Mr. Kevin Brady:

I will make three brief points. First, the support scheme for renewable heat, the second phase of which opened for applications earlier this month, supports the use of slurry or food waste in anaerobic digestion and the combustion of that gas to produce heat. If a pig or poultry farmer has this waste he or she can put it in an anaerobic digester and combust that gas to use for heat for his or her own use. That is supported under the support scheme for renewable heat.

The second route to market is taking that biogas, cleaning it, upgrading it and putting it into the natural gas grid. That is what we call biomethane. We see two main pathways to that. The first is where it is used in transport. It is similar to the biofuels obligation. We are consulting on this in quarter 3; it is set out in the plan. For instance, compressed natural gas, CNG, trucks, which I mentioned earlier in response to Deputy Pearse Doherty, running on biogas can essentially fulfil a requirement under the renewable energy directive and that cost is socialised across all of transport. In many ways that is one route to market.

The other route is the heat sector. The key challenge in the heat sector is that this gas is more expensive than natural gas. Natural gas might be 2.5 cent at the wholesale rate, whereas biogas might be three times that. Most consumers would not choose to move to that so the question is how we bridge that gap.

We also need to answer the question of whether it is a role for the Exchequer. That would involve a large cost over a long period. Is it something that could be fulfilled by a public service obligation, similar to what happens in the electricity sector where we see use of the letters "PSO" on our electricity bills? Could it be considered to be an obligation similar to the biofuels obligation but in the heat sector? This has not been decided, but they are the different funding areas. To be very clear, the barriers to using bio-methane and injecting supplies into the grid are the cost differential and how the cost would be funded, which is key.