Maurice Quinlivan (Limerick City, Sinn Fein)
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Members participating in the meeting remotely may do so only from with the Leinster House complex. Apologies have been received from Deputy Louise O'Reilly. Today we are carrying out further scrutiny of the net zero industry Act. The European Commission has proposed the net zero industry Act as a means to scale up manufacturing of clean technologies in the EU to make sure the Union is well equipped for a clean energy transition. The Act aims to strengthen the resilience and competitiveness of net zero technologies manufacturing in the EU and make our energy system more secure and sustainable. It aims to create better conditions, set up net zero projects in Europe and attract investments with the goal that the Union's overall strategic net zero technologies manufacturing capacity approaches or reaches at least 40% of the EU employment needs by 2030.

I am pleased we have an opportunity to consider this and related matters further with representatives from AMBER, the Science Foundation Ireland, SFI, research centre for advanced materials and bioengineering research, Professor Michael Morris, director of AMBER and professor of surface and interface chemistry at the school of chemistry, Trinity College Dublin; and Ms Amy Sweetman, communications and public affairs manager. From IBEC I welcome Dr. Neil Walker, head of infrastructure, energy and environment. From Hydrogen Ireland we are joined Ms Catherine Joyce-O'Caollai, co-chair of the policy working group, ESB, and Ms Gillian Kinsella, co-chair of the policy working group, Bord Gáis. From the Irish Bioenergy Association, IBA, we are joined by Mr. Seán Finnan, CEO, and Mr. Paddy Phelan, president of the IBA and CEO of the South East Energy Agency.

On parliamentary privilege, I will explain some limitations and the practice of the Houses as regards references witnesses may make to another person in their evidence. The evidence of witnesses physically present or who give evidence from within the parliamentary precincts is protected pursuant to both the Constitution and statute by absolute privilege. Witnesses are again reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that they comply with any such direction.

The opening statements have been circulated to members. To commence our consideration of this matter, I invite Professor Morris to make his opening remarks.

Professor Michael Morris:

I thank the Cathaoirleach and members for the invitation to contribute to this important discussion. I am the director of the AMBER research centre, which focuses on material science. I will not stress that further, given the fulsome introduction. As well as being the academic lead for the centre, much of my work centres on sustainability and the circular economy, and measurement in particular. I work with the International Organization for Standardization, ISO, and the European Committee for Standardization, CEN, which are the global and European standards agencies, through the National Standards Authority of Ireland, NSAI, in developing standards in the fields of circular economy and sustainability. I also work with the European advanced materials 2030 initiative on the role of materials in developing net zero.

The background to the proposal does not give us much to do other that tacitly agree with the tenets of the proposal, if not its detail. A stark fact is that energy emissions in Ireland increased by 17.6% in 2022 compared with the previous year, largely due to an increase in coal use and a decrease in renewable energy for direct electricity generation. There are distinct issues with the current proposal that have to be addressed. The first is the focus on manufacturing, which becomes somewhat diluted and unclear as the proposal develops across multiple issues. Many of the challenges of the core technologies are underestimated. We believe the specific challenges should be prioritised in terms of the readiness of manufacturing and the material shortages that might evolve. The quickest and most extensive contribution to emissions and reductions does not seem to be accounted for and the proposal lacks detail in respect of the development of industry opportunities around material components and product manufacturers. An independent assessment of the technologies should be seen as an important parallel activity.

Pillars 1 and 2 of the Act kind of focus on carbon dioxide and emissions storage, which is devolved somewhat from the rest of the focus of the Act in terms of renewable energy production. We recognise that CO2 sequestration and storage is important across a range of industries and the proposal calls them out. It is a vital consideration for climate change but it is a very different field. It is immature and expensive and the barriers so significant that it should be addressed separate from the Act. In the near term, it does not offer the solution to direct energy emissions and is unlikely to make fossil fuel and other technologies unsustainable.

As regards pillar 4 and the need for an enhanced workforce, we welcome the recognition that a new highly trained and educated workforce is needed but have reservations in respect of the required education and training being carried out through the as yet poorly detailed net zero academy. A focus on delivering training from current suppliers should be prioritised. Pillar 5 is of direct relevance to research providers such as ourselves in Ireland and Europe. Many of the proposed technologies are very early stage low technology readiness level, TRL, and practical solutions at demonstration and even laboratory levels are lacking. How might research priorities be identified and how might they interface with the net zero academies? We need much closer links to innovation actions, policies and funding in this space.

There are barriers to this policy. Many of the critical raw materials are from outside the EU and there are supply chain challenges in terms of existing channels for integrated circuits and materials including plastics, adhesives, rare earth and other metals, as well as the various components and products. We also foresee issues arising because the downstream effects of those solutions have not been considered within the proposal, particularly in the context of their circularity.

Finally, we welcome the opportunity to contribute to today’s discussion, which we hope will be the first of many interactions between the scientific community and legislators, not just on this Act but on policy going forward.

Dr. Neil Walker:

I thank the committee for the opportunity to contribute to its consideration of the recent EU legislative proposal for a green deal industrial plan and, in particular, a net zero industry Act. I propose to expand on key points set out in an earlier written submission by my IBEC colleague, Mr. Conor Minogue, who administers our energy and climate policy committee.

First, I reiterate that IBEC members broadly support the objectives of the net zero industry Act, which are to improve the European Union’s economic resilience as it decarbonises its industries and transport systems over the coming decades. There is a growing sense of urgency on this. Other major economies are capturing an ever-higher share of global investment in low-carbon technologies. The EU risks becoming vulnerable to disruption of supply chains that are critical to the sourcing and processing of materials needed to manufacture net zero equipment and renewable fuels.

The Commission proposal singles out several categories of net zero strategic projects for special treatment by planning and regulatory authorities in member states. There are no surprises on the list. Solar photovoltaic, PV, and thermal, onshore and offshore wind, energy storage, heat pumps and geothermal, electrolysers, fuel cells, biogas, biomethane, carbon capture and storage and smart grid technologies all have the potential to improve the EU’s technological resilience and to stimulate the creation of highly skilled employment.

On employment, the investment in upskilling and research required to avail of these opportunities will be enormous but it will pay dividends. Irish businesses will be investing huge sums in some or all of these technologies and the State must embrace the opportunity for citizens who live and work here to capture a share of the value added.

There also needs to be investment in regulatory and delivery capability. IBEC supports the idea of a one-stop shop for project permitting that is envisaged for these technologies. We hope it can be provided for in the forthcoming planning and development Bill. Indeed, if Ireland’s cumbersome planning system can be streamlined for some industries, why not for the rest? That said, it is a pity the European Commission did not believe it possible or necessary to undertake a proper impact analysis of the proposed legislation. There is considerable potential for unintended consequences, some of which may be difficult to mitigate retrospectively.

For example, the emphasis of the Commission appears to be on manufacturing of the technologies, but barriers to their deployment can be equally significant. The Commission envisages designating some strategic projects as being of overriding public interest but the imperative reasons of overriding public interest, IROPI, route requires compensatory measures that may be difficult to conceive, let alone implement, particularly if it relates to the seabed for offshore projects.

Likewise, as experience shows, picking winners requires a very good crystal ball and it involves making judgments that do not always work out. Some years ago, I recall the Commission created a new entrants reserve comprising 300 million EU allowances, which were worth close to €2 billion at the time, with a view to kick-starting the demonstration of commercial-scale carbon capture and storage deployment. It was not a success. A technology-neutral approach can be more flexible in allowing member states to develop solutions tailored to local circumstances.

The selective relaxation of state aid rules is an understandable response to the competitive threat emerging from other regions of the global economy - China and the US in particular. However, there needs to be safeguards, as it could undermine the coherence of the EU Single Market. Temporary measures, once in place, have a habit of becoming more enduring than originally intended.

Last but not least, given limits on the resources available to regulatory and delivery agencies in Ireland, there is a risk of deprioritising important industries that are neither on the list nor qualifying as key upstream suppliers for the selected technologies. Traditional energy-intensive industries in particular will need to find new ways of decarbonising their operations while coping with uncompetitive energy costs. Where is the provision for the circular economy, demand management or offsetting?

I mention in conclusion that these views are echoed not only by other national business federations across Europe, but also by its wider civil society. Separately, I have provided the committee with a recent draft opinion from the European Economic and Social Committee, of which I am a member. While welcoming the framework of the European Green Deal industrial plan, it cautions against focusing too narrowly on promoting certain technologies and on picking alleged winners through regulatory actions. Instead, it calls for a comprehensive innovation and research support policy. I thank the committee.

Maurice Quinlivan (Limerick City, Sinn Fein)
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I thank Dr. Walker, and I invite Ms Joyce-O'Caollai to make opening remarks on behalf of Hydrogen Ireland.

Ms Catherine Joyce-O'Caollai:

On behalf of the Hydrogen Ireland membership, I thank the joint committee for the opportunity to share our thinking on the EU’s proposed net zero industry Act. Hydrogen Ireland aims to promote the role of hydrogen in becoming a key component of our future low-carbon economy on the island of Ireland. I am from the ESB representing Hydrogen Ireland in my capacity as co-chair of the policy working group. I am accompanied by Ms Gillian Kinsella of Bord Gáis Energy, also co-chair of the policy working group.

The net zero industry Ac should be examined in the context of the current emerging policy framework for hydrogen in Ireland. The climate action plan currently contains commitments to kick-start the hydrogen sector, in particular to release a hydrogen strategy which is expected in the coming weeks, and for 2 GW of offshore wind dedicated to hydrogen production to be in development by 2030. The Act can provide support for the development of an Irish hydrogen sector, if implemented in an efficient, practical and flexible manner.

In the interests of time, our comments will focus on the most relevant aspects from an Irish perspective, those being the designation of net zero technologies and enabling legislation to deploy early projects in hydrogen through regulatory sandboxes. Second, we will focus on how these measures can assist Ireland’s decarbonisation and security of supply objectives and enable the industrialisation of offshore wind, with the potential to derive additional value from our significant renewable resources and incentivise regionally-balanced growth. Third is the skills dimension and establishing academies to develop the skills needed to develop the transformational change in our energy systems. Finally, we will look at how the net zero industry Act measures could interact with additional EU instruments, such as EU funding tools and the state aid framework.

The aim of the net zero industry Act is to scale up the manufacturing of technologies key to achieving climate neutrality. The Act has selected certain net zero technologies, such as solar panels, batteries and electrolysers, as being key to meet this target. Electrolysers use renewable electricity to produce renewable or green hydrogen that can be used in a variety of settings to decarbonise multiple sectors, including industry, energy generation, transport and many more. The categorisation of “renewable” or "green" is important, as it can contribute to Ireland’s renewable energy targets and the binding hydrogen sub-targets under the renewable energy directive.

A simplified regulatory framework for the manufacturing of these technologies is proposed for a limited amount of time to help increase the competitiveness of the net zero technology industry in Europe. Measures to achieve this include time limits on the permit-granting processes for net zero manufacturing projects and a requirement for member states to set up one-stop shops to act as single points of contact for project promoters. This is particularly relevant for the EU’s electrolyser manufacturing sector, which is planning to ramp up electrolyser production within the EU by a factor of seven within three years, moving from the current 3 GW production capacity to approximately 21 GW by 2025.

As Ireland is in the very early stages of developing a hydrogen sector, the inclusion of renewable hydrogen technologies such as renewable hydrogen and electrolysers, the manufacturing of fuel cells for different mobility and other uses, and the production of sustainable aviation fuel are clearly relevant in in the Irish context. The Irish hydrogen industry will likely need to scale up at pace to meet its carbon budgets. Therefore, it is important that hydrogen producers can access the necessary technologies such as electrolysers from manufacturers.

Moving on to the regulatory sandboxes for cluster development, it is important to also examine how these proposed measures can assist in meeting our climate targets, specifically measures to enable the development of renewable energy clusters and support regionally-balanced growth across the breadth of Ireland. Clusters or hydrogen valleys occur when renewable energy, hydrogen production and consumption, and the associated infrastructure, are developed together in close proximity to one another. This cluster or hub-based approach has been important to the development of hydrogen in many countries and has great potential for Ireland. The proposals to develop hydrogen valleys and renewable energy hubs, through accelerated permitting, the use of regulatory sandboxes and prioritised access to funding, have the potential to provide material momentum for their delivery.

In the interest of time, I will move to the skills section. The focus on skills, especially the creation of net zero industry academies with upskilling and reskilling programmes, is to be welcomed. While we recognise the scope of much of the Act is temporary and includes some exceptional measures to deploy net zero technologies as quickly as possible, it is important to point out that we are setting up structures to develop lifelong careers. Well-designed, targeted, multi-annual funding schemes will nurture apprenticeships, roles for technicians, engineers, energy software designers and many more. While seed funding is envisaged from a variety of EU funding sources, a multi-annual approach to fund these academies is important.

Finally, I will deal with financing and funding. As has been recognised in a number of EU policy statements, the development of net zero industry projects, including hydrogen projects, will require public support. The existing state aid framework - the climate, energy and environment aid guidelines - provides the ruleset for eligible projects and the nature of support that can be provided for under EU law. Other measures of relevance to the implementation of the net zero industry Act are the temporary crisis and transition framework and the endorsement of the revised general block exemption regulation. It is also worthwhile considering their role in enabling the replacement of fossil fuels in Irish industry in order to speed up and simplify state aid approval procedures for the timely deployment of projects.

I thank the committee for its time. We welcome further engagement on the topic and look forward to members' questions.

Maurice Quinlivan (Limerick City, Sinn Fein)
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I thank Ms Joyce-O'Caollai. I invite Mr. Finan to make opening remarks on behalf of the Irish Bioenergy Association.

Mr. Se?n Finan:

I thank the Chair and the committee for the invitation to present today. I am the CEO of the Irish Bioenergy Association. I am joined by my colleague Mr. Paddy Phelan, who is the president of the association and CEO of the South East Energy Agency. Our organisation represents and promotes the bioenergy sectors on the island of Ireland, including biomass, biogas, biomethane, biofuels, energy crops, wood fuels and biochar. Bioenergy is an environmentally, economically and socially sustainable energy. The association is a member of Bioenergy Europe and the European Biogas Association, and a founding member of Renewable Energy Ireland.

The Irish Bioenergy Association members broadly endorses the objective of the net zero industry Act, which seeks to enhance the competitiveness of European industries. This will be vital to achieving the EU’s ambitious climate goals.

Net-zero solutions will enable the transition to climate neutrality, and this can be even further accelerated by simplifying and fast-tracking permitting procedures and supporting the upscaling of sustainable renewable energy technologies.

In terms of the strategic annex, the legislation defines net-zero technologies” as all renewable technologies as defined by the renewable energy directive, which includes bioenergy. However, in section II, the legislation identifies “net-zero strategic projects”, which would be eligible for even more favourable treatment based on an annex which identifies “strategic net-zero technologies”. These benefits include notably faster permitting processes for the infrastructure and facilities that will need to be built for large-scale emissions reductions, as well as additional access to funding. Currently, the annex lists eight different technology areas, namely: solar; wind; battery and storage; heat pumps, electrolysers and fuel cells; sustainable biogas and biomethane; carbon capture; and grid technology.

We identify that there are gaps in this list which need to be addressed. To ensure that all renewable solutions are properly acknowledged as strategic sectors, solid biomass, which arises from sustainable forest management thinning material and liquid biofuels must be added to this list of strategic net-zero technologies. These could be added to an expanded item 6 or as a separate item. In addition to this, and to ensure the EU achieves negative emissions, which will be pivotal to reach carbon neutrality by 2050, bioenergy with carbon capture and storage and carbon dioxide removals technologies, including biochar, should be explicitly added to point 7.

Specifically on bioenergy, the technology has emerged as a crucial component of the European clean energy industry system, as it promotes renewable, storable and low-carbon energy that reduces greenhouse gas emissions, increases energy security and supports rural development. Additionally, it is a stable form of renewable energy source which can easily work together with other renewable energy solutions or provide an alternative when other solutions are not available.

According to the European Commission's long-term strategy for a climate-neutral economy, bioenergy can provide up to 27% of the total energy demand by 2050. According to the International Energy Agency, it is the largest source of renewable energy globally, currently accounting for 55% of renewable energy and more than 6% of the global energy supply. The IEA "Net Zero Emissions by 2050" scenario sees a rapid increase in the use of bioenergy to displace fossil fuels by 2030.

In Ireland, the sector is growing and contributing more than 90% of the renewable energy currently used in transport. It provides dispatchable renewable electricity through biomass- and biogas-fuelled CHP generators and contributes to renewable heat deployment through solid biomass support via the support scheme for renewable heat. Despite bioenergy not currently receiving the same level of policy support in Ireland as wind and solar technologies, our members are optimistic that this will come and the potential for the Irish bioenergy sector will be realised for its contribution to energy security, decarbonisation and emissions reduction.

Our colleagues in Bioenergy Europe, as our representative body, clearly state that if solid and liquid bioenergy is not considered as a strategic net-zero technology in the Net Zero Industrial Act that it may not generate sufficient support, which could push EU-based bioenergy technology providers to outsource their production to non-EU territories. Given that there are more than 50,000 businesses and manufacturers situated in the EU and more than 900,000 jobs across the value chain, this would then weaken the EU economy and decrease its industrial competitiveness. According to Bioenergy Europe, the EU is a leader in bioenergy sector technology, with more than 70% of the companies providing equipment to bioenergy investments being based in Europe. Only 7% are based in China, which makes bioenergy a truly European industry.

In terms of bioenergy, carbon capture and storage, BECCS, the absence of bioenergy with carbon capture and storage from the list of strategies also shows a missed opportunity. There is a heavy focus on CCS technologies, which overshadows the negative emission technologies and carbon dioxide removal technologies. The proposed Act lacks the vision to support an activity recognised by the Intergovernmental Panel on Climate Change, IPCC, as necessary to reach the Paris Agreement’s targets. By enforcing the market for BECCS, many of innovative projects would be quickly realised and would contribute to achieving negative emissions on a larger scale. One example of this is the BECCS, which is operated by Stockholm Exergi. That project aims to remove 800,000 tonnes of carbon dioxide annually.

IrBEA is calling on this committee to strongly encourage the European Commission to implement an EU-wide contract for difference for carbon dioxide captured and stored in non-ETS sector. This would be enough to ensure that operators in the biomethane and bioenergy sector can capture and store all the carbon dioxide that arises from their facilities. This carbon capture would result in energy that is not just net zero-emissions, but strongly negative in terms of emissions. It would also stimulate the sector in Ireland.

Our member, Ethanol Europe, estimates that the total carbon storage opportunity for Ireland, particularly in the fermentation industry, is approximately 250,000 tonnes per year, rising to well over 500,000 as biomethane develops. In Europe, it is from 20 million tonnes to 40 million tonnes. The EU is slowly developing some carbon removal supporting legislation but nothing is being done to make carbon capture economically viable. BECCS will play a pivotal role in achieving carbon neutrality as the International Energy Agency, IEA, clearly identifies bioenergy as the only carbon-negative solution for industry and a significant contributor.

To conclude, the increasing production of bioenergy in the EU and recognition of the strong potential for the sector in Ireland, together with a sustainability framework provided with the renewable energy directive, indicates that the industry can play its part in the decarbonisation pathway. With continued investment, innovation, policy and legislative recognition, bioenergy technologies can have a bright future within Ireland’s and Europe's renewable energy mix, provided they are recognised in this Net Zero Industry Act. We thank the chairperson and committee for the invitation and we look forward to taking any questions they may have.

Maurice Quinlivan (Limerick City, Sinn Fein)
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I now want to invite members to discuss this issue with the representatives. I remind members who are joining remotely to raise their hand if they wish to speak. We have a rota in place and the first slot is a Sinn Féin one. Senator Gavan will have 14 minutes. This will be followed by a Fine Gael slot of 14 minutes.

Paul Gavan (Sinn Fein)
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I thank all our guests for this very important discussion. I have a range of questions that I want to work through in as timely a manner as I can. I hope to give everybody an opportunity to speak if possible. I just want to start - and this was very much a feature of the last presentation - by asking our guests if there are any gaps in terms of the net-zero technologies that are covered by this legislation. If so, would they elaborate on these gaps and on what renewable solutions are not included? As I said, I note the opening statement by the Irish Bioenergy Association, which lists solid bioenergy and liquid bioenergy as gaps. Indeed, a couple more have been mentioned. Let us kick off with that.

Mr. Paddy Phelan:

I thank Senator Gavan. Stepping right back from the technology listings, I note that technology is key to converting any vector of energy into another form. The efficiency with which we do that will be critical to its ability to roll out. In a sense, when you analyse a list, it is quite dangerous to list specific technologies. Through innovation, simple thermodynamics and the conversion of energy from one form to another, such as from solid, liquid or gas, it is important to acknowledge the criteria around which it is classified as renewable and, if possible, we must extend the exemptions around it.

Elements of the Act, such as job creation in bioenergy and other forms, will have particular benefits for rural regions of Europe and Ireland. As I mentioned, we need to look not just at the price-based option system that are mentioned in the Act. There are some notes in the Act about the capacity to give scoring leverage to those who may create further employment or further skills that are to be retained and sustained, particularly within rural regions.

Technology-wise, it is clear and obvious that bioenergy and general forms of solid and liquid energies are at issue. Within the gambit of the Irish Bioenergy Association, there is the obvious role that bioenergy and all the forms can speak to.

The other key element is that we must not pitch different technologies in different sectors against each other. I as, a founding member and board member of Renewable Energy Ireland, want to highlight the importance of sector coupling. This acknowledges that all of these technologies can work together and, if they do so, they will do so at a much faster pace, which is an underlying foundation of the Act. That is to expedite or accelerate our transition to a lower-carbon energy economy. I make that key point, rather than getting into specifics. There are many missing that are out, but the obvious ones, as we noted, are bioenergy solids and liquids.

Paul Gavan (Sinn Fein)
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I thank Mr. Phelan. Would anybody else like to come in on that, please?

Ms Gillian Kinsella:

The Hydrogen Ireland association is focused on the uptake of hydrogen across Ireland. In that context, we have analysed the Act and can see that it covers sustainable aviation fuel technology, technology that will support renewable fuels of biological origin - which is also covered in EU legislation - electrolysers and fuel cells. From that perspective, we are comfortable that it covers the key technologies that are needed to support hydrogen in Ireland.

Paul Gavan (Sinn Fein)
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Does Dr. Walker have a view?

Dr. Neil Walker:

I would make a similar point about sustainable aviation fuel.

Paul Gavan (Sinn Fein)
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Super. What about Professor Morris?

Professor Michael Morris:

What the proposed Act misses around carbon dioxide, because, mainly, it is looking for storage, is that carbon dioxide, as I said in my opening address, is an immature technology to invest in and cutting prices per tonne of carbon dioxide in a carbon capture and storage, or carbon capture alone, is working out at somewhere between €100 and €200 a tonne. If it links, as I said here, into abating some of the emissions from the cement industry, it will add 50% onto the cost of a bag of cement. Those are foreseen prices by 2030. That is a problem.

What it does not call out, and a couple of my colleagues alluded to this, both for hydrogen and for biofuels, is the opportunity for making something from carbon dioxide. Hydrogen plus carbon dioxide is the way industries made all their chemicals for the past 150 years and yet that has not been considered in this at all. It is all about capturing it and storing it and negating the value you have spent on this whereas there is a growing industry in making chemicals from carbon dioxide that is captured. That is one of the things that is really missing from this proposal.

Paul Gavan (Sinn Fein)
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I thank our guests for those responses. I will move on.

I want to ask our guests about the US Inflation Reduction Act, how this impacts Europe, what should the EU's response be and how should that response be managed. There has been much talk of the selective relaxation of EU state aid rules but such relaxation could put Ireland and smaller states at a competitive disadvantage and undermine the Single Market. We saw this with how the larger EU states used relaxation of state aid rules to the war in Ukraine and the energy crisis to subsidise their industries more extensively. Do our guests have an idea of how these matters could or should be approached?

Ms Catherine Joyce-O'Caollai:

On the effect of the Inflation Reduction Act, anecdotally, we are hearing within the hydrogen sector that it has had the effect of expediting the development of the sector by five years. By introducing certain tax breaks as well as a production support per kg top-up, it has had the effect of accelerating the sector at quite a rapid pace.

With respect to the EU response, we obviously need to scale rapidly. Looking at the use of EU-wide mechanisms in an Irish context, it is important to say with respect to the Irish hydrogen sector that we are coming from a lower base. Other member states are further ahead of us. Some of them would also have existing oil and gas infrastructure which can be repurposed which will enable the faster deployment of those industry.

However, when one looks at the relaxation of state aid rules, it should be temporary. As Dr. Walker pointed to, it can have the effect of lingering for longer than had been originally intended. However, in the general block exemption regulation and the changes that were made there, there are limits. For certain projects, it might be up to a limit of €30 million. It really should not have a distortive effect upon the operation of the Single Market. However, it needs to be looked at and analysed to ensure that we have knowledge of the enduring effects so that it does not distort the market.

Broadly, we would be in support of the measures that are introduced under this Act and the accompanying relaxation of certain state aid rules but it has to be proportionate.

Paul Gavan (Sinn Fein)
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Does anybody else wish to come in on that?

Dr. Neil Walker:

As has been pointed out previously, the Commission has not undertaken an impact analysis because it sees this as a burning platform but we need to see an impact analysis as soon as possible.

Professor Michael Morris:

To follow on from Dr. Walker's comment, the US Act has hard figures behind it and was formulated about the costs of producing these technologies all the way down from the research and innovation to the manufacturing costs, and so it was well-informed. Its advantage to the American industry was well-called out. We have four and a half lines in this which state:

This proposal is not accompanied by a formal impact assessment. Considering the urgency to act for the reasons explained above, an impact assessment could not have been delivered in the timeframe available prior to the adoption of the proposal. The analysis and all supporting evidence will be set out in a ... working document published at the latest within three months of the proposal’s publication.

This is apparently unfounded by any quantitative information, which is very worrying to me.

Dr. Neil Walker:

The three months are already up.

Paul Gavan (Sinn Fein)
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That is an important point.

The clock is against me. I will try to get in a couple more questions. I thank our guests for their full responses.

I want to ask Hydrogen Ireland to expand on clusters, hydrogen valleys and renewable energy hubs, how this can help with hydrogen development in other countries and the potential for such measures here in Ireland.

Ms Catherine Joyce-O'Caollai:

I will gladly answer that. The concept of hydrogen valleys is quite deeply embedded within the EU's legislation and its proposals to develop the hydrogen economy. It is whereby one has the production of energy, the production of hydrogen and its use within a relatively small confined space. The benefits are that one is not adding additional transportation costs for the use of hydrogen. If it is produced in a locality, it should have the effect of decarbonising on a lower cost base.

With respect to the opportunities for Ireland, we see some natural clusters in inception. That could be in Cork or the Shannon Estuary whereby one has the potential to land large sources of offshore wind, produce hydrogen locally at scale and then use it to decarbonise the processes that are located nearby. In Cork, that could be the refinery or, indeed, the existing gas-fired power generation that is located in the Cork Harbour area, and in a similar model at the Shannon Estuary-----

Paul Gavan (Sinn Fein)
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I am glad Ms Joyce-O'Caollai mentioned that.

Ms Catherine Joyce-O'Caollai:

-----where one could decarbonise heavy industry. One would be replacing fossil fuels and decarbonising the sectors. Obviously, we need to start small and then scale it apace.

Paul Gavan (Sinn Fein)
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Given the time constraints, I will ask one final question of Dr. Walker about infrastructure, in particular, energy infrastructure. The need to invest now and over the next number of years in addressing infrastructure constraints is an area where business and trade unions agreed. That is significant. At the National Economic Dialogue, Dr. Walker's chief executive officer, CEO, Mr. Danny McCoy, said: "A failure to meet the pressing investment needs of the Irish economy over the coming years would represent a greater risk to future economic development and social cohesion than any potential future 'rainy day'." In terms of the corporation tax receipts surplus the State is currently experiencing that we rightly keep hearing about, can Dr. Walker tell us more about the new national infrastructure funds that IBEC has called for in order to address the capacity constraints?

Dr. Neil Walker:

In the words of Fr. Ted, "That would be an ecumenical matter". We will have €65 billion in corporation tax receipts and we need to make sure that we spent it, invest it or save it wisely. One could blow it all or one could put it away for a rainy day, but the best use for possibly non-recurring revenues is not to commit them to the things that will continue indefinitely.

We have an enormous national development plan. It originally started off as €118 billion, it went up to €160 odd billion, and with all the inflation, costs and whatever, it is probably well over €200 billion if one were to try to deliver everything that was conceived. It will not be delivered, largely because our planning system is a car crash and it desperately needs to be reformed. There will be a review of the national planning framework. There has already been a review of the national development plan. We need to invest and we need to unblock investment. At the moment the system is not fit for purpose but that is a job for a different committee.

Paul Gavan (Sinn Fein)
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Can I chance one last question, Chairperson?

Maurice Quinlivan (Limerick City, Sinn Fein)
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Quickly, go on.

Paul Gavan (Sinn Fein)
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In terms of the regulatory sandbox, Sinn Féin thinks these are a brilliant idea and they have been called for across various economic sectors. Can our guests elaborate on the benefits of a regulatory sandbox where testing and validation of innovations can be carried out in a controlled environment, and are there European or global examples that we could look at?

Ms Catherine Joyce-O'Caollai:

That is where one tries to learn while doing. In the absence of an existing legal and regulatory framework, one tests processes.

It is a strong innovation tool. With respect to how it would apply in an Irish context, we believe it could be very useful for renewable energy clusters. Some sectors are already using hydrogen and the use and integration of green hydrogen into their processes could be tested.

As mentioned, another good example is sustainable aviation fuel. As an island economy, aviation is obviously an important enabler to regionally balanced growth. That could be a nice sector to focus on to see what is required to enable such fuel to be produced at scale. As somebody said to me, the Shannon Airport zone was a traditional form of a regulatory sandbox where innovative financial tools and mechanisms could be tested in addition to trying to test what the economic effect and benefit is. Sustainable aviation fuel could be a good test-bed. There are companies on the island of Ireland that are looking to produce that, such as Catagen, which is based in Northern Ireland, and others are in inception.

Professor Michael Morris:

That would be very sensible. One of my main criticisms of the report is that what will happen and what will be developed has not been prioritised. The report is constantly focused on the aim of a 55% reduction in emissions by 2030. Clearly, some of the technologies that are called out in that report are for the 2030 to 2050 period. Most of our climate goals can be met within the energy sector within that 2030 framework. The 2030 to 2050 period is where we have real problems. Even if these are split between things that will give us big wins between now and 2030 and those that will actually achieve what I suspect will be the more difficult targets between 2030 and 2050, that would be an eminently sensible thing to do.

Mr. Paddy Phelan:

It reflects my point about the sector coupling element, especially in Ireland's context. As we saw yesterday, EirGrid launched the second iteration of its Shaping our Electricity Future. We identified some of the challenges around grid and grid infrastructure. It goes back to Senator Gavan's point on infrastructure. To place bets on certain technologies that are reliant on key pieces of infrastructure, be they electricity, gas or others, is in some cases a risk that cannot be predicted. At European level, it might not be as constrained as it might be in the Irish scenario. From Ireland's perspective, we need to make sure we are not locking ourselves into something that is unexpectedly hindered by a delay in other factors.

To go back to the question on planning and consenting, there is an absolute urgency for Ireland, as a nation, to select these strategic corridors and enable local authorities to act coherently in developing these key infrastructure projects to prevent the delays we have seen regarding these arguments over project splitting and screening assessments. If we could do a national screening assessment similar to what we did to get motorways built, and set up strategic corridors to each municipal authority, we would see key infrastructure projects less resisted, if that makes sense, and more easily consented to. Those are key elements that sit alongside the likes of these Acts. In one sense, there has to be infrastructure connectivity and coupling and, in the other sense, the technologies that can plug in.

To come back to the Deputy's primary point regarding the question of how we set these criteria, fundamentally, we are chasing carbon and a decarbonised energy system. Those are the two key parameters. To reduce emissions from the energy sector and increase our percentage of overall renewables, which we abysmally failed to achieve by 2020, and they are on a path to do equally poorly if not worse when it comes to our 2030 targets, these key elements around infrastructure and technologies need to be unlocked.

Mr. Se?n Finan:

I thank the Deputy for his question. As a follow-on point, when we go down the route of listing technologies, it is important to recognise that there are also different technology readiness levels within that list, in addition to different cost points and different benefits that some technologies can bring over others. Another very important recognition are the uses. We have many within heat and transport. There is high and low temperature within heat so different technology offerings can be deployed, depending on the temperature. It is the same for transport. Electric vehicles could potentially be deployed at domestic car level, whereas for heavy duty vehicles it could be biofuels or biomethane. We need that flexibility built into any mechanism, which comes in the form of this Act, that allows-----

Mr. Se?n Finan:

Some of the current policies that are in place, for instance, the renewable electricity support scheme, are based solely on a cost per megawatt hour of electricity. That disenfranchises our sector from contributing to that from a bioenergy perspective because the dispatchable element is not valued, or the rural jobs generated as a result of generating these fuels, and we cannot compete, even though it is seen as a technology-neutral option. By being technology neutral, however, we cannot compete with the other intermittent generators. That flexibility, while it is mentioned on paper, is not there in reality. A full review of the different benefits, which are many and varied, that each type of renewable energy can bring is needed to try to come up with a mechanism and framework by which they can be supported and not disenfranchised. We worry about a list system. If you are not on the list, you are not recognised by the broader political and legislative landscape as being a solution and are then disenfranchised compared with the technologies that are on it.

Mr. Paddy Phelan:

It is a very good question. To link it back it to bioenergy, we look at the bio-economy and all the achievements there in terms of added value within that supply chain itself, and not just the food element but the combinations around proteins, wheys and all these elements of improved value chains. Coming back to bioenergy and the circular economy, with my south-east energy hat on and looking at the south-east region, we completed a resource assessment of potential energy or, as we say in the science terms, the potential energy we could convert using technologies. As a nation we import in excess of 86% or 87% of our total energy. We have identified that in the different sectors, through the aggregation of existing residues from existing activities in agriculture, industry or the food sector, the potential for that region alone is as much of 37%. That is just with existing residues and not creating any new or more. While fundamentally we want to deliver increased percentages of renewable energy, it is important to appreciate and look around us in our homes and businesses to see the potential energy that can be converted at scale. With the opportunities around infrastructure and expediting the capacities, it is fundamental that we build all the infrastructure required - solid, liquid and gas, as well as electrical - to enable our economies to decarbonise.

Ms Catherine Joyce-O'Caollai:

The Deputy makes an important point. The Net Zero Industry Act must be read in conjunction with the Critical Raw Materials Act. They were published around the same time and should be read in tandem. However, the Deputy has pointed to an important gap. It probably underlines how the Net Zero Industry Act was a response to international dynamics.

Ms Catherine Joyce-O'Caollai:

Possibly. Before we came in, the other witnesses and I discussed the recent publication of the corporate sustainability reporting directive and how that will introduce obligations on organisations to ensure that they meet certain environmental criteria. It is as if, in totality, we have a number of instruments. However, the Deputy has raised an important point about the need to look at whether is still a gap in enabling a smooth transition to the more circular use of certain products.

Dr. Neil Walker:

The Critical Raw Materials Act and the Net Zero Industry Act are the two pillars of the Green Deal industrial plan, and they are joined at the hip. In particular, there are just not enough resources within Europe for all the batteries that are going to be needed in all the catalytic materials. We are very dependent on China for the processing of them. There will be targets for the amount of indigenous sourcing of critical materials and the processing of them. If we are not circular and they are being re-exported outside Europe for processing because we cannot get planning permission for the materials recovery facilities, then we are shooting ourselves in the foot. Apart from climate, the sustainability reporting directive is going to cover biodiversity, water quality, air quality and the circular economy. It is going to be an enormous burden on an extra 40,000 companies across Europe, who really do not know what is going to hit them in 2025.

Mr. Se?n Finan:

Just to follow on from Mr. Phelan's point, bioenergy has a huge role to play in the promotion of the circular economy. Looking at the three different forms, with the gaseous piece, we can take animal slurry, remove the gas from it and produce a renewable fuel that can be used by other sectors. That is agriculture through bioenergy decarbonising other sectors, potentially. We can also use a digestate that displaces the use of chemical fertilisers on land. Looking at liquid biofuels, our current fatty acid methyl ester, FAME, biodiesel producers in Ireland are taking waste fats and tallows from animal processing and rendering sectors and processing that to produce biodiesel. That biodiesel is blended in at the pump as a biofuel blend. In terms of solid biomass, our members are taking first thinning material from forest residues. The material is low-value anyway, but low value for any other sector to potentially utilise it. It is being turned into woodchip and the sawdust is being turned into wood pellets and wood briquettes. That can then be used as a solid fuel or in a biomass boiler to decarbonise high-temperature heat. Inherently, bioenergy contributes to a circular approach. However, the policy needs to support that and we need to raise awareness of that. For instance, if we want to promote the use of timber in construction, to get construction timber and saw log we need to thin the forests and remove some of the smaller trees to get larger trunks and material. If we do not have a solid biomass sector, we will not have an offtaker for that low-value material. By not taking a broad approach in terms of the renewable energy sectors and promoting all of the benefits of all of the sectors through the policy landscape, we risk leaving behind the likes of the bioenergy sector. As a result, we will not achieve the optimum output in terms of construction timber at the end of the forest lifecycle. We have a large target in terms of forestry, but that is a whole other discussion. Those are a number of examples as to how our sector is inherently involved in the circular economy. There needs to be a broader awareness of that among the public, and at all levels, in order for its full potential to be realised.

Professor Michael Morris:

I have a few comments. There is a myriad of policy and a myriad of standards being developed in response to climate change. Within the standards being developed for the circular economy and the International Organization of Standardization, ISO, burning any form of biomass for combustion is not seen as circular because we do not capture the CO2. The worst thing we can do with any grown product is to burn it. That is just a general comment. On the question of whether we have considered the circularity at all, it is so manufacturing-based that it assumes that we are going to do things in exactly the same way that we have done them for the past 150 years. That has proved to be pretty damaging. Circularity should be included. A neat piece to put into it would be that it complies with the remits and the protocol set out in the safe and sustainable by design framework, which includes circularity. Should we be producing the same products as China? No, we should be producing more circular products. That is where the competitive edge is in this. I will give members an example of where circularity should not have been considered. We are obviously very reliant on photovoltaics.

All silicon comes from mines. It is not sand, despite what people try to say. It is mined in very poor environments which always worsen. We have a shortage silicon across the world. Unless we are circular in the way we treat those processes, we will not make enough silicon to meet the demands relating to photovoltaic technology. This is a very important missing piece. I do not quite know how to put it in or whether it complies with other documentation and regulation, but that needs to be a significant consideration.

Mr. Paddy Phelan:

This goes back to one of Deputy Bruton's previous economic Ministries. Producer responsibility and end-user responsibility were touched upon. In my experience over recent years when procuring for clean energy for beneficiaries whether they be in public are private sector actors, cost and value for money are fundamental to the decision on why somebody buys something. If we do not force producers to manufacture more circular economy products with the value around waste around the ability to optimise digitisation innovation and if we continue to purchase the cheapest available product, it will not deliver results on reducing carbon.

Dr. Neil Walker:

I will just add a footnote to that. The ecodesign for sustainable products regulation is making its way through the process, and that will transform matters. To date, everything has been about tailpipe solutions, such as deposit-and-return schemes, etc. Most of the environmental footprint of the product is baked in at the design stage. There has not been enough focus on that.

Professor Michael Morris:

As has been mentioned, one of the key pillars of the circular economy is industrial symbiosis where people share resources. Some of my colleagues mentioned that in terms of sandboxes in Limerick and Cork, where we can actually bring all of the industry that uses product, be that essentially energy, to work alongside together in the same place. That is where the sandboxes would really help to develop that circular approach whereby everyone shares resources and looks at value in the waste which would produce that.

Matt Shanahan (Waterford, Independent)
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I thank all our guests for attending for this very important discussion. We could probably take up an entire meeting with any one of the groups before us. Having them all here together means there is an awful lot of information. Just as this reflected in wider society, we are all having conversations about the potential and what we need to do, but there are myriad different routes we could go down. As the witnesses said, we do not want to pick winners. It is very hard to see who the winners are and who the losers will be in the long term. When we hear a discussion nationally about climate policy, wind energy comes up all the time as a major issue. We supposedly have an abundance of wind energy just waiting to be harnessed. We could use that in so many different ways, but, as well all know, it is not quite that simple. The witnesses have highlighted some of the issues with materials, etc.

Returning to the issue of net zero industry Act, Dr. Walker or Professor Morris might come in here. They mentioned the need for an impact analysis relating to the net zero industry Act, I presume covering who, what, why and when. Who is required to do that and how does that process occur?

Dr. Neil Walker:

It would be up to the European Commission itself to do an impact analysis.

Matt Shanahan (Waterford, Independent)
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What would initiate that? What would deliver that?

Dr. Neil Walker:

There would need to be Commission research assessing the likely impact of relaxing state aid rules on the Single Market. Would certain member states be disadvantaged because the relaxation of the rules would allow other member states to roar ahead owing to excessively generous subsidies?

Matt Shanahan (Waterford, Independent)
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Is it a Commission decision or a Parliament decision?

Dr. Neil Walker:

It is a co-decision. Normally, when the trilogue process commences, they would all have seen an impact analysis. In this case that has been skipped.

Matt Shanahan (Waterford, Independent)
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I ask specifically about Ireland. I presume Amber Research is probably doing this as well. Doctor Walker must be looking at technology readiness levels in different technology sectors. He probably has some idea of where we should move first fast. I ask him to expand on that. What should we be going after now early on to try to move along the climate agenda?

Dr. Neil Walker:

How long does the Deputy have? The net zero industry Act is about manufacturing of low-carbon technologies. However, the biggest obstacles we face are arguably the deployment of them. Somebody looking to construct a wind farm may wait years to go through not just the planning process but also the inevitable judicial reviews.

We have enormous ambition for our offshore wind but some environmental organisations believe we should not do anything until we have the completed network of marine protected areas which, at best, will take a decade. The offshore renewable energy development plan advisory group believes that marine plans can be designated for specific areas where it would be possible to put down either floating or fixed offshore wind farms without damaging coral, and without impacting cetaceans, migratory fish or whatever. However, it is a debate on what can be done with the limited resources we have in the courts, the new maritime area regulatory authority, An Bord Pleanála, the Commission for the Regulation of Utilities and the EPA. They are all poaching staff from each other. It is a kind of an in-joke, but it is not funny. We are desperately under-resourced on the regulatory side.

Matt Shanahan (Waterford, Independent)
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With onshore wind, we have already seen the environmental impact of planning. Dr. Walker is saying we know we will see something similar. I am from the south east. I have concern about fixed pylon windmills and their proximity to the Copper Coast in Waterford. I have a concern even though I want to see offshore wind deployed.

I have worked close to the bioenergy sector previously and I know it has always been an outlier in terms of where the European Commission wants to go because those who support bioenergy are possibly supporting more intensive agriculture or maybe they are not hitting down on it. Why does Dr. Walker believe bioenergy has been somewhat excluded from EU support in comparison with other technologies that are being looked at?

Dr. Neil Walker:

I am probably speaking beyond my competence, but my perception is that there are concerns about the sustainability of some liquid biofuels. The EU instituted a biofuels target many years ago and it had disastrous consequences with rainforests being chopped down to grow palm oil. One of the major suppliers of hydrotreated vegetable oil is from sustainable palm oil. However, the problem lies with proving that it is sustainably sourced. Ideally, we would want to have an indigenous industry. Just the other day one of my members asked me if there is a legal basis for a company to claim that it has genuinely certified offsetting. We really ought to be preparing. The European Commission adopted a proposal last year for an EU-wide certification of offsetting - the definition of additionality, the quantification and the enduringness of it. We need to be getting ready for that here. That is a conversation I intend to have with the Minister, Deputy Eamon Ryan, when the opportunity arises.

Professor Michael Morris:

In response to who does this, I think that enterprise in the Commission will have a big effect. The idea before us is where to compete. For example, we are very strong in Europe in terms of wind power. The latest figures indicate we have 5% solar power generation. Is it even worth our while thinking about trying to compete with China and America in that space. When we talk about impact, we need to ask what the investment needed is and what will it realise. That is the missing piece when looking at those technologies.

From an Irish point of view, among the energy technologies that are probably most appropriate, wind is certainly the big one. To generate it, we do not have to do an awful lot. We just go to a company and buy off the shelves, they are co-invested and there are opportunities there. Then there is solar and heat pumps. They are the three things we have that we have a chance of implementing by 2030 in terms of our climate goals. I take the point about bioenergy, but the reason it is not so clear in Europe - and I have been involved in some of the discussions - is simply that we do not know whether we can generate enough waste organics to drive a sizeable European industry. That does not mean it does not have a vital contribution to make to local energy generation, particularly in rural communities; it does. It is very important in Ireland; it is less important in Europe. Anything which challenges agriculture and forestry we probably will not want to do. Germany rowed back last year on the use of forestry for energy generation. Wind, solar and heat pumps are the three things but they are accompanied by two other critical elements. First, how do we store energy? Second, how is it transmitted across the grid? I do not mean the Irish grid; I mean the European grid. In essence, we can convert wind energy to hydrogen, but our weather patterns go west to east, so when we are in a very rich vein of capture we should be transmitting our energy to Holland. When they are in the high wind, then it is past us and goes back to us. When we talk about grid energy in this context, that is a critical technology. That is the massive roadblock we have because we have to transmit energy from high wind to low wind, and it has to be done on a European basis. We should therefore not be thinking about one or two interconnectors; we need multiple interconnectors to cope with that. We also need a grid system here so-----

Matt Shanahan (Waterford, Independent)
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Chair, may I ask one question of-----

Maurice Quinlivan (Limerick City, Sinn Fein)
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Wait one second. I will give you the time to come in. I call on Mr. Finan, to be followed by Ms Kinsella.

Mr. Se?n Finan:

I will just pick up on a couple of the points that were made. Deputy Shanahan mentioned bioenergy and the industrialisation and intensification of agriculture. In fact, we believe that it would have the opposite effect. If we were to deploy bioenergy more widely across Ireland, it would actually result potentially in taking livestock off the land by giving farmers alternative economic opportunities, whereby they could scale back slightly, maybe, and keep some livestock but grow feedstocks for use in the production of energy or biomaterials in the broader bioeconomy. We would therefore not agree with the Deputy's point that bioenergy would promote the intensification-----

Matt Shanahan (Waterford, Independent)
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It is not my point; it is the European position I was trying to reflect. Incidentally, I do not agree with it.

Mr. Se?n Finan:

It is good to get that clarification.

I will make a couple of other brief points on some points that have been made about bioenergy. In terms of sustainability, we are governed very strictly by the renewable energy directive. There are specific chapters about bioenergy within that in terms of sustainability, and we are supportive of that. We feel, however, that the same sustainability lens is not placed on maybe some of the other sectors around the potential use of raw materials for the production of other types of renewable energies and so on. We do not want to get into that except to say that the renewable energy directive very specifically governs us from a sustainability perspective. We have concerns, no more than Dr. Walker mentioned, about unsustainable palm oil finding its way into the biofuel blend, and we strongly support mechanisms by Europe to introduce registers and to try to address some of the issues around that. I want to articulate very strongly, however, that, from an Irish production perspective and a biofuels perspective, and as I highlighted when I addressed Deputy Bruton's question, we do not have any members that produce hydrotreated vegetable oil, HVO. They are producing fatty acid methyl ester, FAME, biodiesel. They are producing that from waste fats and oils generated through the rendering sector, the meat production sector and that whole area, so they are completely and 100% sustainable. That material has no other use from the perspective that it is only utilised potentially for the production of FAME biodiesel. From our members' perspective, therefore, I want to highlight very strongly their sustainability credentials in that they use the waste product. As to why bioenergy has not received the recognition it deserves, the bioenergy sectors are booming across Europe in terms of biomethane, solid biomass and so on, and that is because their governments are actively supporting it and putting in place policy measures which encourage development and deployment. It has been recognised as a solution in its broad context. I take the point that there are limitations around feedstocks and resources, and we have specific things we can help to decarbonise, such as heavy-duty transport in terms of biomethane, high-temperate heat for heat pumps, which are potentially not an option. There are sectors where bioenergy can do a job, where there are not other technology options which potentially could do it. I very strongly make that point in response to a number of the comments made by some of our colleagues.

Ms Gillian Kinsella:

Deputy Shanahan's original question was about technologies and where we go first and what the priority should be. One point to stress is the fact that the net zero industry Act seeks to prioritise on the basis of a set of criteria. I recognise that a full impact assessment has not been completed at this point but it does look to put in place a framework based on technology revenues, manufacturing and, probably most importantly, the need to decarbonise. It has put forward a number of technologies on that basis. I think there was a reference or a question earlier about maybe taking a more flexible approach. In considering that, the key thing to bear in mind is that this approach as put forward does provide certainty. Any flexible approach needs to be considered in that context and as to whether it maybe erodes the certainty that would be provided to certain sectors, particularly hydrogen, in which we are looking to start a full market.

Matt Shanahan (Waterford, Independent)
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I want to ask about the hydrogen strategy. I was part of a group that was in Berlin recently and hydrogen was one of the main areas we discussed there. The witnesses are probably well aware that the German economy is facing very significant decarbonisation challenges and Germany is looking to hydrogen and has estimated that it can probably produce at best 30% of its own hydrogen over the next ten to 20 years. Germany is therefore looking at outsiders and Ireland is being considered because of our west coast potential for offshore wind infrastructure and the amount of excess wind capacity we could have. We could be a conduit to develop hydrogen. First, we were told at that time that the hydrogen strategy was imminent and was probably going to be published. That was about a month ago. I think I heard it still has not been produced. Second, where do the witnesses believe we are at at this moment in time in developing a cohesive hydrogen strategy over the next five years - not 20 years but five years?

Maurice Quinlivan (Limerick City, Sinn Fein)
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Anyone who wants to come has to be very brief.

Ms Catherine Joyce-O'Caollai:

We hope that the hydrogen strategy will be published imminently. It is important to point out that the EU has given quite clear indicators as to what constitutes hydrogen and it will allow existing renewables to be used to produce hydrogen until 2027. If we are able to move at a sufficient pace, we hope we will see early scale hydrogen projects deployed on the ground in the next couple of years. A couple of facilities have planning in place for electrolysers and a number of our members are about to lodge planning applications. The framework allows hydrogen to be produced from existing renewables. After that, it will have to come from additional renewables, and the pipeline and the biggest opportunity for Ireland is definitely offshore wind, but I do not think we can ignore the gift that has been given in using our existing resources.

Matt Shanahan (Waterford, Independent)
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That is the long and short of it. As regards the applications referred to, where are they at? What is the kind of development timeline of those projects? Three years or four years for a potential plant?

Ms Catherine Joyce-O'Caollai:

The lead times we are hearing from electrolyser manufacturers are 12 to 18 months. Once the order is placed, depending on its scale, it will be 12 to 18 months. Then it is obviously hard to predict planning timelines. We do know that one of our members secured planning within around a year, but that was not subject to any appeals.

Matt Shanahan (Waterford, Independent)
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Can Ms Joyce-O'Caollai outline where those might be?

Ms Catherine Joyce-O'Caollai:

Bord na Móna has secured planning for, I think, Mount Lucas wind farm, and then Indaver, which is a waste energy facility in Meath, and there is a planning application under way in Galway, I believe.

I am not sure if planning was granted there. I know there are other facilities that are in preplanning discussions with the relevant local authorities.

Maurice Quinlivan (Limerick City, Sinn Fein)
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Did Senator Gavan want to come in again?

Paul Gavan (Sinn Fein)
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There is one other question on which I wanted to get the witnesses' opinions. It concerns the issue of funding and research and development in particular. Can the move towards net zero be achieved through additional funding for existing streams or is there a need for bespoke funding streams, grants, and tax incentives? On this point, will our guests also address problems with the current research and development tax credit and how it can be improved for businesses regardless of size?

Ms Gillian Kinsella:

With respect to funding, whether it is bespoke or we use the frameworks we have, we are looking to understand what the best route is right now. Essentially, we have some options. Recently, earlier on this year, we saw the launch of the European Hydrogen Bank and that will provide some funding into the sector. It is looking to run a pilot auction later this year and has a concept known as an auction as a service, so individual member states can use that framework and use funding from a national perspective to support projects. An assessment will need to be undertaken to understand if we can maximise the option there versus bespoke measures we have, and how we potentially link them into the frameworks in place at the moment. There is the renewable electricity support scheme, both onshore and offshore, and there potentially needs to be linkage there. Therefore, we need to understand how the whole design might fit together.

Mr. Paddy Phelan:

I thank Senator Gavan. The question is well pointed. Talking about how we were very proactive in this country around our renewable electricity support scheme option, we were first out of the blocks in 2019. Again, we have touched on the element of technology neutral and that has its benefits in terms of value for money. The fundamental purpose of these auctions around energy procurement is to protect the consumer and keep the cost of energy down. We have seen what has happened with the energy markets through the Ukraine war and the linkage to gas and gas price in terms of electricity markets.

I will mention two very important notes, which tie together neatly to Deputy Shanahan's question as well. Within this Act, in Article 20, it is stated that within this auction there is opportunity there "where applicable under Union legislation, and of any limit for non-price criteria set under State aid rules". They are allowing for weightings to be applied in terms of auctions where one can place greater weight perhaps due to the benefit in terms of CO2 or in the instance where we look at the very simple analogy or example of anaerobic digestion. Anaerobic digestion has not been able to compete in our renewable electricity support scheme because of its fundamental difference. One of its outputs can potentially be electricity through combined heat and power, however its primary route to market now is biomethane. In the south-east region, we have completed a resource assessment and it has been found that anaerobic digestion from existing, not additional, resources, can supply up to 10.3% of total energy required in the south-east region by 2030. Whether that is a financial support, a grant, or however it might be, it is clear the current option scheme disadvantages and does not account for the jobs, skills and benefits in a rural region that can come from it. There is a very regional solution within a European context that will not get financial close on any of these projects without support in the form of filling the gap.

The second point to note is when grants, funding, or supports are mentioned, and we look right across the other aspects such as storage for example, energy storage is something we have not touched on. Bio-energy and hydrogen are dispatchable and storable forms of energy, be they liquid, solid or gas. I refer to supports around storage and incentives. I know markets are being considered around longer duration storage. When we look into the energy security sphere and look at what we do after 12 hours into one, two, three weeks such as we experienced last summer, we again identify the opportunity to couple the supports where the ability to store can be demonstrated, like gas or solids or liquids in whichever form, which, at present, electricity very much struggles to do. Going back to which horses we should back, and we can see solar is starting to arrive, move, and significantly contribute in Ireland, we have to understand that wind and solar are very much in that one- to six- to eight-hour space and we have to understand the need to couple storage with all the technologies. Again, going back to sectoral coupling, we have to have supports around storage, and in particular supports around anaerobic digestion. We understand all of the carbon and economic benefits, the jobs, the skills and that the help it would provide to reduce the emissions from the agricultural sector to boot. That study in the south-east region very clearly sets out that we need infrastructure for electricity but we also need coupling with storage and technology-specific supports around, for example, anaerobic digestion. It just cannot compete with wind or solar in an auction without some consideration of the added benefits upstream and downstream.

Ms Gillian Kinsella:

To add to that from a hydrogen prospective, we see the need for supports to be considered across the board. As we scale this sector, we would expect economies of scale, and the sector to stand on its own and not need a support. However, it is a nascent sector and we will need supports in the short term to kick-start the market. That should focus on the various different elements of the hydrogen value chain, not only production as I mentioned earlier on, and the European Hydrogen Bank, but right through to transport, storage and end use as well. I stress the importance of storage in that context. Hydrogen can be stored over long periods of time, even for days, weeks, or months which is really beneficial. From the point of view of times when we have periods of low wind and low solar, we need power generation in the market to meet demand. Hydrogen can be stored for long periods of time and then backed up and used in power generation. Having a framework in place which supports that would be really beneficial in order to support the market.

Professor Michael Morris:

I will make some general points. If we look at the research development ecosystem, we clearly have a lot of failures. The fact that we invest less than 1% of our GNI in third level research is a very significant block to developing some of the solutions we have heard about today. We are an island nation and we are not like most of Europe. We have no history in things like chemical and hydrogen production and the way that system will work in Ireland is probably completely different to the way it would work in Germany. There are real and fundamental research gaps that we will have to tailor to the fact that we are Irish. We cannot rely entirely on Europe funding that research. We have to make the commitment in Ireland about what technologies we can exploit. There are real opportunities. We talked about storage. I mentioned energy shortage. The country is very rich in zeolite deposits from which we can make sodium batteries. It is very rich in zinc for particular employment and local things. Zinc batteries could be used as part of short-term energy storage before we go on to hydrogen and so on. Therefore, there are opportunities. How we allocate research and development tax credits has to be looked at. If you are doing onshore wind, should you really be able to write some of that money off as a research and development tax credit when you are buying it off the shelf and getting someone else to install it? There has to be some consideration that research and development tax credits should be spent within Ireland in doing things further down the pipeline that will address things like the storage of hydrogen. We talk about piping hydrogen; there are not any hydrogen-proof pipes available at the moment. There are real gaps which should be funded and should be part of how we spend and allocate our research and development tax credits.

Mr. Paddy Phelan:

If we step back out from the energy supply element of this, focus back in on the Act and go back to the Senator's question about grants and supports, and I mentioned price competitiveness around energy earlier, the understanding in procuring energy supply or technologies from which to generate energy supply, is history would say the cheapest price wins.

A key element to this Act is enabling industry to accelerate its path to net zero. That is not just the energy industry in my reading, or it is certainly a missed opportunity if we just look at the energy industry. If we look at all manufacturing and all industry and think about the opportunity if Ireland can accelerate its own island indigenous supply, then what industry would it attract in the future by virtue of helping that industry to decarbonising its existing processes by having a net zero carbon energy supply? That is a key point to understand and address within this Act. It is not just the energy sector and its listing elements there but ultimately it is the end user if we accelerate and decarbonise, and I do believe we have some very strong policy around electricity. Ms Maria Donnelly, former chair of Renewable Energy Ireland, said that the stained glass windows we will have in terms of our energy mix in 2030 and 2050 will have many elements within it across all of the renewable technologies. Fundamentally, if we can accelerate to decarbonisation of our energy system across all vectors, incentives and grants should be provided to those industries that are prepared to pay extra to support supply chain development until such time as it becomes the norm. There is potentially an opportunity to attract foreign direct investment and manufacturing technolgies to this country within the context of the wider Europe attracting back some industries from Asia and other areas where they are currently concentrated. It is important to consider it in that context and not just the energy piece.

David Stanton (Cork East, Fine Gael)
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I thank the witnesses for their presentations and for the work they are doing in this area. As my colleagues said, we could probably spend the whole day dealing with one area never mind a short period of time dealing with such a vast number of topics. Dr. Walker made an interesting comment in his submission that the imperative reasons of overriding public interest, IROPI, route requires compensatory measures that may be difficult to even conceive of let alone implement, particularly for offshore projects. I looked up what IROPI meant. I did not know, and correct me if I am wrong, but it stated it was imperative reasons of overriding public interest. I have been looking at this and I think Dr. Walker mentioned he was quite scathing of our planning system as well. The Aarhus Convention, strategic environmental assessments, environmental impact assessments, EIAs, and so on all play a part and our common law system comes into it. Will Dr. Walker expand a bit on this for people listening in? As a public representative, I am interested in that kind of point of imperative reasons of overriding public interest.

Dr. Neil Walker:

I will give an example of it. Galway Harbour needs to expand. The entirety of Galway Bay is a special protection area for birds, including the oil tanks by the way, because there is no way of de-designating that area and that is on reclaimed land. In order for them to be able to expand the port and effectively use up some of the special protected area, they have to undertake to manage a wetland area a few miles down the coast in Oranmore. Effectively, that is a compensatory measure which then enables development to occur even though that development is within a protected area under the Habitats Directive and the Natura directive. If we wanted to compensate for something we were doing to the sea bed ten miles offshore, where would we select another piece of sea bed, and what would we do with it? I cannot get my head round it.

BusinessEurope is an umbrella federation, and IBEC is one of 20-odd national federations affiliated to it. One of the things BusinessEurope is suggesting is that within the scope of the net zero industry Act, where it talks about overriding public interest, if we just have vanilla IROPI, then it might be an impossible task to find compensatory measures. It is suggesting not to have the compensatory measures as mandatory where they are impossible.

David Stanton (Cork East, Fine Gael)
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Okay.

Dr. Neil Walker:

I would not necessarily endorse it but it needs to be debated.

David Stanton (Cork East, Fine Gael)
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Yes, it is complex. Much of the language around this area is quite complex and hard to penetrate. If the ordinary citizen looking in cannot penetrate the language, we all need to speak in plainer English and break it down into simpler forms so people, who are not experts in this whole space, can understand. Dr. Walker also mentioned that the €300 million EU allowances that are worth nearly €2 billion did not work. Why not?

Dr. Neil Walker:

There were meant to be 12 demonstration projects.

David Stanton (Cork East, Fine Gael)
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Was that for the carbon capture and storage strategy?

Dr. Neil Walker:

This was 15 years ago and there are different levels of technological readiness. I think there were eight or nine levels and the technology was such that although carbon capture and storage has been demonstrated in the States and has been demonstrated successfully in Norway, it really has not been demonstrated within the EU. What they wanted to do was to have demonstration projects but there are a number of societal issues. Let us say the Kinsale worked out gas field could be used for carbon storage, we would want to ensure it would stay there for at least 100 years otherwise we could end up with the biggest jacuzzi in the world. One of the biggest problems is the cost of insurance. Who would insure against the risk of something that might happen 50 years hence, so that money never got spent.

David Stanton (Cork East, Fine Gael)
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By the way, the Kinsale pipeline and all of the infrastructure is being decommissioned.

Dr. Neil Walker:

It is such a mistake. They should never have allowed it to be decommissioned because it cost PSE Kinsale Energy a fortune to decommission it and it may cost somebody else another fortune to recommission it for a more green purpose.

David Stanton (Cork East, Fine Gael)
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The issue was the actual agents and the condition of the pipeline but I presume we could put in a new pipeline if needed. I am with Dr. Walker on that. We need to debate that issue better than has been done. I thank Dr. Walker for that.

I welcome Professor Morris. I will ask him about the academies. In his opening statement I think the word he used was "ill-defined". What is his understanding of these academies and how they might work, where they would be based, or what they are?

Professor Michael Morris:

Unfortunately, there is very little detail. It states it will be modelled on some of the academies and what are also called flagship projects within Europe. The flagship projects would, for instance, maybe take one of these technologies and put a huge amount of money into the research and development fund for people to apply to. That is a reasonable way to really focus European research funding through industry and right back to universities to do that. That flagship concept is well formulated. The academies appear to work by creating standards and targets for the educational process and what should be taught. It states that within the eight areas identified as key, it wants to produce 100,000 trained people in each sector, which is nigh on 1 million people within the next five years. It does not state how that teaching will be developed, and it does not say at what level. Is it at degree level or at training level?

There is not enough detail to understand what those academies are looking for. My guess is that it would span everything from postdoctoral fellows all the way through to technical level. There is no detail in it, so I am very worried about that and our engagement with it. We have a university system and a training system. There are huge gaps and I think in all aspects of decarbonisation and the circular economy, we do not have a trained workforce. People talk about the general public but most people within Ireland's knowledge of the circular economy is gained by reading things rather than being taught them because we do not teach it as a subject matter. There are real, serious implications for what those academies are and how they interact with our education system at all levels.

Dr. Neil Walker:

My understanding is that the European Commission would centrally develop curricula that would then have to be delivered in the member states. It is like the scariest thing in the context of an operating company: “Hello. I am from head office and I am here to help.”

Ms Gillian Kinsella:

While there is still much to be understood about the net-zero academies, generally speaking, Hydrogen Ireland is quite positive about the concept that is coming through there. It is a new sector we are looking to develop. There is massive potential for job growth and skills development. We feel there is a need to better identify the exact skills that we will need. The net zero academies will be discussed and considered under this concept called a net zero Europe platform. For Ireland to be able to partake meaningfully in that platform, it would be excellent if we had the information to back that up. There has previously been some excellent work carried out by the expert group on future skills needs looking at areas such as retrofit and renewables and what skills might be needed. Similar work focusing on hydrogen would be excellent, particularly taking into account the broader skills demands we have for infrastructure because we may all be looking to avail of the same talent pools. That would be very beneficial.

David Stanton (Cork East, Fine Gael)
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Professor Morris also mentioned that he is concerned about our reliance on materials from China. There is a lithium recycling experiment occurring in Trinity. Is he familiar with that or has he come across-----

Professor Michael Morris:

Within part of our co-funding, there is a researcher in University College Cork and another in Trinity who are actively looking at how to reuse lithium. At the moment, it is not reused. They are also looking at alternatives, including sodium batteries as an alternative to lithium batteries. We have about five years' worth of lithium that we can mine, which is not enough to meet even the demand for batteries for vehicles. As a result, it is absolutely critical that we participate in that research.

David Stanton (Cork East, Fine Gael)
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Professor Morris also mentioned that not all forms of renewable energy are carbon neutral. Can he expand on that a little?

Professor Michael Morris:

Looking at carbon neutrality, one would always say that something like wind is never carbon neutral or carbon zero. We have to think about all the plastics, all the design and, critically, the end points of what we do. We do not know what to do with old wind turbine blades at the moment. That is a particular problem if we look at environmental legislation that will come down the road about having to recycle within the country. When one starts looking at the carbon footprint of all those processes, the carbon neutrality of everything has to be quantified. There are key things that, at the moment, are pretty good. I was reminded by someone from the ESB that the new oil turbines, with all their decarbonisation, are as carbon neutral as wind power from five years ago. We have to be careful when we start talking about renewable energies as to whether they are really renewable in that sense.

David Stanton (Cork East, Fine Gael)
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On hydrogen, I was at a conference in Cork recently. Dr. Eddie O’Connor was quite scathing about hydrogen. He maintained that it is hard to store and move, that it is volatile, etc. I am sure the Hydrogen Ireland representatives and others are aware of that criticism. I represent the Cork East constituency. We have the oil refinery and two gas power stations there. The offshore wind is also not far away, hopefully, although I am concerned about the floating wind because it seems to have been put on the long finger - the floating offshore rather than the fixed spot offshore. It is a pity, but that is another story. Could the witnesses talk to me about the criticism of hydrogen and play devil’s advocate for a minute on that? Are they aware of the criticism to which I refer? What progress has been made in different parts of the world regarding hydrogen?

Ms Catherine Joyce-O'Caollai:

I will talk a little bit about some of the benefits of hydrogen and the legal and regulatory basis that underpins it. The European Commission was very clear when it published REPowerEU. It put in place firm targets for the use of hydrogen across the EU by 2030 – 10 million tonnes produced indigenously within Europe by 2030 and importing 10 million tonnes. The reason it did that was because it realised it could not meet net zero in the absence of a zero-carbon fuel like hydrogen. Around 2017 or 2018, we saw it starting to amend the legislation that gives effect to renewable technologies because it realised net zero could not be reached in its absence.

With respect to criticisms of hydrogen, if one looks at the benefits of it, when it is produced, it is storing electricity from intermittent sources of renewables. There were six weeks in 2020 or 2021 where there was very little wind, not only in Ireland but across northern Europe. Hydrogen allows you to mitigate against those types of scenarios. Looking at storage data - I think it was data from 2019 and I will not labour on the figures too much - it showed that we had 60 days of energy stored in fossil fuels across Ireland. As we move away from fossil fuels, we also lose that storage. If we are to remain within our carbon budgets and meet our statutory obligations under national law to reduce carbon emissions, we do not really have a choice but to go for hydrogen. With respect to its storage, there are studies being undertaken across the EU of transitioning existing gas storage to the storage of hydrogen.

David Stanton (Cork East, Fine Gael)
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Could Ms Joyce-O’Caollai point to any jurisdiction where hydrogen is well developed and being used, and where we should be heading?

Ms Catherine Joyce-O'Caollai:

Within central Europe, there are Germany and the Netherlands. In western Europe, we see the production and use of hydrogen. The difficult that those jurisdictions are seeing is that they are just not at sufficient scale as of yet. It is absolutely an industry in its infancy. It is trying to replace something quicker than initially anticipated, due to many reasons.

David Stanton (Cork East, Fine Gael)
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With the issue of carbon capture - I am not an expert at all obviously, but the witnesses probably are – I have been told that you can blend CO2 with hydrogen to create biodiesel of some sort.

Ms Catherine Joyce-O'Caollai:

Yes.

David Stanton (Cork East, Fine Gael)
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Perhaps Dr. Walker can respond.

Dr. Neil Walker:

Professor Morris would probably be better than me. It is an ancient technology called the Fischer-Tropsch synthesis. It requires catalysts and high temperatures. It is like a mini-processing. One of the criticisms of hydrogen is that you cannot really cycle it. It takes a lot of energy in the electrolysis process. It also takes a lot of energy to combine the hydrogen with CO2. You could actually use biomethane but you need a sustainable source of carbon in order to make the liquid fuels because they are medium-length chain hydrocarbons. The question is what the best thing to do with the hydrogen is once you have made it. In the case where there is a pipe network, that is great – nothing more needs to be done with it. However, for sustainable aviation fuels, if you are going to do them from non-biological origin, then you need to have a sustainable, permanent source of CO2. If we are trying to eliminate emissions of CO2 from industry, you cannot rely on an industrial source, so there is a broader question in that regard.

Professor Michael Morris:

I have a quick comment. One does not just have to think about oil. Hydrogen and CO2 make methanol and ethanol. That would be a tremendous benefit to us because it takes carbon importation down. It makes diesel and high-quality petrol, as well as aviation fuels. It comes from a technology developed in the 1960s in South Africa when, as a result of apartheid, exports of all petrol products to that country were banned. South Africa switched its industry within five years to be totally reliant on hydrogen as a form of petrol. There are loads of things we could do with it. We have a problem with regard to emissions because we have such a heavy reliance on air transport, so it is something we should think about.

Going back the hydrogen demonstration, it is a very small-scale demonstration of that, but in terms of this sandbox concept, Scottish isles have a direct offshore wind to hydrogen storage and that is piped around the island system to generate electricity as part of the infrastructure. It is very successful as far as I am aware, but my colleagues probably know more about that than I do.

Ms Catherine Joyce-O'Caollai:

On the use of industrial carbon for the production of e-fuels, the EU has legislated that it can only be used until 2040. It does not want to keep carbon in the system for longer than necessary. That should give sufficient signals that we can go for direct air capture, which is obviously more expensive as of now, but it is giving signals to invest, deploy at scale, reduce the cost, etc.

David Stanton (Cork East, Fine Gael)
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Finally, on the bio side, I ask the witnesses to talk about biomethane. Will we have a biomethane strategy? What is their understanding of what is happening in that area?

Mr. Se?n Finan:

I thank the Deputy for his questions. We understand a biomethane strategy is being developed and we have been clear on what we believe that should contain and include. For biomethane to be deployed, we have a target of 5.7 TWh by 2030, which is reflective of Ireland's contribution to the 35 billion cu. m target at an EU level. We are clear the strategy currently being worked on needs to contain whatever incentives, supports and mechanisms are available to fully support the widespread deployment of biomethane throughout the country. The benefits for a broad range of sectors are known and have been widely articulated for many years.

There are a number of fundamental issues we feel should be addressed. One is the gap that has arisen given that fossil gas is dropping in price from the high level achieved 12 to 18 months ago. That has made the economics of biomethane more difficult. As a result there, is a gap as regards the cost of production. As carbon taxes on fossil fuels increase over the coming decade, the price of fossil fuels will increase, which will help with the economics of biomethane. However, all European countries that have mobilised a biomethane sector have given it policy and financial support. We believe that should be an ongoing support. There is talk of capital support but the volumes of capital are significantly high and we cannot bank projects based on capital support. How will we pay for our feedstocks in five, seven or ten years' time if the price of fossil gas remains at a low level? The other challenge associated with biomethane is that the price of feedstocks can fluctuate. We have seen the production costs associated with producing grass and other materials fluctuate.

There are a number of variables involved so the policy mechanism that is introduced needs to be flexible to accommodate them all. If we are to realise the opportunity that exists, an operational support will be required that is ongoing over a period of time.

David Stanton (Cork East, Fine Gael)
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Are there production facilities currently in operation in Ireland? If so, at what scale?

Mr. Paddy Phelan:

I can come in on that. A similar question was asked on hydrogen. We secured European INTERREG funding through the South East Energy Agency. This is typically how pilot projects come about. Regional energy agencies such as the South East Energy Agency are constantly looking out for opportunities to support supply chain development. The anaerobic digestion facility in Portlaw, north County Waterford, is currently compressing. It got funding for its biomethane compression set from an INTERREG programme. For the past nine months, it has been supplying virtual pipeline gas to a Kilkenny County Council machinery yard and a Wexford County Council fire station by a canister mechanism. Subject to agreement, that project will soon be able to inject its biomethane into the gas network system. This will allow for the demonstration of both modes of roll-out of biomethane. In the initial pilot, it is for heat and the specific programme is around heat but its location in the machinery yard means there is an opportunity in the area of transport also. That is a practical example but there are economics involved in that, be it through the grid or the virtual pipe system.

We have done extensive studies and mapping and if we take a region like the south east, there are 49 urban areas that are not connected to the current fossil gas system. All the modes and opportunities are needed, including electricity, pipeline gas with an increased blending of hydrogen - I believe it can potentially be up to 23% - as well as an increased potential for biomethane injection. However, that biomethane will not hit the system if it does not get the supports Mr. Finan mentioned and we touched on earlier in terms of operational supports. Biomethane is more expensive to produce than wind and solar but it provides significant upstream and downstream benefits around the circular economy, and also jobs and rural economies.

Mr. Se?n Finan:

To give the numbers, there are approximately 20 biogas plants in Ireland. Only two to three are producing biomethane. We have one injection point for biomethane at Cush in County Kildare. Most of the AD facilities are producing biogas supported through a renewable energy feed-in tariff, REFIT, 3 programme but they are looking at potentially diversifying into more biomethane production. There is also much AD technology used across the country in facilities that would not necessarily be classified as AD sites. I am thinking of water treatment, as AD is used in many water treatment facilities. These sites are using the gas they produce by using AD technology to fuel and decarbonise their existing production system. While on paper there are about 20 biogas plants, there is a lot more use of AD technology in a broad range of sectors. That energy is being used by facilities for their own consumption to decarbonise their systems.

David Stanton (Cork East, Fine Gael)
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I have two brief questions. Article 7 of EU Directive 2019/944 concerns direct lines. My understanding is facilities such as those Mr. Finan described could use the electricity locally. Have the witnesses seen that?

Mr. Paddy Phelan:

That is correct. The directive was passed and brought in through a statutory instrument here in, I think, April 2022, so 14 or 15 months ago. It means a direct power purchase agreement can now be signed with a facility in the vicinity. There is no need to go through the network. It was formally known as the private wire.

David Stanton (Cork East, Fine Gael)
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Yes. The national network is under a lot of pressure and there is concern we might produce too much electricity offshore and might not be able to handle it. This direct wire is an interesting concept whereby power produced locally may be used locally.

Mr. Paddy Phelan:

To expand on that, it does not have to be a direct wire for electricity and could be a direct line of gas supply as well. Those opportunities are widespread across Europe. Fortunately, the EU directive got implemented and that barrier was removed.

David Stanton (Cork East, Fine Gael)
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I am not sure how much that facility is being used here.

Mr. Paddy Phelan:

I expect to see its use increase over the coming years as new renewable plants come on stream, be they solar or wind. Direct wire requires co-location with demand and demand often tends to be in urban areas where it is difficult to develop. It goes back to strategic areas and the directive's provisions on each municipal region or area identifying an area in which to develop these technologies. Trying to get a wind turbine, solar park or even an anaerobic digester in an urban area is an issue on which we are constantly working with the local authorities and their planning sections. It goes back to public perceptions, however.

Ms Gillian Kinsella:

Direct line or private wire, or private network as it is also known, is very important with respect to hydrogen. In the recent offshore wind policy, we have a target of 2 GW dedicated specifically for hydrogen production. The target is to have that in development by 2030. The policy indicates private wires or networks will be used to underpin that, as we understand it, due to the challenges of relying on the network for the increased capacity. We expect a consultation on that in the coming weeks. That will be of critical importance to kick-start the hydrogen market.

David Stanton (Cork East, Fine Gael)
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My final question is on BECCS, resulting in bioethanol. Where is that at? I think the issue has been mention.

Mr. Se?n Finan:

In our submission we made the point that BECCS is not recognised in the list of technologies. Carbon capture and storage is but the list does not specifically refer to BECCS or pyrogenic carbon capture and storage using pyrolysis.

We believe that should be a key component. It is very clear from reports from the International Energy Agency, the Intergovernmental Panel on Climate Change and elsewhere that it is recognised as a contributor. The point included within our submission was specifically around one of our members, Ethanol Europe. They have done some work around the opportunity for storage of carbon from a number of sectors, particularly the fermentation industry. They are involved in the production of ethanol for both industrial use and as a fuel. Our point was that the policy framework mechanism does not recognise or place a value on that storage. Until there is some manner of valuing it, it is going to be difficult to develop. It is another avenue and opportunity which needs supporting legislation, potentially through this or through another mechanism by which it can be made economically viable and can help to deliver the overall objectives.

There is a big opportunity particularly from the biomethane sector. Biogas is produced at 60% methane, 30% carbon dioxide and 10% hydrogen sulfide, which is of no value. There is a very valuable component within biomethane which should be harnessed. Bio-carbon dioxide can be an important product. I refer to the beverage sector and the animal slaughtering sector. Many sectors use carbon dioxide and need it for their production processes. At a broad level, there needs to be a legislative or policy framework around this to encourage its development. Our member, Ethanol Europe, specifically James Cogan, has done work on this area and is strongly encouraging it to be developed in Ireland. I am sure he would be happy to come in and talk to the committee about it.

Professor Michael Morris:

To build on that, the fact is that the carbon dioxide to chemical route is not identified. That is a critical fact. If we phase out the use of fossil fuels, they are responsible for 98% of the chemicals we use because of the carbon. Where are we going to get the carbon from if not from carbon dioxide or biomass? That is a really critical area for us. By 2030 we will be manufacturing a billion tonnes of plastic every year, all from fossil fuels. If we phase out fossil fuels, we will not have any plastic to build houses, drainpipes or electricity or to do anything. That is a particular area which really needs emphasis, carbon to chemicals and polymers.

Maurice Quinlivan (Limerick City, Sinn Fein)
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That concludes our consideration of this matter for today. I thank all the representatives for assisting the committee. We will be considering the matter further as we go forward. I propose that we go into private session to discuss our order of business. Is that agreed? Agreed.