Oireachtas Joint and Select Committees
Thursday, 6 November 2025
Joint Oireachtas Committee on Climate, Environment and Energy
General Scheme of the Renewable Heat Obligation Bill 2025: Discussion
2:00 am
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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We have received apologies from Deputy Malcolm Byrne and Senator Alice-Mary Higgins.
The purpose of our meeting today is to have an engagement with officials from the Department of Climate, Energy and the Environment as part of the committee's scrutiny of the general scheme of the renewable heat obligation Bill 2025. From the Department of Climate, Energy and the Environment, I welcome Mr. Seán Kinsella, principal officer, and Ms. Niamh Hamill, assistant principal. I remind everybody in attendance to make sure their mobile phones are on silent mode or switched off.
Before I invite the witnesses to deliver their opening statements, I wish to advise them of the following in relation to parliamentary privilege. Witnesses and members are reminded of the long-standing 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 that 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.
Regarding the format of this meeting, I will invite witnesses to make an opening statement for a maximum of five minutes. Once that statement has been delivered, I will then call on the members of the committee in the order they indicate to me their wish to put their questions. We operate a rota system, which provides each member with an initial six minutes to engage with our witnesses. It is important to note that the six minutes are for both questions and answers. Therefore, it is essential for members to put their questions succinctly and for witnesses to be succinct in their responses. When all members who have indicated have had their initial engagement, time permitting, a second round will commence, where each member will have up to three minutes for both questions and answers. The duration of this meeting is limited. As a result, the times must be strictly adhered to. I ask everybody to be focused in their contributions.
Before we start, I want to welcome three transition year students who are here on work experience, namely Zoe Taylor, Lucy Smith and Grace Connaughton. They do not need to stay until 3 o'clock if the meeting lasts that long. I thank them for attending. They are very welcome.
I call on Mr. Kinsella to deliver his opening statement.
Mr. Seán Kinsella:
I thank the Cathaoirleach and committee members for the invitation to attend. We welcome this opportunity to discuss the general scheme of the renewable heat obligation Bill with the committee.
Heat-related greenhouse emissions arise directly from the combustion of fossil fuels in our homes, businesses and the industry sector. They account for approximately 40% of our total energy-related emissions. Ireland is committed to reaching a legally binding target of climate neutrality by no later than 2050 and a cut of 51% in greenhouse emissions by 2030.
In 2024, over 90% of Ireland's heat demand was met using fossil fuels, with a renewable energy share for heat at just under 8%, which is among the lowest share of renewable heat in the EU. Under the renewable heat directive, Ireland has ambitious renewable energy targets for heat. Achievement of these targets will be extremely challenging for all sectors. Despite the efforts of many households and businesses to add insulation, install more efficient technologies and use less fossil fuels, Ireland continues to have an excessive dependence on fossil fuels for heating. As Ireland imports most of its fossil fuels, our heating sector is also a significant contributor to Ireland's high energy import dependency. Reducing our fossil fuel use for heat will help to strengthen energy security and is a key theme in national and EU responses to energy security risks.
In July 2022, Government committed to the introduction of an obligation in the heat sector to include renewable heat, and development of the renewable heat obligation, RHO, began thereafter. Once introduced, the RHO will obligate suppliers of fossil fuels used for heating to ensure a proportion of the energy they supply is from a renewable source. The primary objective of the RHO is to support the achievement of Ireland's renewable heating targets by the most economical means available. Secondary objectives include stimulating the production of indigenous renewable fuels, diversifying energy sources and strengthening our energy security.
Design of the RHO included two phases of analysis and extensive stakeholder engagement activities. Two public consultations were carried out to seek feedback on key aspects of the obligation's design, including introductory obligation rates, fuel availability, final target rates and duration of the obligation. Feedback received largely supported the introduction of the RHO, with the majority of stakeholders calling for its immediate introduction.
There has also been extensive industry engagement throughout the design process, including dedicated workshops tailored to the gaseous, liquid and solid fuel markets. In early 2025, the Department completed its final phase of analysis which included a full impact assessment of the scheme structure, considering critical factors, including the availability of renewable fuels to meet the obligation, and the likely economic and social impact of the obligation. Results of this work informed the general scheme of the renewable heat obligation Bill recently approved by Government and under discussion today.
The RHO will operate in a similar way to the existing renewable transport fuel obligation in the transport sector. RHO certificates will be awarded for every unit of renewable energy placed on the market for the production of heat. The National Oil Reserves Agency, NORA, which currently administers the renewable transport fuel obligation, has been appointed as the RHO scheme administrator and will manage the RHO once introduced. Under current proposals, in year one of the scheme, obligated parties will need to supply 1.5% of renewable fuel in their energy mix, followed by a rate increase to 3% in year two. These initial rates have been determined following careful consideration of the availability and cost of renewable fuels required to meet the obligation. The RHO will stay in effect until 2045 and apply to suppliers of gas, oil and solid fossil fuels used for heat.
The obligation follows a user-pays principle whereby the users of the fossil fuel pay the additional cost incurred by the increased proportion of renewable fuel to meet the obligation. However, when designing the scheme, energy affordability and the impact on the end consumer remained a key consideration. Based on the currently proposed obligation rates of 1.5% in year one and 3% in year two, and costs socialised equally across an obligated party's whole consumer base, the impact on a typical household energy bill will range between 0.4% and 0.7%, depending on fuel type. In year two, this will range between 0.9% and 1.4%. Any increase to obligation rates from year three will be subject to a further review of market conditions and scheme performance and take into consideration the most cost-effective and affordable way to achieve our renewable energy and climate targets.
Identified in the national biomethane strategy as a key mechanism to create a demand-side incentive, the RHO will also support the development of an indigenous biomethane sector. While biomethane production has been deployed across Europe at significant scale, it is at a nascent stage of development in Ireland. As a result, Ireland is now placed at an economically disadvantaged position compared with the EU biomethane market due to the high cost of production. As such, the RHO general scheme includes a multiplier for each unit of indigenously produced biomethane surrendered under the scheme. Multipliers are mechanisms for increasing the credit earned for certain types of fuels within the obligation scheme. While the use of a multiplier on domestically produced biomethane does not constitute a restriction on biomethane trade within the EU, it may impact Single Market trading. The use of this multiplier therefore requires formal notification to the European Commission to ensure no discriminatory practices or fragmentation of the Single Market. The Department is currently engaging with the European Commission and preparing Ireland's formal notification. I look forward to further discussion on the RHO and hearing the views of the committee, and we are happy to answer any questions members may have.
Ciarán Ahern (Dublin South West, Labour)
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I thank the witnesses for coming in today. I have had a good look at the Bill that was circulated. I thank the secretariat for summarising the numerous submissions we have received. It was very helpful. I am interested in the multiplier. I understand from what Mr. Kinsella that for every unit of domestically produced biomethane an obligated party places on the market, it would be rewarded an extra 0.5 RHO of a certificate. If some entity is using Irish-produced biomethane, it would only have to have 1% of renewable fuels in year one and 2% in year two. Is that how it works?
Ciarán Ahern (Dublin South West, Labour)
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I understand the reason the Department wants to incentivise the Irish industry. Will that have a negative impact on the amount of renewables that go into the system? Obviously to Ms Hamill's mind, it is negligible or worth it.
Ms Niamh Hamill:
You have to take into account the obligation rate and, ultimately, the renewable energy share that you are actually achieving. As we are looking at it, the scheme was looking to achieve at least a 10% renewable energy share in heat. Obviously the use of multipliers impacts the volume of fuel, so then you would have to look at increasing the obligation rate to meet that 10% energy from renewable energy sources for heat, RES-H. That is why we wanted to set the first two rates in the first two years, but regarding the final target level, we want to actually see the multiplier or the impact.
Ciarán Ahern (Dublin South West, Labour)
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On that final target level, to give people and the industry certainty, has the Department a desired pathway? Mr. Kinsella said we are at about 8% renewables in our heating mix at the moment. We want to get up much higher than that. Has the Department a desired total of renewables?
Ciarán Ahern (Dublin South West, Labour)
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An additional 10%, so it would get up to 18% overall?
Ciarán Ahern (Dublin South West, Labour)
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Some people in the liquid fuel sector have talked about being able to achieve a 20% renewable rate immediately, although they would potentially be using hydrotreated vegetable oil, HVO, with which there are issues as we discussed previously. This legislation groups liquid and gas heating together rather than, as the Alliance for Zero Carbon Heating has advocated for, including heating under the renewable transport fuel obligation, RTFO. I am curious about the thought process behind that.
Ms Niamh Hamill:
They are very different fuel types and costs. There are a number of different factors, including availability and sustainability. They all have different impacts. Under the general scheme, within the heads, they are treated separately, as individual fuel types, so there is a mechanism there to raise one independently of another fuel type. It is for that reason that we have to treat them separately under the one scheme. That is the mechanism and the way we intend to manage it across the lifetime of the scheme. We would also have submissions from the liquid side with regard to availability. We will check that again. Our Minister has asked for that as well to make sure we are being as ambitious as possible, especially from the liquid fuel side. We will have done a further review of the Bill that will be brought to Government as well. We are not just stopping at the point in time of the general scheme but looking ahead to the Bill being brought to Government. That is an important feature of the scheme. We had to treat them independently of each other but within the same general scheme.
Ciarán Ahern (Dublin South West, Labour)
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Has any analysis been done of how this type of scheme compares with alternatives such as retrofitting with heat pumps or district heating?
In deciding to go with the scheme, I assume the Department weighed it up against alternatives. How did that process happen?
Mr. Seán Kinsella:
It is not one or the other. They very much complement each other. Two of Government's key aims are retrofitting homes and businesses, switching them to heat pumps and developing district heating. In conjunction with that is having a renewable heat obligation scheme for businesses, homes and properties still on fossil fuels to make sure a level of renewables is going into that sector. It complements and builds on the other two.
Jennifer Whitmore (Wicklow, Social Democrats)
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I thank the witnesses for coming in. Heat-related emissions account for 24% of Ireland's total greenhouse gas emissions. Is that correct?
Jennifer Whitmore (Wicklow, Social Democrats)
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Okay. With these measures, what would the reduction be? I mean with the 1.5% and the 3%.
Jennifer Whitmore (Wicklow, Social Democrats)
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We received a briefing note on this and it was really useful. Some of the submissions were put in. Were there submissions from any environmental groups? Did the Climate Change Advisory Council put a submission in?
Jennifer Whitmore (Wicklow, Social Democrats)
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Is the Climate Change Advisory Council satisfied with this? Has it not made any-----
Jennifer Whitmore (Wicklow, Social Democrats)
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One thing raised in a submission - I think it was by Energia - is that it will have significant cost implications for householders. Has the Department done any analysis of that?
Mr. Seán Kinsella:
Yes, the impact on cost and affordability for end consumers was a key consideration in the design. Ultimately, the fuels we will try to encourage will be more expensive than the fuels we are trying to replace. We designed the scheme in such a way as to ensure flexibility and to mitigate significant cost increases. For example, we allowed a buy-out rate if there is a large influx in costs in the market for renewables. We allow trading within the scheme to make it more efficient up to a certain level. We started the obligation rate at a relatively low level. It has been a key consideration in that regard.
Jennifer Whitmore (Wicklow, Social Democrats)
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Do the witnesses know what the cost implications will be, on average, for people under the 1.5% and the 3% obligation rate?
Jennifer Whitmore (Wicklow, Social Democrats)
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When the Department developed this Bill and the policy, it took into account affordability issues and some others. Did it take sustainability issues into account? We would not want this to create problems in other areas from a sustainability perspective. Will the witnesses outline the risks and how they mitigated against them?
Ms Niamh Hamill:
Because we had the obligation on the transport sector, we have a good understanding of how the market is operating and any concerns that are there. We work quite closely with the Department of Transport on that. Under the renewable energy directive, there are specific sustainability requirements regarding transport and land use change. There is no directive in terms of heat but we want to make sure whatever happens in transport is aligned directly with heat. We do not want to say we will not do that in heat because we do not have to. We are essentially aligning the RHO with what is already in play with transport.
NORA is the competent authority for biofuels. We see that expanding to competent authority for bioliquids once the RHO comes online. Having it as scheme administrator means it is the competent authority for these fuels. It is also scheme administrator for the two obligations and we are working quite closely with transport, so anything that happens in the transport space, we will match that.
Jennifer Whitmore (Wicklow, Social Democrats)
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Okay, so those guardrails are already there. Is there any risk with imports? NORA may not have visibility or governance responsibility for anything coming in internationally. Are there restrictions on imports?
Ms Niamh Hamill:
There are no restrictions on imports under the RHO, the same as there is with the transport. Mr. Kinsella mentioned the TRIS process. Any impact on Single Market trade is open to consultation with the EU. We cannot do that because of the restriction. There are no trade barriers. There is an EU framework in place and voluntary schemes are already in place. It is about keeping an eye on the integrity of the supply chains. There is a competent authority, the verification process and the voluntary schemes. The Department of Transport has a working group as well. It has the sustainability working group and we are a member of that.
Jennifer Whitmore (Wicklow, Social Democrats)
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In a theoretical worst-case scenario, the industry could import renewable energy and that could be incredibly environmentally damaging overseas. That could potentially happen and we cannot stop it because of trade rules.
Ms Niamh Hamill:
It is not that. When we look at import availability, most of the fuels, particularly on the biomethane side, come from Europe. The integrity of those supply chains would be well regarded with the voluntary schemes. Once you move outside of Europe, issues are being reported in terms of the global market, particularly on the liquid side. We have to take that into account and work with the competent authority and transport.
Jennifer Whitmore (Wicklow, Social Democrats)
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How does the Department take that into account if it has no authority over it? Is it more of a reporting thing or-----
Ms Niamh Hamill:
In transport there are multipliers for particular fuel types and feedstocks. We do not have any of those multipliers in place. We are starting at that baseline where we are not incentivising any fuels that are being looked at. Transport is looking at fuels that are being incentivised, but the renewable energy directive is a requirement to incentivise those fuels. There is a lot of engagement at EU level on this. Ireland is calling for a harmonised approach so that all member states are looking at this.
Pa Daly (Kerry, Sinn Fein)
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I thank the witnesses for the presentation. Where I am coming at it from mostly relates to the energy costs from which people have been suffering, particularly over the past three years. There are increased network charges but there does not seem to be any holding of energy companies to account. Legislation we had was rejected.
Social Justice Ireland, for example, described what has gone on in retrofitting as a wealth transfer. People in wealthier areas have been able to afford the €40,000, €50,000 or €60,000 for EVs and retrofitting work. I would be slightly concerned that with increases in property tax or carbon tax, the regular consumer will be punished further.
Does the Department still think the scheme will come in around the middle of next year? Is that likely to happen?
On the obligation rates, I think the witnesses said in response to a previous question that it was factored into the increase in costs, or is it because some sectors, such as gas, would not be able to match the level of others, such as liquid fuel? Is the Department satisfied with the incentives to encourage some sectors to increase their contribution to the scheme? What will be done to ease the burden on people already suffering from price increases?
Mr. Seán Kinsella:
I will take a couple of those questions. First, on the introduction of the scheme, we have three main work streams to go through: the drafting, on which we are working with the Office of the Parliamentary Counsel; we have to work with NORA to get the scheme operational and to detail the terms and conditions; and then we will make the submission to the European Commission in relation to the multiplier. These will be tight deadlines but our aim is to take in as much as possible of 2026. We have those milestones to work to but introduction in 2026 is still the aim. In relation to the obligation rates-----
Pa Daly (Kerry, Sinn Fein)
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Will that be in the middle of the year or at the end of the year? It will not be at the start of the year.
Pa Daly (Kerry, Sinn Fein)
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It will be quarter 3 or quarter 4, as they say.
Pa Daly (Kerry, Sinn Fein)
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What is Mr. Kinsella's best guess at this stage?
Mr. Seán Kinsella:
As I set out for Deputy Whitmore, the cost in relation to the obligation rates and affordability elements were front and centre as regards the design of this scheme. We recently published the report the scheme is based on and the primary analysis was based on fuel availability and cost for consumers. That has been taken into account at all stages. As the rates increase beyond year two, cost will be the number one determining factor, in addition, obviously, to our climate targets. Ultimately, we are trying to push it up and encourage investment in indigenous supply. However, the cost will be the number one factor in relation to that. In relation to incentivising, particularly domestic supply, that is primarily in relation to biomethane. The biomethane strategy was published last year and that set out mechanisms for how we can stimulate domestic production, mainly through two elements. First, there is the RHO, to drive demand for domestic biomethane, and the second is two rounds of grant funding. The first grant round was run by the Department of agriculture last year. The Minister, Deputy O'Brien, has secured funding for a grant programme between 2026 and 2030. We are looking to get that up and running as soon as possible.
Pa Daly (Kerry, Sinn Fein)
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Will there be any teeth in keeping prices low? What moves will NORA be making to try to ease the burden on consumers as much as possible?
Ms Niamh Hamill:
It is through the energy affordability task force as well, which sits in our Department. We work through and with that task force, which sees it and has the full overview of all of those percentages in the different areas, to see what supports need to be put in place for vulnerable customers.
Pa Daly (Kerry, Sinn Fein)
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The task force has an interim report and it is now on the roadmap. Is that it? The roadmap will be published in the middle of next year sometime.
Ms Niamh Hamill:
Until the general scheme was published, we were working with the task force as we were designing the scheme and it was a member of the steering group, but it is really only since we have had the figures and costs once the scheme was approved that we have been able to start looking at that in terms of actual costs and then across the next two to three years.
Pa Daly (Kerry, Sinn Fein)
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Does Ms Hamill think that if the energy supports that were available up to last year were reintroduced, that might ease the burden?
Mr. Seán Kinsella:
Yes but, ultimately, that is not a decision for us. On the incentives in relation to biomethane, ultimately, the key aim for that is that it is a pass-through cost to make the fuel competitive with the alternative and, ultimately, it is the end consumers who should see the benefit in that regard.
Réada Cronin (Kildare North, Sinn Fein)
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Initially, I see from this proposed Bill that it is very much market-led rather than about the State guaranteeing it. We are looking to the market to look at things. I have a question on the biomethane strategy that was published last year. Is that strategy null and void?
Réada Cronin (Kildare North, Sinn Fein)
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Okay. If we are serious about renewable heat, the Government should be backing this. I also have a worry about NORA having been appointed to oversee this. NORA's main concern is making sure we have oil reserves. Do our witnesses think it is a good body to be overseeing this?
Réada Cronin (Kildare North, Sinn Fein)
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Its knowledge is linked in with fossil fuels rather than climate, however.
Réada Cronin (Kildare North, Sinn Fein)
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I also worry about the cost risks for ordinary householders as well. Let us be honest, suppliers are not going to absorb extra costs. They are going to pass them straight on to householders and we already have so many people in fuel poverty. I worry that this would be a climate policy by some kind of stealth tax and the Bill needs to have stronger consumer protections there. Regarding the ambition, we are starting at 1.5% and rising to 3%. Do our witnesses believe we are going to be able to meet that? Are we being ambitious enough?
Ms Niamh Hamill:
When we looked at availability versus cost sustainability, we felt that was the most appropriate at this time. There is limited data as you move out further, so we wanted to see how the market responded and the scheme performed before we went higher than that. We tried to find that balance between climate targets and how ambitious we could be, and also costs and availability. As we said earlier, the scheme is open to imports as well. It is not just availability of fuels and one fuel type; it was across the board. Ultimately, it is about how the market is going to respond and how the scheme will perform, and then costs. We had to balance those different aspects.
Réada Cronin (Kildare North, Sinn Fein)
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There is an over-reliance on biomethane and biofuels at the moment. I worry we could have a risk of corporate greenwashing. We need to guarantee that we are going to support sustainability as well. The fact that we still do not have a proper definition of a just transition is something else we should be worried about. The fact that the proposed Bill hands the scheme over to NORA is like asking the fox to mind the henhouse, in my opinion. There should be more Oireachtas oversight over this as well, not just ministerial. We support the goal but I am not sure if we support the design. We will have an opportunity to bring forward amendments to the heads of Bill, however.
Barry Heneghan (Dublin Bay North, Independent)
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I thank the witnesses for coming in. Do they think the obligation set at just 1.5% in year 1 and 3% in year 2 is acceptable? I know other Deputies have raised this already. If we are going to try to align with the targets we have, is it a bit timid in that sense?
Ms Niamh Hamill:
Given the costs and situation of energy affordability we are in now, as well as the availability of different fuel types, we feel it is the most appropriate starting rate. Obviously in transport there are much higher rates, but it has been in existence for more than ten years now. They had time to climb to those higher rates and we need to do the same and see how the market responds. From that point on, we will be able to set that trajectory and align it with our target rates. It does give us a higher climb. We did look at what point to start at to get to where we need to reach.
Barry Heneghan (Dublin Bay North, Independent)
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Correct me if I am wrong, but after year 2 we do not have a clear target set, do we?
Barry Heneghan (Dublin Bay North, Independent)
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What is the reason for that? Is it just because we do not know the current state or is it because we do not want to have targets we cannot meet?
Mr. Seán Kinsella:
No. Ultimately, it comes down to cost to end-consumer, how the scheme is going to operate and fuel availability. The analysis suggests the latter is available.
How will the scheme operate? We thought it was prudent to start at 1.5% and 3% before doing an analysis in the second year and moving on from there.
Barry Heneghan (Dublin Bay North, Independent)
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I did my thesis on the Tallaght district heating system. What is Mr. Kinsella's overall opinion? I know it is mentioned in the Bill. He will know that we do not have a district heating system built. We need to compare the overall carbon life cycle of installing one with just using alternative heating methods. I know it is mentioned in the Bill. Is he of the belief that the utilisation of waste heat from data centres is a feasible solution? Many of the data centres we use in Ireland are air-based, which is not as efficient as liquid-based, as is used in Nordic countries. Is that something we should lean towards?
Mr. Seán Kinsella:
District heating can and will play a crucial decarbonisation role in Ireland. We are behind the curve compared with our European neighbours but we are now in a place where district heating will take off over the next couple of years. We are trying to implement district heating policy through three different channels, the first of which is legislation. The Bill was published last year and we are going through drafting at the moment. Second is funding, and these projects need funding to get off the ground. Funding will be put in place under the national development plan and will be made available from next year. Preconstruction funding will be made available. There will be an announcement in that regard today. Third is to drive projects. We have a healthy project pipeline ready to go. We are just waiting for Government funding at the moment.
It is an exciting time for district heating. All the main ingredients are there. It is just about pushing on now and getting everything implemented.
Barry Heneghan (Dublin Bay North, Independent)
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The Cathaoirleach and I are aware that in our constituency, there were plans to look into a district heating system at the Northside Shopping Centre. Would Mr. Kinsella be for that? If there was already a district heating system there, it would be great but it is not. Are we talking about quasi-local district heating systems for apartment builds? Are we talking about entire estates?
Mr. Seán Kinsella:
We are looking at city-wide or town-wide district heating projects. To let the committee know, we have pipeline projects that could be developed over the next couple of years. A third of those have waste heat as their potential heat source, whether from data centres or an alternative.
Barry Heneghan (Dublin Bay North, Independent)
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Perhaps an industrial source. We all received submissions from across the board for this committee. I ask Cathaoirleach to correct me if I am wrong, but is the committee going to be having some of the people who made submissions before the committee in advance of our making a final decision on this Bill?
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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That is a matter for the members.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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This is just the pre-legislative scrutiny stage. It is a matter for the members.
John Clendennen (Offaly, Fine Gael)
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I thank the witnesses for joining us. I will pick up from where Deputy Heneghan left off on district heating. How do the witnesses envisage potential eligibility or the criteria there? For cities and towns, will the criteria include population size or land mass size? Who will be eligible? Where would be best suited to it?
Mr. Seán Kinsella:
Our policy is heavily influenced by the 2022 heat study that was carried out by the Sustainable Energy Authority of Ireland, SEAI. That study provided heat density mapping, which looked at the most suitable places in Ireland for district heating. Based on that, we can look at where the most appropriate places are. Initial analysis has been done as to where would be most appropriate in respect of heat industry but also where there is waste heat. it is about linking those. Projects will be driven by local authorities, private developers or State utility companies. That is what we are seeing at the moment.
John Clendennen (Offaly, Fine Gael)
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I know there is already a policy in respect of the roll-out of biomethane. Is there a risk or concern that could be a cluster resulting in oversupply in particular areas? Do we need almost to strategically identify locations with a radius of protection around them to ensure we are not ending up with clusters and that becoming problematic?
Mr. Seán Kinsella:
The main thing driving the location of anaerobic digestion, AD, plants that produce biomethane is, first, where can they get the feedstock. That tends, obviously, to be in rural areas. The second consideration is can they be developed close to the gas network. Those are the key criteria in respect of location. Ultimately, you are unlikely to see two AD plants built side by side or in close proximity because they would be competing for the feedstock.
John Clendennen (Offaly, Fine Gael)
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Would it be the case that if one gets approval, a second application would be declined? No competition between the two would be allowed.
John Clendennen (Offaly, Fine Gael)
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There would be greater demand for the raw material so the price would probably go up. Even though we are trying to create independence domestically, if a competition was generated within a close radius, it could lead to an increase in price.
John Clendennen (Offaly, Fine Gael)
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And the raw material to generate the power.
John Clendennen (Offaly, Fine Gael)
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Farmers want the best price as well. That is something of which we need to be mindful. I come from Offaly, where there is a large dependency on solid fuel, liquid fuels and so on. Over 700,000 households in the country are relying on kerosene or home heating oil to heat their homes. In terms of the blend, do the witnesses feel we have not gone far enough? From the engagement they have had with the sector, have they any feedback?
John Clendennen (Offaly, Fine Gael)
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Should we be differentiating further?
Mr. Seán Kinsella:
We could, but, for example, if you differentiate between the liquids and gas, if you, say, up the obligation rate for the liquid side, there will obviously be costs associated with that where the liquid is most heavily used. The cost goes up for those households. That tends to be in rural areas so there is a rural-urban divide. It is an element that of which we need to be mindful.
John Clendennen (Offaly, Fine Gael)
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There is cost, comfort, fuel poverty and so on. There is also a level of disruption in terms of the initial barrier to entry, both financially and if someone is at a later stage of life. Should we almost be looking at this on the basis of age profile and considering different obligations and percentages?
Ms Niamh Hamill:
There are different limitations on oil as well. Once you go above a certain percentage, say 30%, you will need to do a burner swap out first. There are technical limitations to those blends. Ultimately, there is a lock-in risk there. We have to consider a number of different factors around heat policy generally, electrification in what we are trying to do and what can be done in the interim for anyone who is in that position.
John Clendennen (Offaly, Fine Gael)
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It is my understanding from engagement with the sector that going as high as 30% is fine but if they are talking about 30% and the Department is currently at 1.5%, surely there is somewhere in the middle that we can meet to create a smoother transition and ensures less disruption, and which equates to what we would do with heat pumps. Has any study been done in that area to see what that balance or cost-benefit analysis is?
John Clendennen (Offaly, Fine Gael)
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Will the Department engage with the sector or will we have to engage with the sector to correlate with the Department's findings?
John Clendennen (Offaly, Fine Gael)
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Based on that review, is there a possibility that before this Bill is concluded that there could be a change in that percentage rate?
John Clendennen (Offaly, Fine Gael)
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If the Department's position right now is between 1.5% and 3%, what would Ms Hamill envisage by the end of this deliberation the percentages are going to be?
John Clendennen (Offaly, Fine Gael)
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That is absolutely so. That is my point. A broad, sweeping target or 1.5% or 3% is fantastic in theory, but there are so many different profiles and dynamics, even within counties and regions. We must bear that in mind.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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I have a couple of questions. The obligation will cover all forms of liquid fuel and gas.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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How does it work in practice for solid fuels?
Ms Niamh Hamill:
It is a bit trickier because the fuel cannot just be blended. We do have a threshold set. If you were supplying energy above 400 GWh, you would be obligated. Essentially, anyone in solid fuel supplying above that amount would have to introduce renewables as part of their commercial operation. There is solid renewable fuel, solid biomass, already available, and there are certificates that would be awarded for those fuel types.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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With solid fuels, it is a lot more difficult to achieve a percentage mix, for a range of obvious reasons, and to then try to adjust that. Ms Hamill seems to be talking about topping out at 13% to 15%. That seems to be the direction of travel in relation to the RHO mix. That is my stance on what is being said. At the 15% level, what is the economic analysis? A figure of 1.5% to 3% was mentioned regarding the average annual bill. What do the figures indicate for, say, topping out at 13%? That is where the big issue is.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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What does that work out at in euro?
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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Mr. Kinsella had a figure for the lower ones.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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Could the witnesses share that and any analysis that exists? Mr. Kinsella said the increase is from 7% to 9%.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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Can Mr. Kinsella provide further information?
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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I will come back to the sustainability of the fuel source, particularly for liquid fuels, and the traceability issue concerning the fuel source. What is the Department saying about what is being blended? Indigenously produced biomethane is probably easy enough to validate and verify, but what exactly is the Department saying it will do around traceability?
Ms Niamh Hamill:
There is a framework in place. Under the EU voluntary schemes, a fuel has to be certified to be considered renewable. That is in compliance with RED III, and that is the way we are trying to align the scheme. On top of that, there is a competent authority that checks the supply chain right the way back, and there is a supervisory framework being built in as well. That applies to all fuel types. The SEAI is the competent authority for biomass, and the National Oil Reserves Agency, NORA, the competent authority for biofuels, has now been made the competent authority for bioliquids too. Each fuel type has its own verification process and competent authority. It will have a supervisory framework on top of that. Ultimately, however, it is the framework set under the RED that we are reliant on. Obviously, there are concerns being raised outside that about integrity, and we are working with the Department of Transport and NORA to ensure the RHO does not add to that.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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Is anything additional needed from a legislative perspective, such as additional powers, or is there anything in particular Ms Hamill feels is missing? Is it already sufficient?
Ms Niamh Hamill:
There may be something needed. We need consistency across all member states – a harmonised approach. At the moment, everyone is operating under the RED, which directs what we do. Some member states are asking for measures outside that, or for member states to be allowed to make their own decisions in this regard. At the moment, we do not have any additional multipliers or incentives for the fuels in question. On the transport side, the RED stipulates additional multipliers for certain feedstocks in certain fuel types. However, we have not started there.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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It is clearly an area of concern within the Department.
To go back to the issue of cost, we will wait for the analysis. The Department is going to share some information on that, but could it address the concern over the economics? Affordability for households is important.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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I thank the witnesses. We will move to the next round, beginning with Deputy Whitmore, who has three minutes.
Jennifer Whitmore (Wicklow, Social Democrats)
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I will follow up quickly on one of the remarks. Are the framework and verification process all accounted for through a voluntary scheme?
Jennifer Whitmore (Wicklow, Social Democrats)
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So, it is not voluntary.
Jennifer Whitmore (Wicklow, Social Democrats)
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It is good to have that cleared up.
The multiplier requires approval by the European Commission. When will that happen, and have any concerns been raised in relation to it?
Mr. Seán Kinsella:
We should be able to make a submission in the coming weeks. Then there is a three-month standstill period for the authorities to consider it. They can give their detailed opinion, and other member states can also do so. Ultimately, it comes down to Ireland providing a strong justification for putting this mechanism in place. We feel we do have a strong justification, not necessarily because we need the energy, although we do, but primarily because of what biomethane can do to decarbonise our agriculture sector. The latter is crucial. Ireland’s agricultural profile is quite different from those of other member states. This also relates to security of supply. We rely heavily on gas in Ireland, and the Corrib field is dwindling. The 5.7 TWh target for biomethane in Ireland represents approximately 10% of the country’s current gas demand. We will also point out that we are competing with many markets that developed their sectors on the back of feed-in tariffs over the past two decades but that might not have them anymore. We believe we have a strong justification but it will come down to the decision.
Jennifer Whitmore (Wicklow, Social Democrats)
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It will be a number of months before that is finalised.
Jennifer Whitmore (Wicklow, Social Democrats)
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There was a discussion earlier about physical disruption, not just financial disruption. Will this involve people having to change their systems?
Jennifer Whitmore (Wicklow, Social Democrats)
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Does Ms Hamill know what the disruption could look like for people?
Jennifer Whitmore (Wicklow, Social Democrats)
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It is just the financial increase, unless of course a threshold is passed.
Jennifer Whitmore (Wicklow, Social Democrats)
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I thank the witnesses.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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Could the witnesses clarify that 30% is the ceiling?
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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I thank Ms Hamill. I call Deputy Cronin.
Réada Cronin (Kildare North, Sinn Fein)
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On what Deputy Clendennen was asking about, namely starting at 1.5%, does the Department believe a sufficient number of companies will be willing to invest, seeing that there is only a small guarantee? We were talking about State investment rather than relying on private investment. Seeing as we are starting so low, it is going to be hard to get investment initially. What guarantee do investors have? If there were State investment at the start, or community wealth co-operatives, with grants or whatever, would it give more of a guarantee that we will actually reach the 1.5% target?
Mr. Seán Kinsella:
It is crucial, particularly for the domestic renewables sector, that we give that reassurance. We have locked in years 1 and 2. Ultimately, the aim is at least 10% of our RES-H. How can we provide the reassurance to the market? We are exploring this. We do not want to lock it into legislation but are considering whether we can make a reference to it in the preamble or issue a policy statement. We are considering options to provide reassurance.
Réada Cronin (Kildare North, Sinn Fein)
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It is not just about giving reassurance but about the State considering investing itself. Ireland used to have the cheapest electricity, but now it is among the most expensive countries. When the ESB was being sold, we were talking about it as if we were selling the State silver. However, it was not just silver because silver, such as Newbridge Silverware knives and forks, does nothing but sit in a drawer and come out at Christmastime. It does not make money, whereas the ESB, when fully State-owned, was making the State money.
Should the State not be looking more long term and not just taking a myopic quick-buck look at this?
Réada Cronin (Kildare North, Sinn Fein)
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I am talking about the mindset of the Department looking at this being an investment for the State and not just selling off a means of making an income into private hands.
Mr. Seán Kinsella:
It is fair to state the policy is this will not be State-led but will be led by the market. In relation to State utilities potentially getting involved in it, it becomes difficult for European regulations on unbundling. You have to separate the production from the network and supply. For those two reasons, the policy is that it will be market-led. For a State utility to get involved in production would be difficult.
Réada Cronin (Kildare North, Sinn Fein)
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Okay. I think that is a mistake.
Ciarán Ahern (Dublin South West, Labour)
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Going back to the Bill itself, I am looking at head 10, which is about discharge of obligations by payments. This is where a provider or supplier does not reach the required threshold for the RHO in a given year. It seems that the calculation for this is fairly non-punitive. Is there a risk that suppliers will just throw money at the problem and that we will not get anywhere? It does not seem like there is any kind of escalation of fines over years if there is sustained failures to meet the RHOs. Does the Department have anything to say about that?
Ms Niamh Hamill:
The buy-out rate or the dischargeable payment is going to be refined. We will give an exact figure in the Bill. At the moment we are just engaging with transport. We have put in the calculation of how it would work out, but essentially we need to make sure that it is not an incentive to just buy out. It is a measure of flexibility whereby if, for whatever reason, the obligated party could not meet its obligation - it is only a certain percentage of it as well - it has that flexibility or option. It is a measure that is in existence with the obligation on the transport side. To our knowledge, I think it has only been used once and there was an error in those calculations. Essentially, you want to make it high enough that it is not the option. It is a flexibility measure just in case. It is not something we want to see as part of the administration. If the buy-out is being used, the scheme is not performing.
Ciarán Ahern (Dublin South West, Labour)
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The Department is looking at this currently. This is not necessarily the final form of it.
Ms Niamh Hamill:
We just want a review to be able to give that figure. Essentially, it will be set. The other side of it is because the different costs and fuel types vary greatly, how do you set it high enough for the biomethane side? If you set it to match the transport side on the oil side, it could potentially be lower than biomethane. It is tricky with the two different fuel types. That will be finalised in the Bill.
Ciarán Ahern (Dublin South West, Labour)
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There is a little bit of overlap with that and trading of certificates. How might the Department see that whole trading scheme operating in practice? I would be interested to hear that.
Ms Niamh Hamill:
Trading is another measure of flexibility. It does reduce the cost of the scheme greatly. We test at a few different levels. In the transport side, you can trade to 100%. Again, there are very different fuel types on our side. We want to have an element of trading but we also wanted to bring up the volume of fuels. We wanted suppliers to bring in their own supply as well. That is why we capped it at 50%. Essentially, it reduces costs, gives greater flexibility and creates a market for all the different fuel types.
Ciarán Ahern (Dublin South West, Labour)
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Going back to the costs issue again, the Department has said that ideally, the RHO will get up to 15% or 18%. Presumably that is five, ten or 15 years away. Does the Department expect over that period that from a cost perspective, the price of Irish-produced biomethane may actually reduce, given there will have been a period where more people are coming into the market and producing more of it? Has the Department taken that into its considerations as well?
Ms Niamh Hamill:
The key to that, and what makes Ireland unique, is that the first TWh or higher will be waste based. That is a much cheaper feedstock. To get to 5.7 TWh, it is agriculture based. In terms of pricing, you may not necessarily see a dramatic price drop there. There also is access to the grid and a few different costs that are higher here than the EU average but we did try to model that. We also tried to model in the different grants that were being put in place as well to see how they will impact costs. It does get trickier post 2030. Again, this is another reason we need to put in those measures to analyse the scheme performance before we make any further adjustments.
Ciarán Ahern (Dublin South West, Labour)
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Does the Department think that it will lead to increased costs one way or the other or is there any universe in which this becomes cheaper for people and consumers?
Pa Daly (Kerry, Sinn Fein)
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Following on from the previous question, I was looking through the heads of the scheme. Head 7 states that price increases are likely. Head 8 mentions a gradual cost increase. Heads 11 to 14, inclusive, refer to supports for local jobs but may raise costs. The cost and affordability section of Energia predicts steep cost increases of up to 31%, with a layer of €325 per household annually, etc. From the price increases that happened during the summer, a lot of the energy companies blame network charges. The network charge is €29 and the price increase then is €200. I see what the Department is saying about the consumer support measures in the policy recommendations and transparent pricing. That is a good thing, as is the monitoring and the review. Could the Department flesh out the grants or tax credits that it will be recommending a bit more?
Pa Daly (Kerry, Sinn Fein)
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Has it come to anything on its roadmap yet or anything like that?
Pa Daly (Kerry, Sinn Fein)
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Okay. That will not be ready until the second half of next year.
Pa Daly (Kerry, Sinn Fein)
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The Department sees the concerns people would have.
Barry Heneghan (Dublin Bay North, Independent)
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I welcome everything. The Bill is generally positive and it has been well received in all of the submissions we got. I will ask some of the questions I got from the industry. Obviously, a lot of businesses would prefer more transparency on the costs that will hit Irish businesses. The second one is on stakeholders, especially in rural Ireland. I am practical, not religious, with sustainability. I can understand that sometimes, in the entire life cycle analysis of a scheme it can be better to use liquid gas in some areas that are removed from the grid. Is LPG going to be treated as fossil gas as well or will it be treated differently?
Barry Heneghan (Dublin Bay North, Independent)
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It is important that the Bill works in parallel with SEAI grants and retrofits and is not opposing it. We have seen the SEAI's new announcements on what it will be giving. Everyone on this committee knows I never shut up about private wires but whenever we look at private wires, we look at Denmark, the UK and Germany. I looked into what they have done with their heat obligations and how they are trying to tackle it. With the Danish model, and heat maps were discussed, it would be beneficial if local authorities were included instead of the entire country and were given these heat maps in order that they can focus on where it would be cost effective for district heating. Is that already on the agenda?
Mr. Seán Kinsella:
As I set out earlier, some initial work has been done in relation to this going back to the heat study of 2022 with the SEAI. A district heating centre of excellence has been established within the SEAI and it is carrying out what is called a national level assessment.
That will look in extreme detail at where is best placed in Ireland's towns, cities and rural counties to have district heating. The primary element is the heat density and whether there is potential waste heat from a data centre.
Barry Heneghan (Dublin Bay North, Independent)
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Yes, or other industry.
I will go off another bit. On fuel poverty, I mentioned the energy cloud previously. Mr. Kinsella will be well aware of the energy we can heat up. Especially people in social and affordable housing can get their heat tank fuel for free.
The other thing I wanted to bring up while the Department is here is that Ireland is far behind other countries on green hydrogen. It is kind of mentioned in this Bill. Is it also being looked into? I will go back to Germany and Denmark, which have already looked into how they can transition their gas networks to hydrogen.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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Perhaps the Deputy would like to move there.
Barry Heneghan (Dublin Bay North, Independent)
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I would. I think so. This is what happens when you get engineers like the Cathaoirleach and me in government, they can bring in policies-----
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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We can possibly add a constituency.
Barry Heneghan (Dublin Bay North, Independent)
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Will the witnesses prioritise, especially for industry? If we will be using waste to utilisation with our offshore renewable energy, we are going to have huge curtailment. Is what the Danes are doing with electrolysis something we will be going into? Let us look at the UK as well, which has a 20% mix of green hydrogen in national gas. Is that something that could also be put in more?
Mr. Seán Kinsella:
Green hydrogen will be eligible under the RHO. There is nothing or very little at the moment. Ireland obviously has huge potential for green hydrogen on the back of our wind energy resources and avoiding curtailment, storage and so forth. Gas Networks Ireland is doing a lot of work in this space to prepare the network and make sure it is able to absorb a certain percentage of hydrogen. The Government has a green hydrogen strategy that was published in 2024. There is a team in the Department working specifically on green hydrogen. The fact that there is a strategy and dedicated resources looking at green hydrogen and that it will be recognised in the RHO when it comes on stream reflects the potential for it in Ireland.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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I will summarise the issues that have come up. Source traceability is important for the committee. The ability to manage the different types of fuels differently and manage along that route as we go; affordability; and the risk of buy-outs and providers welching on their obligations by buying out are the key issues that are important to the committee.
I thank the witnesses for their time. They will forward some information to us. When do they think we will see that?
Jennifer Whitmore (Wicklow, Social Democrats)
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Do we have a timeline for moving this forward? Will it be next year?
Mr. Seán Kinsella:
We will have to make the TRIS European Commission notification, which we hope to do in the next few weeks. There is a three-month standstill period. It will depend on what comes out of that. If it is positive, we will go to publication and go through the Houses of the Oireachtas, enactment and then implementation as soon as possible. We will have to leave a small buffer between enactment and operationalising the scheme but NORA, which is the scheme administrator, already will hold workshops with the scheme's obligated parties and fuel suppliers in the next week or two. That work has started so we are getting towards the final stage of this.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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If we were to pin the officials on a timeline, what would they say?
Jennifer Whitmore (Wicklow, Social Democrats)
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I think that is more up to the Government.
Ms Niamh Hamill:
If it has a three-month TRIS process, that will close in the new year. We are working our way through the heads with the Office of the Parliamentary Counsel, OPC, at the moment so we could finish that by the end of the year. We could bring it to the Government early in the new year and then the enactment process would put us in the middle of next year. However, it all hinges on the drafting process. The committee's recommendations can be folded in at this point as well so it is an opportune time, but the TRIS process is the unknown timeline.
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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It will probably be the middle of next year.
Réada Cronin (Kildare North, Sinn Fein)
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When Ms Hamill said the committee's recommendations, did she mean the debates today or are we doing a report?
Naoise Ó Muirí (Dublin Bay North, Fine Gael)
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Yes, we will put a short report together.
The meeting now stands adjourned until 12.30 p.m. on Wednesday, 12 November 2025 when the committee will meet in public session in conjunction with the Joint Committee on Housing, Local Government and Heritage. Our engagement with witnesses will be on the response to Storm Éowyn and storm preparedness.