to the State and the shareholder from €4 million in 2014 to €8 million in 2017. We have restructured the business quite significantly, taking €20 million in costs out of the business. This makes us more competitive and also makes the business more sustainable into the future.

In our forestry business, I am delighted to say that last year we had a record planting year, planting 18 million trees. This is a 30% improvement on 2014 and is crucially important in ensuring the sustainability of the organisation. This year, we are on track to sell 1.7 million cu. m of sawlogs, the highest volume in ten years. This is important to our forestry customers throughout the country. We have invested more than €10 million in world-class technology to help manage our businesses, and we are maintaining and building on strong relationships with more than 1,000 forestry contractors across the country.

Over the past 12 months, we have been working with partners in the industry on understanding the concern and risks around Brexit and its impact on our business and theirs. We have put together a Brexit forum to address those issues for the broader sector. It is a crucially important sector, one that is growing strongly, and we need to make sure it stays that way. We have been working on innovative biodiversity classification projects to ensure that we continue our role in climate change. In the tourism and recreation sector, we have been cornerstone leaders in the national outdoor recreation plan. We have concluded a €500,000 project with Fáilte Ireland this year to bring substance to key areas around the Wild Atlantic Way and east coast initiatives, and to ensure that we align with Fáilte Ireland's initiatives.

In regard to sustainable wood panels, we have focused our business much more on value added products, moving away from commodity products over that period. As part of our effort to enable national infrastructure, along with our partners we have invested in excess of €400 million in wind energy across the estate. We have identified one gigawatt of energy that we can develop over the next ten to fifteen years. We will not be doing this on our own. Coillte will partner with another concern so that we can focus on our core forestry business.

What will Coillte look like in 2019? We believe that we can and will be the best forestry and land solutions company by 2019 or 2020. That means that we will have a business that first and foremost is sustainable from a financial perspective. It will have world-class recreational facilities and environmental services. Importantly, we believe it can play a key role as an enabler of renewable energy in this country. It will also play a key role in helping Ireland to tackle its increasing climate change challenges and ensuring that we allow other sectors to grow.

Coillte plays a significant role today in mitigating climate change in four key areas. First and foremost is the carbon sequestration on forested lands. As I mentioned, we have a store of 200 million tonnes of carbon dioxide equivalents in our land, and this grows by 1 to 2 million tonnes per year through the growth of forests. We are also working with the Department of Agriculture, Food and the Marine to play a more active role around afforestation. The low-carbon wood panel-based products produced in our businesses in Waterford and Clonmel are a good substitute for non-sustainable materials in the building sector. They are also are an important store of carbon.

In the biomass area, Coillte provides a triple carbon benefit from substituting biomass for fossil fuels. In the renewable energy sector, there is significant scope for Coillte to help achieve Ireland's targets through our renewable energy, wind farms and solar energy portfolio.

We think that Coillte is very well positioned to play a leading role in the Irish bio-economy. This is a reflection of our work In planting forests. We plant 18 million trees every year, and we are looking to further increase that over the next three years. We have a robust land mitigation strategy. Historically, Coillte sold land but did not replace it. Nowadays, when we do sell land for various reasons, we mitigate that by acquiring other land which is put into forestry. That is an important policy that we have adopted to ensure that our overall productive estate grows. We are working intensely with the Department to understand how we can help to grow the forest cover in this country from 11% to 14% in the coming years.

On the topic of sustainable forest management, I note that Coillte manages its forest in a way that maximises carbon sequestration, not only from a commercial perspective, but also from a carbon-storing perspective. Some 20% of our land today is managed for biodiversity purposes. As regards increased forest productivity, we have invested in technology which allows us to manage our estate more efficiently. This allows us to optimise truck movements and carry out work in the forest in a much more efficient and environmentally friendly way. In regard to the private forestry initiative, we have now launched the Coillte Premium Partners scheme. This will be key to mobilising the private supply of fibre by effectively paying farmers and other landowners a cash yield in years 20 plus to allow them to manage their forests and to continue to receive benefit until the final felling at 40 years.

In the biomass area, there is a triple carbon benefit, as I have mentioned. Carbon is sequestered when forest grows, we displace high embedded carbon products, and we have a carbon neutral heat and energy plan. We believe we are well on the way to being the best forestry and land solutions company in Europe, and I believe we can play a significant role in helping Ireland to meet its challenging emissions targets.