Oireachtas Joint and Select Committees
Tuesday, 9 June 2015
Joint Oireachtas Committee on Jobs, Enterprise and Innovation
Strategic Plan: Bord na Móna
I remind members, visitors and those in the Visitors Gallery they should ensure their mobile telephones are switched off for the duration of this meeting as they interfere with the broadcasting equipment even when on silent mode.
We are now moving on to our discussion on Bord na Móna's strategic plan for the company, how it will impact on existing jobs in the midland counties and the possibility of creating new jobs as a result of diversification. I welcome Mr. Mike Quinn, managing director, Mr. Michael Barry, finance director and Mr. Gerry Ryan, company secretary, to this meeting.
Before we commence, in accordance with procedure I am required to read the following: By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.
Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.
I remind our guests that their presentation should last no more than ten minutes as the presentation submitted has already been circulated to members. I now invite Mr. Quinn to make his presentation.
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.
Given the remit of this committee is jobs, we are all happy to hear from the concluding sentence of Mr. Quinn's speech that the intention is to ensure Bord na Móna remains a major employer in the midlands out to 2030. The role of Bord na Móna in terms of employment in the midlands counties for decades has been significant. Regardless of where we come from, we all want to see that continue into the future. We all very much welcome the diversification of Bord na Móna and the forward planning outlined by Mr. Quinn.
In terms of jobs, at a recent meeting of the Joint Committee on Transport and Communications attended by Mr. Quinn, he stated Bord na Móna needed to achieve savings of €24 million. Will that target, which is pretty steep, be achieved and, if so, how will that impact on existing staff?
Mr. Mike Quinn:
We have to achieve the €24.2 million. I will explain why it is necessary that we achieve those savings. The price of energy is linked to gas, the price of which has dropped significantly over the past three or four years. Other fuel types include coal, which has decreased from $130 in 2011 to $60 a tonne now, and oil. We are all aware what has happened to oil. At the end of this year the Edenderry facility will have to be able to compete with those commodity fuel stocks on the open market. If we do not get the peat price down to compete with those, we do not get access to the grid, which means we do not generate power.
That same scenario happens with the two ESB stations at the end of 2019. While there has been all this movement in the commodity fuel-feedstocks, peat has been guaranteed at a fixed price for the past 15 years under these fuel purchase agreements supported by the PSO but that will end and, therefore, we have to transform our business to drive our feedstock business to compete against these other fuel commodities.
Will we achieve the savings? We have to. The three stations will become what is called co-fired stations. Each of the three stations will operate between 37% and 40% biomass and, therefore, the need for peat will drop by 40% across the stations. We need to a drop of 200 people in employment across the business to do that. We are in a fortunate position in that we will have 216 natural retirees over the period to 2020 and, therefore, if there are redundances, it will be a handful. However, we also see an opportunity on the biomass side to grow employment in the sector. We spent €19 million on biomass last year. That will grow to more than €100 million by 2020 and we believe that will increase to between €175 million and €200 million by 2025. That will generate a significant opportunity for the workforce if we can get the willow crops, for example, off the ground. We are also exploring another scenario. Our peat harvesting business is seasonal, running from May to September, but we are talking to a company at the moment which would take the workforce and deploy it in the private forestry sector during the six months of the winter timeframe. While we might not secure increased head count, we might secure longer term employment all year round by moving to a biomass-peat mix in the power stations.
Mr. Mike Quinn:
Potentially we will need more because we will not stop harvesting peat. The energy peat will run out in 2030 but we still have a significant stock of raw material for the growing media which I referred to earlier and for the briquette factories. This year we will harvest approximately 3.6 million tonnes of peat. That will drop post-2030 to approximately 1.5 million and, therefore, will halve in volume. We believe we can fully employ the staff we currently have in biomass production. It is the same skill-set and the same harvesters, tractors and trailers will be needed to haul the willow, etc. We can make that transition because we have, hopefully, 15 years to do it.
Will there be sufficient biomass production nationally to meet the company's requirements? Can the company provide what is required or will it need to continue to import biomass as it is currently?
Mr. Mike Quinn:
We will need 2.3 million tonnes of biomass by 2020. There is not enough indigenous biomass to support that. What we have committed to is for every tonne of domestic biomass we secure, we will displace an imported tonne. There are private biomass projects coming on stream. Members may have seen the announcement yesterday of the new station in Mayo, which needs 500,000 tonnes. We believe the market for biomass will be between 5.6 million and 5.8 million tonnes by 2025. Ireland currently generates 990,000 tonnes. That demonstrates the gap between domestic gap and overall potential demand. Through BioEnergy Ireland with Coillte, we are looking at three potential streams of biomass supply - domestic supply, internationally sourced and internationally owned. We hope to mix these three supply streams evenly across the overall demand.
Mr. Mike Quinn:
That is our intent. We have had successful trials on the 650 acres on which we are growing willow crops. They have exceeded expectations. We need 15,000 hectares of willow crops to generate 300,000 tonnes of biomass and we would need between 800 and 1,000 people to maintain and harvest that.
I welcome the fact that Bord na Móna is going to maintain its briquette factories at Derrinlough and Littleton. Will permanent staff at both facilities who are due to be redeployed during the summer months be guaranteed this will happen on a full-time basis? Is it planned to lay them off temporarily or how does the company propose to proceed?
Mr. Mike Quinn:
Staff at both factories will be on short-time working for five additional weeks this year. We have secured 29 additional positions out of the total workforce of 120 in the harvesting of feedstock. We began harvesting last Sunday and as long as the weather remains good - which we need it to do - those 29 people will be employed until the briquette factories resume production on 10 September. We have also brought forward some capital works from next year into this year in order to try to minimise the impact. In addition, we have drawn up a roster in respect of site security. This will involve staff doing two days of site security work on a rotating shift basis and then doing three days on short-time hours. We have tried to minimise the impact wherever possible.
Mr. Mike Quinn:
I had a meeting with the Minister for Agriculture, Food and the Marine, Deputy Coveney, approximately four or five weeks ago and we engaged in a very detailed discussion regarding anaerobic digestion. As the Chairman is aware, there are no anaerobic digesters in the country at present. Actually, that is not correct because there is one small digester in operation at Shanagolden in Limerick. We were asked to examine the suitability of Bord na Móna land for anaerobic digestion, which we have done. When one considers the position of Ireland versus, for example, Germany, where large-scale anaerobic digestion is used to produce biogas, it is obvious that the biggest problem we face arises in the context of the tariff. We currently have the lowest tariff for anaerobic digestion in Europe. The two challenges we face relate to the fact that we cannot make the use of digesters commercially viable and our ability to secure feedstock. We have prepared a submission on the matter which we are going to send to the Department of Agriculture, Food and the Marine in the next week or so. We are of the view that there is scope for three regional anaerobic digesters of significant scale that would process somewhere between 150,000 and 200,000 tonnes of waste per annum in order to generate biogas but the provision of meaningful tariff support would be required to facilitate this.
Mr. Mike Quinn:
They are two very different technologies. Anaerobic digestion is such a new technology, I could not really comment on that matter because I do not know how successful it might prove. The technology relating to wind energy is proven and we know that once a turbine is up and running, it will generate-----
With the expansion of the national dairy herd, we have a readily available source of material for anaerobic digestion. In that light, I will ask the question again. Would Bord na Móna be in favour of reducing the tariff relating to wind energy and increasing that relating to anaerobic digestion?
I welcome the delegation. Obviously, Bord na Móna is a very successful company and most people are extremely proud of it. The company is an indigenous entity and has adapted to the winds of change.
I wish to ask about the scale and sophistication of the operation used to extract peat from the ground. The process in question is extremely crude in comparison to the traditional methods used to extract peat in the past, which had a very slight impact on the Earth. How sustainable is Bord na Móna's way of operating from an environmental point of view? I do not know whether the company is obliged to calculate what is the impact of its production processes but I presume that this would be the case. I have experience of cutting turf with a spade and I am interested in the different methods used to extract peat.
Mr. Gerry Ryan:
I thank the Chair. The first point is all the peat extraction activities we operate in Bord na Móna are fully licensed under licences issued by the Environmental Protection Agency. We are the only licensed extractor of peat in the State and all our activities are supervised and are carried out in accordance with strict terms set out in the various licences. We have nine different licences issued by the EPA and they contain very strict conditions in respect of all our activities. Moreover, all our activities are carried out to ensure we are in full compliance with the licence conditions. Through the Chair, I note to the Deputy that one licence condition is that we are required to stabilise the peatland when we have completed the economic extraction of peat. We have a number of projects that have been ongoing for many years regarding the rehabilitation and restoration of peatlands. In particular, in a very large area in excess of 5,000 acres of our peatlands in north-west Mayo, we have the largest rehabilitation and restoration project regarding peatland habitats in Europe. We also have a dedicated team of ecologists employed by the board to ensure all our activities are carried out with the minimum impact on the environment in general and biodiversity in particular. This is the way we regulate our activities under peat extraction.
First, it is interesting to hear from the witnesses' presentation and the history of Bord na Móna the opportunities that can be available to the State with regard to good semi-State companies that focus on particular areas. It is something positive and there is a need in this State for more focus on the opportunities provided by a semi-State for investment and development. The second positive issue is the opportunities that are available within the green economy, which appear to be a focus on the part of Bord na Móna. What are the vitals of Bord na Móna at present? Mr. Quinn told members about its turnover, its expected turnover and its employment levels. Can the witnesses identify the vitals in respect of profitability, any dividend that is passed on to the State, the balance sheet, etc.?
Mr. Michael Barry:
Perhaps I will pick up on that question. As was stated, the turnover of the company is somewhat in excess of €400 million. In the year ended March 2014, we reported an after-tax profit of approximately €33 million, of which one third was paid back to the State by way of dividend. In fact, 95% went to the State and 5% to the employees, who have 5% ownership. As for the balance sheet, we have shareholders' funds in the region of €225 million. At present, we have borrowings of approximately €200 million, all of which is long-term and repayable up to the end of 2019 and all of which has been raised in the US private placement debt market.
Very good agus go raibh maith ag Mr. Barry as sin. In addition, reference obviously also was made to the changes that are happening, the restructuring and so forth. Is it expected there will be changes to the terms and conditions of the employees and will all those redundancies be voluntary?
Mr. Mike Quinn:
As I stated earlier, we do not expect to make any redundancies and if there are, there will be fewer than ten. We find ourselves in the position where more people are retiring naturally than we need to leave the business. Consequently, even when the 216 people go, we will be obliged to hire somewhere between 20 and 50 people back into the business after retirement to get us to the right-sized number of employees for peat production in the future. As for people's terms and conditions, I really cannot say too much about that because it is one of the items that currently are under discussion at the Labour Relations Commission. That process is in play at present and, in fact, the next session will take place this week on Friday, 12 June.
All right. In respect of carbon fuels and the carbon tax, the latter obviously was introduced to reduce carbon-rich fuels. Does Mr. Quinn have figures to hand on exactly how much of a reduction this has had on Bord na Móna's carbon-based products?
Mr. Mike Quinn:
Absolutely. We see two roles for Bord na Móna in this. One is on the biomass side of things in regard to willow. We can take willow crops from anywhere within a 100 km radius of the power plants commercially, which is a significant catchment area for willow production. There is a huge opportunity for private forestry. By 2030 the private forestry sector will be bigger than Coillte. That has not yet been mobilised. We are in detailed discussions with a company to come in and start to mobilise the private forestry sector to do thinnings and then obviously harvesting after the next five years. We believe we can get just as much from the private forestry sector as we can from Coillte.
Mr. Mike Quinn:
We have a project ongoing in Mr. Gerry Ryan's department on land and property at the moment to see what we can grow on our cutaway peat lands. We have run multiple trials and the problem is that we cannot get the same yield per acre as we get from good arable land. Willow needs to grow on good land.
On carbon tax, I have heard anecdotally that a large number of briquettes that Bord na Móna sells into the North find their way down into the South. Does Mr. Quinn have any figures or information on that? I believe Bord na Móna puts a different colour band around the bale of briquettes.
Mr. Mike Quinn:
I am not too sure there has been a big increase in sales of briquettes in the North. There has been a big increase in sales from the North coming back down into the South. It is a huge issue for us and I wish to put something on the record. We fully support the carbon tax. It supports our renewable agenda. That is not what we are saying. What we want is a level playing field. We have had an example of a 24-tonne coal truck showing up in Killarney and selling exactly the same coal as we do for €1,465 cheaper per load. When the VAT is thrown in, it comes to more than €3,000. We just cannot compete with that.
This committee is focused on an all-Ireland economy. There is a great opportunity for the State in wind energy etc. However, one of the dangers is that community interest or co-operation can be switched off if turbines are positioned too close to domestic homes. I believe the Mount Lucas turbines are 160 m tall, among the highest in the State at the moment. Does Bord na Móna have a code of ethics with regard to locating them 1 km away or ten times the height away, or is it only dealing under the current guidelines?
Mr. Mike Quinn:
We have three wind farms. The first one was in Mayo in 1992. The two recent ones in Bruckana and Mount Lucas were done under the existing guidelines. Considering our landbank, they are relatively remote. We will absolutely comply with any new legislation that comes in. We have a landbank that can support further set-back distances.
I thank the delegation for coming in this afternoon. The carbon tax has not been implemented by the Northern Ireland Executive, even though it has been introduced throughout the rest of the UK. Mr. Quinn has already clearly outlined the impact that is having. It should be implemented in the North of Ireland to provide a level playing field.
A major reason for insufficient biomass being grown here is that the land is being utilised for other more valuable crops. It is likely that Bord na Móna will import more given that it is cheaper to import it and it has a lower moisture content than the biomass produced here.
How will Bord na Móna encourage more farmers to produce willow, in particular? How can the Government assist in that regard? I am enthusiastic about the proposal to use the Mount Lucas site for solar energy generation. If the solar panels prove successful, will Bord na Móna be more interested in developing solar capacity than wind turbines on its lands? What can the Government do to encourage solar generation? As far as I am concerned, the mix has gone too far towards wind. With regard to the Mount Lucas project, what percentage of the turbines are not in use because other sources of energy are available on the grid? Will the witnesses identify the locations of proposed wind farms over the next seven years? I am concerned about a proposal for large-scale development close to a large property owned by Bord na Móna. In the event of a connection being made to the grid, is it likely that the company will take advantage of the connection? Is the area to which I refer being considered for a wind farm?
I asked earlier about the change in tariff from wind to biodigesters but I got an non-committal answer. We should increase the tariffs for biodigesters but rather than levy the citizens of this State, perhaps we should reduce the tariff on other sources of energy generated from renewables.
The witnesses referred to Drehid, which is in the heart of my constituency. I acknowledge that a community levy is imposed on each tonne going into the site but how many groups are involved and is there engagement with the local community in terms of showing people around the facility? That is a better type of community interaction than simply paying a levy to the local authority for redistribution to the community.
Mr. Mike Quinn:
It is more economical for us to use domestically produced biomass than to import materials. We have given a commitment under NewERA that for every tonne of domestically produced biomass we will displace an imported tonne. Biomass has become an internationally traded commodity which means that ownership of an international biomass supply chain is a low-risk venture because if we do not consume the material in Ireland, we can sell it on the open market. A considerable number of economies are converting to biomass power stations and combined heat and power plants for district heating and other purposes.
The most recent energy crop programme involved miscanthus but it was a disaster. Farmers have long memories of it. We have been trying to get the willow programme off the ground for nearly five years but the fruit of our efforts is 650 acres, which is very disappointing. The other problem is that while willow needs to be grown on good land, there is a lack of willingness on the part of the farming community to lock up land for 15 to 20 years. We can, however, offer 15 to 20-year contracts for the willow because the power stations will need biomass over that period. I hope that will go some way towards encouraging cultivation. We have also been working closely with the Department of Agriculture, Food and the Marine to prepare a grant package. When one plants willow, there is no cashflow for the first three years but the crop can be harvested every second year after that. We are working to alleviate that cashflow problem upfront in order that farmers get an annual income from the first year for the crop.
That has been a major impediment in our experience. The proposal is in with the Department of Agriculture, Food and the Marine at the moment. I gather the Department is very supportive of it and we hope to submit it to the Department of Finance for inclusion in this year's budget. That is one way in which the Government could help us to establish the willow industry. It is wide-ranging. We need 15,000 ha within 100 km of the power stations. That is the position in terms of biomass support.
There is grant support for the private forestry sector already. The problem with the private forestry sector at the moment is that it tends to be rather fragmented. The grant was for 7 ha blocks. When we met representatives from the UK-based company with which we work in this area we concluded that the minimum economically-feasible land area to harvest private forestry was approximately 20 ha. Therefore, we have to come up with a way of putting small co-operatives together to take close proximity 7 ha blocks and harvest them in one deployment. Some of the barriers include road access etc. There is some grant support available from the Department of Agriculture, Food and the Marine, but that will be one of the challenges. There are over 19,000 private owners of forestry in Ireland. It is incredibly fragmented. How we achieve scale to harvest private forestry is going to be a key challenge.
A question was asked about wind versus solar. Bord na Móna has the opportunity to roll out large-scale solar panels. I am unsure whether committee members have seen these panels. They are 2.5 m off the ground at the front and have a maximum height of 4 m at the back. They are relatively maintenance-free once we deploy them. They have halved in cost since 2008. We are talking about efficiencies of 11% or 12%. They are becoming very economical for western Europe. Next year's pilot will tell us a great deal about how effective those farms will be. We will be the first company in Ireland to deploy a solar farm on that scale. We have to work out how we are going to co-locate that with the wind farm and how that works from a grid perspective. That is a key point. This time next year we will know a great deal more about solar.
Would we opt for solar instead of wind? That is not our strategy at the moment. Our plan is to co-locate the solar farms with the wind farms. This has been a proven deployment option in Europe and we intend to do the same here. I do not have the figures on curtailment at the moment, but that is something I can come back to the committee on.
A question was asked about wind farm locations but I cannot give specifics on the matter. We have identified approximately 20 locations. I cannot tell the committee about them because we are in the process of looking at the land banks of Bord na Móna and Coillte as part of the joint venture announced last year. There are approximately 30 potential sites between the two companies. Whichever location we decide on, it is our intention by the end of this year to communicate the decision to the local community within the coming six months.
Mr. Mike Quinn:
Internally, we have made a decision to the effect that before we submit any planning permission we will involve the local community. We will go through all our plans upfront before we submit. We are not going to submit planning permission and then engage with the community. We will be upfront about that.
People need education about what is going on rather than the company simply saying the information is in a given document. That is proactive engagement. Reactive engagement is when something goes wrong, such as what happened some years ago with regard to what happened at Kerdiffstown. I firmly believe there are responsibilities for companies like Bord na Móna, particularly in the case of something as difficult as what happened on that occasion. If I travel to the area I can still get the smell off it. The company needs to be more proactive in its engagement with the community.
Again, we are talking about landfill. What is the impact of Covanta opening in Dublin? What impact will that have on the possibility of extending the lifespan of that facility?
I have looked at this because there are a number of landfills in my village. If Covanta cannot get sufficient material to incinerate, what is the likelihood of Bord na Móna removing the material and selling it on to Covanta to be incinerated because it is a fuel stock? Most of the material is just plastic and combustible materials after a number of years. The gas materials are biodegradable but there are non-biodegradable materials that could also be a fuel source.
Mr. Mike Quinn:
Our planning permission up to the end of this year is for 360,000 tonnes into the Drehid site. That returns to 120,000 tonnes in December. We got an intensification period of two years plus two years, which runs out this year. We will not be applying for an increase back up to 360,000 tonnes. The reason we got the 360,000 tonnes was because of the delay in Covanta.
In respect of the 120,000 tonnes, there is more than enough types of waste that need to be landfilled that will not compete with Covanta. For example, construction, demolition and wood waste will not go to Covanta and need to go somewhere. We will landfill waste stream types like that in Drehid so there is no real competition with Covanta in the landfill.
I welcome the witnesses. Bord na Móna is an important State asset. Mr. Quinn outlined that last year, its profits were €33 million. This is quite a turnaround when one looks back at Bord na Móna in 1998 when significant State intervention was needed. I know when the previous Government was listing State companies that were to examine their strategy and appropriate ownership models, Bord na Móna was not included in that list but it has engaged, and rightly so, in this process with the strategic plan, which is very important.
In respect of the ownership model, has Bord na Móna formulated a firm view in this area? Does it want to be privately owned or does it see itself having a different regulatory regime? Last November, it unveiled plans for an additional 210 turbines with the ESB at a cost of €300 million. What stage is this process at? The fact that Bord na Móna is looking at expanding and investing in the forestry industry is very welcome. It is key for Ireland. We cannot afford to be importing materials we could produce here. We talk about our indigenous economy and how it is the backbone of our economy. This is a great opportunity so anything that we can do as a Government to support Bord na Móna in that role is critical because the amount of material we are importing at the moment is not sustainable. Mr. Quinn mentioned the target of 800 to 1,000 jobs in the biomass industry by 2030. Again, this shows how labour-intensive it is. This is our future. If this is how we want to see our country growing, we need to focus on what we can do best. Now is the time to plan, although there is a long-term vision there. I compliment Bord na Móna on that.
Mr. Mike Quinn:
In respect of forestry, that mobilisation is done under the auspices of BioEnergy Ireland, which was Government policy last year. Coillte is working very closely with us on that. We believe BioEnergy Ireland will become a source of biomass for Ireland Inc., not just Bord na Móna and Coillte. Most of the projects in the private sector that are failing to get financing are not getting it because they cannot guarantee the fuel stock. What Bord na Móna and Coillte will provide through BioEnergy Ireland is a platform for indigenous biomass to sell to BioEnergy Ireland and for projects that need fuel stock to come to BioEnergy Ireland. If they need a ten-year fuel contract, because of the scale and our international supply chain, we should be in a position to provide that guaranteed supply of ten-year feedstock. We believe that will support the renewable heat incentive that the Government is working on. If that lands in a medium-scale CHP-type scenario, we would be able to provide the fuel stock for that.
Most of these projects do not get off the ground today because they cannot get the feedstock, and that is a major problem. We believe this project not only will create the jobs but will kick-start an entire industry in Ireland around biomass.
With regard to the ownership model, the unique nature of what Bord na Móna is doing and this diversification, I would have my doubts about flotation or other methods. Has Mr. Quinn explored that as part of this plan?
Mr. Michael Barry:
I will pick up on that. Our starting point with regard to ownership is that it is first a matter for the primary shareholder being the State. On saying that, we believe the company can function very well in State ownership and we have proven that we can access the global capital markets. We are comfortable that within State ownership we can continue to grow the company, finance our development and deliver a return for the shareholder. Any decisions with regard to flotation or privatisation are matters for the shareholder. It is our job as the management team to run the business, regardless of the ownership structure.
Mr. Quinn will know that the Quinns are generally recognised as being optimists but if he is coming to work on a Monday morning does he have a worry in the back of his mind that would make him say, "I hope this is not on my desk today"? In other words, what are his concerns? What could go wrong? Is there a particular aspect about which he is concerned, especially in regard to competition?
Mr. Quinn mentioned that Germany had an advantage in one particular aspect. Does Bord na Móna have competitors that it had not even thought of that will just appear behind the scenes? What are his concerns about what could happen on that basis?
To touch on the willow, is the willow a native Irish plant, and is there any environmental query about the biomass development of the willow tree and what Bord na Móna is doing in that regard?
Mr. Gerry Ryan:
Willow grows naturally on peatland in Ireland. It is a natural indigenous plant in that sense. Willow grows naturally on many of our cutaway peatlands where we are not actively involved or where we have restoration projects, but it grows in a scattered way, as mentioned earlier. It does not grow in such a fashion that it could be harvested economically, but it is a natural plant and grows naturally on the bogs.
Mr. Michael Barry:
To pick up on that, if we roll out widespread development of willow it will be particular hybrids. Those hybrids are currently being propagated in places like Sweden but it would be our intent to develop our own propagation facilities on suitable land and propagate the particular hybrids domestically. While Mr. Ryan is correct that willow is a native species there are particular hybrids for getting the right returns and having the right resistance to disease and so on.
Mr. Mike Quinn:
I would not call them fears, I would call them concerns. I outlined one earlier, namely, while I endorse the carbon tax it has to be applied on a level playing field. I understand the reasons we cannot roll back on the carbon tax but it is putting Bord na Móna in a completely uncompetitive position. To pay 51% of the overall take for 30% market share is unsustainable. Something must be done on that to allow us at least compete on a level playing field.
With regard to other aspects that concern me, we have issues with the amount of time it takes to get through the planning process for some of the infrastructure. I came back from the United States to take up this role. It takes two and a half to three years to get through every step of the planning process, and some of these projects, particularly the wind projects, are very capital intensive to get to the consented planning stage. That is something we need to examine in the future. The more up-front community engagement we can do will help in that process, and some of the models that are very successful internationally may help with that.
That is the energy side of our business. On the other side, we have weather dependencies to consider.
One thing I have learned is that this is an issue that can make or break the business. I have not yet experienced the harvest, but we were meant to do 20% of our harvest in May. We did nothing, and only started on Sunday last week. I understand there was a very bad harvest in 2012 which created significant financial issues for the company. Going back to the renewable energy side, we need the wind to blow, which is another weather dependency. One of the first things I do every morning when I get up is check the weather forecast. That is a very important factor for our business but not one we can control.
If we are to become the number one renewable energy supplier, we must have a portfolio approach to renewable energy at Bord na Móna. There cannot be a dependency on wind, solar, anaerobic digestion, gasification or landfill gas. We want to be involved in every element of renewable energy in order that we do not get huge spikes in our financial results each year, depending on the weather. That is probably our largest uncontrolled variable at this time.
When I was involved in the food business, the two issues that worried us every Monday morning was whether there would be a food poisoning scare or a strike or some other industrial relations problem. I am sure Bord na Móna has all types of problems like that which it is obliged to handle.
I thank Mr. Quinn and the delegation from Bord na Móna for their presentation. They have outlined several great opportunities for the future in terms of growth and job creation. In the context of Bord na Móna's core business, are all the areas in its remit currently in operation and are they all excluded from all European designations which impact on other areas of the country?
In regard to biomass, I understand the concept of growing willows and carrying out thinnings. Are the remnants left behind after a clear felling considered harvestable biomass? What involvement does Bord na Móna have with Coillte in this regard? Is Bord na Móna taking all branches and remnants from Coillte? In many of the sensitive environmental areas where there are coniferous plantations, there is an environmental issue in terms of pine and spruce needles and so on getting into lakes and waterways. It is good for the environment to remove them. Are all plantations being gathered for biomass use?
In terms of importation, where is Bord na Móna sourcing biomass, how is it being transported and how economical is it in the long term? Mr. Quinn referred to the need for a portfolio approach in regard to renewables. Is this in light of the possibility of future mergers with sections of Coillte?
I welcome the delegates and compliment them on the fine plan they have presented to the committee. They indicated that Bord na Móna currently has 2,200 employees. What percentage of those are seasonal staff? The witnesses have said that employment levels will be maintained when the company transitions to the new situation. Will that involve retaining the same 2,000 staff, taking on some whole-time equivalents, or how will that be worked out?
In regard to the €22.4 million in savings Bord na Móna is obliged to make this year, will the delegates indicate how they hope to achieve them?
Regarding the cultivation of biomass, what is the greatest obstacle to being able produce more of it in Ireland? Is it that the return to the farmer is a lot less than from, say, dairying and beef production? Have the delegates done any comparisons as to what the return per acre would be from biomass versus dairying, beef, sheep and so on?
Mr. Gerry Ryan:
On Deputy Kyne's first question, we have approximately 80,000 hectares of land in the company's ownership, spread throughout the country, but mainly in the midlands, with some pieces in north-west Mayo and smaller pieces in Kerry and Donegal which are not in active production.
Approximately three quarters of the 80,000 ha, whatever that is, approximately 60,000 ha, are directly involved in the production process at the moment, either by way of actual production, namely, harvesting of peat off those acres, or by providing transport paths, headlands and so on. Quite extensive working areas for machines to turn and so on, which may not relate directly to harvesting the peat but are nevertheless part of the overall production process, are needed. Therefore, approximately three quarters, or 60,000 ha, are actively involved in the production process.
In respect of lifespan, Mr. Quinn has already noted that we expect the fuel peat to last until 2030 or thereabouts, based on current forecasts. The horticultural peat would last a bit longer, probably another ten or 20 years, depending on demand.
None of the areas that we operate production on are currently designated under the special area of conservation, SAC, or national heritage area, NHA, processes. None of the rest of our land is either. Over the years, in a number of cases we have passed areas to the National Parks and Wildlife Service which it has subsequently designated as SACs or NHAs. I mentioned earlier on that we have an extensive programme of rehabilitation and restoration of peatland on which we are not actively in production. We have a number of areas where we never entered into production although these were acquired in the same way as all other peatlands in the past. In fact, the National Parks and Wildlife Service has identified with our co-operation and help a number of areas which may be suitable for designation as SACs and NHAs later in this year and we are co-operating fully with that process. The reason they are so desirable or suitable for designation is because of the work we have carried out in the past in relation to restoration and rehabilitation and we are very happy to be in a situation where those lands can be designated.
Mr. Mike Quinn:
I will try to reply to the matters raised in sequence, if I may. In terms of the biomass clear felling, we are talking about stumps and roots. On what we currently get from Coillte, we will receive about 20,000 tonnes this year. This is the first year we have received anything from Coillte. Some 50,000 tonnes will be wood and 5,000 tonnes will be brash. The brash is made up of the first and second thinnings of the tree. We have tried using stumps in the past because obviously we have a lot of wood on our own land. The problem is that there is lots of soil and stones, etc., in the wood and up to now we have not been able to find a machine that is capable of crushing and chipping it as the wood is very hard. We had a demonstration last week from a German company which now appears to have a machine that is capable of chipping it. If that is successful, our intent would be to maximise the biomass out-take which would include the stumps and the roots, but that is a relatively recent development in terms of capability.
Mr. Mike Quinn:
It is pulp wood. If I may move on to the international biomass supply chain, there are two types of international biomass with which we are engaged at the moment. We import palm kernel shells which are used in the palm oil industry. They are coming in from Indonesia and Malaysia. We can call the second biomass woody biomass. We look to the USA, South America and Africa for that. There is a power company in the UK called Drax which has converted 50% of its capacity to biomass. Its model is that it went to the southern United States, took rights on the forestry for 20 years and built a wood pellet plant and shipping terminal and it now brings 900,000 tonnes of pellets back to the UK annually. It constructed two 450,000 tonne plants.
That is potentially one model that we may look at. I mentioned sourcing. There will be three streams: owned infrastructure, internationally sourced contracts on long-term agreements for ten or 15 years and domestic supply. I also mentioned that the risk of developing an international supply chain is pretty low because one can sell it on the open market. It is a commodity-based fuel stock.
In regard to future modules with Coillte, we have only one which we are working on, that is, the wind farms. The State proposes to have one company developing wind farms. We are taking our development pipeline and Coillte's development pipeline and currently evaluating whether we can merge the two and have one company to develop wind farms. We are not engaged with Coillte on any of the other projects, for example, anaerobic digestion, gasification or landfill gas.
I was asked about the number of employees. We have 500 to 600 seasonal employees depending on how late we start the harvest. Obviously, the later the harvest, the more people we need to try to catch up. It is our intention to keep the 2,200 FTEs long-term but the mix will change. There will probably be more seasonal employees than permanent employees. The overall FTEs will be the 2,200.
In respect of the €24.2 million, due to the reduction in volume we get almost €17 million or €18 million from sales. Some €8.7 million will come out of labour cost. The reason we need €8.7 million for labour costs is that 62% of the cost of producing peat is labour related, 38% is non-labour. As there is not enough in the 38% to achieve the €24.2 million, unfortunately we have to do something with the labour costs.
I wish to raise a few issues. Will a recent planning decision in respect of Cluddaun, which is a Coillte development, impact on any of the wind farm plans? Coillte was developing the Cluddaun project separately. I am aware from the presentation that Bord na Móna has a joint venture with the Cluddaun project. It seems Bord na Móna, Coillte and ESB are running around the country almost trying to outbid each other to build various wind farms. That is driving the planning process at which Bord na Móna is frustrated. Will the joint venture have a responsibility to communities on the part of the three semi-State companies in this space or just carry on as at present?
In respect of the Northern Ireland issue, have the representatives engaged with customs, the Department of Finance and the Garda? Is Bord na Móna losing money each year? I am aware that many of its loyal suppliers are feeling the heat and are looking to Bord na Móna, as the parent company, to take leadership. Have the representatives engaged with Revenue on that issue?
If Bord na Móna wants to get into biomass, how is it that we had an announcement in Mayo at the weekend that a company is going to import biomass for five or six years? Bord na Móna is one of the largest landowners in County Mayo, literally within miles of where the plant will be based. If Bord na Móna sees a future for itself as the biomass base, it makes no sense when this golden opportunity was presented to it that nobody in the company took the ball and ran with it.
I apologise on behalf of my colleague, Deputy Barry Cowen, who had to attend a family event this afternoon. I know he will engage with you at the other committee.
Mr. Michael Barry:
I will pick up on these items. With regard to the Coillte wind development project in County Mayo, the Cluddaun project, the reasons it was rejected from a planning standpoint are not directly applicable to our site. There were different issues specific to that site. Our site is absolutely adjacent. Any site we own we develop in joint venture with ESB.
We have had delays also and are currently suffering from a continuing delay in achieving a revised planning. There have been some legal developments. A law case decision at the latter part of last year in the O'Grianna case has had a bearing on this. We are still absolutely committed to developing that project and working hand in hand with the ESB we expect to deliver.
On the subject of community gain, we actively engage with the local community in terms of maintaining relationships and explaining what we are doing and the nature of the project. We have had a series of town hall meetings. I think a fundamental aspect of Bord na Móna's DNA is its responsibility to the community. We in Bord na Móna regard ourselves as being part of and a product of the local community, especially in the midlands. Generations of the same families have worked for the company. We actively engage in local communities, in particular on infrastructure projects. We believe it is essential to liaise actively with the communities and to bring them on the journey with us.
In response to the question on carbon tax and the engagement of Bord na Móna with the Department of Finance and the Revenue Commissioners, we have actively engaged with both. A couple of years ago, prior to the introduction of the carbon tax, members may remember that the then Minister for Finance deferred its introduction for a couple of years pending the introduction of a so-called robust mechanism for dealing with the issue of product coming from across the Border. We engaged heavily with the Revenue in relation to that. The reality is that there is no robust mechanism that works in practice. That is not, however, for the lack of engagement on our side.
The question of biomass and the announcement on Mayo Renewable Power was raised. We have land adjacent to that project, but what has been demonstrated based on extensive trials over the years is that Bord na Móna's land does not support the growing of biomass. The yields are not adequate. It does not work. My colleague, Mr. Ryan can expand on that point.
Is Mr. Barry confident that Bord na Móna has good title of all the lands it has around the country? Many of the holdings were based on commonage and the land was given to Bord na Móna for the specific reason of harvesting peat back in the 1940s and 1950s.
Does Bord na Móna receive EU payments under CAP?
Mr. Gerry Ryan:
Deputy, we are quite confident of the title to our lands. We have a number of legal specialists whose role is to ensure that the title of all our land holdings is correct. That is an ongoing process because of the nature of the acquisition of the land, which tends to be in small parcels. In those situations there may be some outstanding issues in relation to title, but they are dealt with on a systematic basis as and when they arise.
On the use of the land, we are quite clear and we have strong legal advice that Bord na Móna is entitled to use the land for whatever purpose it desires. It is not restricted to turf cutting or peat harvesting.
Mr. Gerry Ryan:
As the committee will know, that project now falls under the remit of Irish Water. Among the options that are being considered for the project to supply water to the Dublin and eastern region is the possibility of interim storage of water taken from the Shannon at a site in the midlands. Our site at Garryhinch is a cutaway peatland, which is just outside Portarlington and has been identified as a suitable site if such a reservoir was required.
We have fully co-operated with the company that is now known as Irish Water but, previously, it was the Department of the Environment, Community and Local Government and Dublin City Council, which led the project and examined and assessed the suitability of the Garryhinch site. For example, the ground conditions at the site and various matters were surveyed.
The site is one of the options that is being considered by Irish Water. In fact, it has just started a public consultation process on the options to deliver the project. Until such time as the public consultation process is finished we will not be actively involved in anything to do with the site. We are happy to say that the site remains available and we are quite happy to deal with anybody who wishes to use the site.
Coillte has launched a fantastic project called the Nephin wilderness project. Coillte will re-wild 10,000 acres over a 15-year period. It is an opportunity to promote eco-tourism. How could Bord na Móna monetise such a project? The general community would probably be able to monetise it better. Can Bord na Móna undertake a similar project given that it has 80,000 ha?
Mr. Gerry Ryan:
Earlier a Deputy asked how much land is not used in the production process and I replied that 20,000 ha are not used. Some of that land is used to provide amenity and tourism facilities for local communities. An outstanding example, which the Chairman will be familiar with, is the Lough Boora Discovery Park in County Offaly. It is an extensive area that is comprised of 3,000 acres of restored peatland. It provides a huge tourism amenity in that part of County Offaly and in the midlands in general. In the past year we constructed a visitor facility at the site. Recently, the Irish tourism industry awarded the site the title of the best environmental initiative in the tourism industry in the past year. We are very pleased with the award. It is a tremendous site which attracts between 60,000 and 70,000 visitors per year, half of whom were from overseas and half of whom were from Ireland.
In addition, we have a number of other projects around the country. Another example is a 400 acre site in Abbeyleix, County Laois. Together with the local community, we have developed it into a tourism and amenity site. If members are down in that direction, it is located on the old Cork Road and is south of Abbeyleix. The local community has also constructed a walkway at the site in recent times. There are a number of instances of that type of activity across our land bank and sites and across the country. Even at facilities, such as the Mount Lucas wind farm, we have constructed a wetland and tourism facility. It includes walks or walkways and a visitor centre will be constructed at the location later in the year.
I can assure the Deputy that we are very interested in tourism and in exploiting the potential of our lands for eco-tourism and other types of tourism activity. In fact, that is one of the work studies which is currently the subject of discussion between ourselves and Coillte. We are carrying out, for example, a feasibility study on the construction of a cycleway network to link up the Coillte and Bord na Móna sites and other relevant sites located in the midlands.
In terms of north Kildare, we have been in consultation with one of the communities that is located close to the northern end of the site, where the Drehid landfill is located, about amenities in that particular area. We are always interested in tourism. We have a number of initiatives which are literally ongoing every day in that area. If anyone has ideas in that regard we would be very glad to discuss them and to deal with them, as best we can.
We started off by talking about the importance of Bord na Móna in terms of the amount of jobs it provides for people.
The clear message coming from Mr. Quinn is that Bord na Móna intends to maintain employment numbers to 2030 and beyond. This is reassuring. Does Bord na Móna intend to provide any opportunities to existing staff to upskill in any way or to diversify into some of the new areas? Will they be offered that opportunity or will additional staff be brought in? Bord na Móna has always been known for providing a tremendous opportunity for young people in terms of apprenticeships. Is that likely to happen any time soon again?
Mr. Mike Quinn:
We actively encourage redeployment and reskilling within the company and have internal development centres for people to give them the opportunity to apply for promotion. We put between 85 and 90 people through those centres over the past 18 months and will continue to do this. Succession planning is key for the company and is a standing item on the agenda for the board since February this year, where we discuss high potential and opportunities to reskill. In regard to apprenticeships, we have 16 apprentices currently and will continue to expand that area as our business progresses.
Mr. Quinn mentioned the weather and its impact and how difficult it can be to manage. If Bord na Móna has full-time staff employed to work in a weather-dependent area, how does it manage that workforce? Must they move on to short time or part-time work or how is that issue managed?
Mr. Mike Quinn:
Obviously we must have a flexible workforce during bad weather periods. We have significant numbers of seasonal workers, between 500 and 600 currently and this workforce will continue to grow. One of the challenges the company had in 2012 when the peat harvest was poor was that it had such a high fixed labour element in the company. Through retirements and other initiatives, we will continue to provide for a variable workforce, which will allow for flexibility in the context of the weather.
Mr. Mike Quinn:
Yes, and we have seen that. We laid people off for five weeks this year and put them on short-term work because of that. We ended up with 60,000 tonnes of briquettes - we showed photographs of these at the last Oireachtas committee meeting - and had nowhere to store the briquettes at the end of the season. It is a combination of factors. In that case, the weather was mild and we had an abundance of wood from the storm a few years back and the carbon tax impact.
Mr. Mike Quinn:
We look constantly at automation. In the context of peat, I was fortunate to attend a conference in Brussels with the European Peat Society, where Bord na Móna's peat harvesting process was recognised as leader of its class. We have made significant productivity improvements over the past number of years, but there are always opportunities to do better. On whether there will be largescale automation in that business, that is highly unlikely. That said, if we look at the briquette factories and some of our other infrastructure, we will go for best in class technology where we can.
Mr. Mike Quinn:
Not necessarily. We cannot keep squeezing staff numbers. We must start to grow our business again. Take the briquette factories for example. When the biomass briquette kicks in, we believe there will be a significant opportunity to develop a stove fuel. Some 100,000 stoves per year have been sold in Ireland over the past three years. There has been significant growth in the domestic stove market in the UK, to the extent that the solid fuel market there is growing again. Therefore, why can we not develop a product that is unique to fuels and manufactured in our briquette factories so that we can grow top line sales? Automation does not necessarily mean fewer jobs. It also enables companies to grow their top line, by enabling them be more efficient and more price competitive.
Is there any capital investment required in terms of the conversion of some of the briquette factories to being able to use biomass? What will happen to staff if something must be done in Derrinlough, for example?
Mr. Mike Quinn:
There is a capital investment required. There are two main pieces of infrastructure development that we plan to do in briquette factories. The first is to invest in 7.8 MW combined heat and power plants to generate power to run the site and dry the peat. The CHP plants will run on biomass and allow us to export 5 MW of power, leading to an income stream from export of power to the grid. From a biomass perspective, each factory will need approximately €10 million of investment to convert to biomass. I do not want to share too much on the production process for commercial reasons but it is a significant investment.
I thank the witnesses for coming this afternoon. I thank Mr. Quinn, Mr. Ryan and Mr. Barry, as it has been a very helpful engagement. We have certainly learned much and I hope we have impressed upon the witnesses that the staff have been asking us to put many of these questions. We have been constrained because of the labour relations engagement but we would like to impress upon the company our concerns. We hope all goes well for the management and the staff in question.
Mr. Mike Quinn:
To close on the industrial relations point, we are absolutely committed to resolving this in the Labour Relations Commission and we will stay there until a solution is found. It is in no one's interest to have this industrial relations unrest and we want to resolve it as soon as possible. I extend an invitation to the Chairman and the committee to visit some of the Bord na Móna sites to see the type of projects we are doing, particularly at Mount Lucas. Perhaps the committee would like to visit, have a look at where we plan to put the solar farm and see what sort of technology we will roll out there over the next decade.
I thank the witness and we will consider it. We will probably not have the opportunity to do it before the Houses go into recess but we will certainly look at it and work it out. I am sure members of the committee would find it very helpful. I thank everybody for the engagement today, which was very helpful. I reiterate how much we appreciate the employers and employees of Bord na Móna. We all know people or have family members who have worked with Bord na Móna for decades and we want to see that there can be a future for all of them.
On Tuesday, 23 June, we will discuss the transatlantic trade and investment partnership, TTIP, with the Joint Committee on Agriculture, Food and the Marine and the Joint Committee on European Union Affairs.