Ms Marie Donnelly:

I thank the Chair for those questions. I will try to answer them more or less in sequence. Regarding offshore wind generation, we have seen a quite serious commitment from the countries around the North Sea to the development of offshore wind generation there. We have seen a very dramatic reduction of costs. The reason for that is that technology costs decrease with volume. The wind industry has repeatedly said to us that it does not need a huge amount of support this year and nothing next year. It needs a steady amount every year. It can then build capacity for that amount, which will allow efficiencies to develop in the production chain. In large measure, that is what the 2030 plan is about. It is about building the volume of demand for, say, offshore wind generation so that industry can scale up and maximise efficiencies in rolling it out.

Copper is used in the production of offshore wind turbines. It is bought through the exchange in Paris. Copper risks being a limiting factor in the production of wind turbines unless production figures are made clear. The second limiting factor is ships. Very long ships are needed to bring turbines out into the sea and put them in place, and they are in scarce supply. The idea is to put together a long-term plan which shows volume. That allows the industry to respond, bringing down costs and increasing efficiency.

By virtue of doing that, the most recent offshore auction in the Netherlands required a subsidy of zero. That is because it is a part of a phased roll-out of volume. I note that in the Netherlands the transmission operator pays for the grid access. That is distinct from the UK where the developer pays for grid access. There is a little bit of difference there. The assurance of the volume, however, means it is possible to get the actors together. For example, the Commission set up a special working group to examine the obstacles.

I will provide some small illustrations. Offshore wind turbines in German waters cannot cause an acoustic increase beyond a prescribed level. The UK does not have any requirement at all regarding acoustics. In Denmark, offshore wind turbines must have two red stripes on the blade. In Belgium three red stripes are required. I am not sure the bird can see the difference between two red stripes and three. These are very small illustrations of how, when things operate in parallel, differences can arise with which industry must cope. We put the North Sea working group together to look at some of these.

Are the requirements very important? Could we standardise them so that we can get efficiencies in the system? Ireland is part of that group. We benefit from the work going on there and we can bring it to bear on our own offshore industry. However, we cannot take a step forward until we get foreshore consenting and licensing procedures in place. The positive news is that financiers, investors and developers are ready to move in the Irish Sea. It is an opportunity of which we can avail.

With wind farms, the issue of setback and flicker are very real and are of very real concern to people who live in the locality. Rather than saying "Thou shalt do this or that" through legislation, which can be difficult to change if technology changes, the most important thing is for the community to be involved in the development.

The community has to say, "Well, maybe it is a little bit close but we can live with it" or "We want it moved from here to there". However, it must be part of a dialogue. I really believe that what is coming through now for renewable sources for electricity, RES-E, is really very good. This community involvement and the requirement for dialogue with the community are mechanisms for resolving a lot of the resistances and concerns that people have regarding wind energy.

Technology changes all of the time and it is true to say that wind turbines are getting taller. I do not know whether members have seen the Leonardo DiCaprio film "The Aviator" about the life of the legendary director and aviator Howard Hughes. One scene shows his character flying a plane through lower altitudes and it shook. When the plane climbed to a higher altitude, however, it was stable and that is why we fly at such high altitudes. The higher one goes, the lower the resistance and the steadier the jet stream. That is why taller wind turbines are being used. Taller turbines can pick up a much better and consistent wind current than lower ones. Also, the use of taller wind turbines means that fewer are needed. The efficiency level for onshore turbines is approximately 35%. For offshore turbines, it is in the region of 50%. However, the efficiency level has increased from 28% due to advancements in technology and an ability to identify and pick up the best wind currents. If something is put into legislation at this stage and then technology advances, it will be very difficult to respond to technological changes in an area where advancements are made all the time.

In terms of funding for research and development, when I left the European Commission the budget was €700 million over seven years or €100 million per year for research on the area of energy. A huge amount of that goes to different parts and less so to existing technologies because they are industrialised at this stage and it is for industry to deal with them.

Let me briefly illustrate some of the research areas which will be important in Ireland. How does the grid cope with a very high share of renewable electricity that is variable? I am sure members have seen the pylons and how the cable comes down in a nice arc. I am not a physicist but I shall outline some aspects of physics that I have picked up. When electricity passes through, the cable heats up and then sags. Therefore, people must always monitor how much electricity passes through a cable in order to prevent it from sagging too much. Up until now, we erred on the side of caution and did not pass more than 80% through cables. Now that there are IT sensors to gauge the temperature, it is possible to allow 90% to be passed through a cable. This is part of the research on how one can adjust existing things to make it possible to respond to the energy transition. Ireland is doing rather well in this regard.

Under Horizon 2020, Ireland receives a rather competitive 4% of the budget. Let us remember that we represent less than 1% of the population so the percentage is fourfold and proves that we punch above our weight in terms of the process. Part of that success is due to excellent research and, even more so, due to our researchers in Ireland collaborating with their counterparts elsewhere in Europe. That exchange of information is where there is real benefit. Specifically in terms of research here, marine energy has strong potential in the longer term. The research is at an early stage at an excellent institute in Cork and we need to continue with it.

The second area that is very important is understanding how we can use energy, particularly electricity, for the maximum benefit. I made a presentation on the usage pattern of electricity at an event organised by the Citizens' Assembly. I outlined that one could reduce the overall cost of the system by 20% simply by changing the usage pattern through the use of digitalisation, such as via one's smartphone.

On the ETS carbon price, I am pleased to say that the rate is now €20 and is likely to increase a little. During my time working at the European Commission, the carbon price languished between €4 and €5 per tonne. The current rate has pushed the wholesale price here in Ireland from €45 per megawatt hour to €65 because our electricity is part of the ETS. That situation makes renewables more attractive and means that the PSO levy we pay for renewables has almost disappeared. Will the price continue to increase? That is very hard to say.

The ETS system covers utilities and big industry. I am concerned that there may come a point when, for big industry, particularly that which exports, increasing the cost of carbon will become a serious competitive disadvantage. As I no longer work for the European Commission, I am free to suggest that the ETS should be divided into large industry, on the one hand, and utilities, on the other, because we must be conscious of the economic impact of the carbon price. I stress that this is not a policy of the European Commission.

On the CAP, it is now about finding ways to allow agriculture to play its role and contribute to the transition. The agricultural sector has a lot of opportunities to do so. The new LULUCF relates to the sequestration of carbon inland.

In terms of sequestration through forestry, there is a great deal of opportunity in this country because we are very far behind. The opportunity of using land as a carbon sink will be emphasised in the CAP. From the perspective of both DG Energy and DG Climate of the European Commission, we support that because it makes sense. We also support the idea that efficiency in farming should be combined with efficiency in energy transition. Let me outline the situation in France. In order to harvest grain, one must cut the stalks, etc., and one is left with stubble that can be used to produce bioenergy. Clearly, the harvesting of grain provides a resource as well. At the same time, one gets a food product and a raw material for a bioenergy. To think about agriculture in that context and take it forward is really what the CAP changes are all about.