Dick Roche (Wicklow, Fianna Fail)

While the European Council has provided a signal on what these targets might be, this is as far as we can go at this time. Certainly, by the time I publish a revised climate change strategy, the way forward may be clarified, though this process is likely to take considerable time. Existing measures in the strategy, together with any additional measures that might be put in place, form only part of the Government's approach to meeting its target under the Kyoto Protocol. The 8 million tonne gap I mentioned will also be addressed through a combination of emissions reductions, by installations, participating in the EU emissions trading scheme and through the purchase by Government of carbon credits sufficient to address any shortfall. The latter is a device identified as a sustainable way forward in the Kyoto Protocol.

As regards the former, the EU emissions trading scheme is a regime whereby major emitters of greenhouse gases are made responsible by their national governments for delivering a stated proportion of the national target for reductions. Deputy Morgan touched on this, showing how imperfect is his understanding of the whole process. In Ireland, these emitters include the power generation sector and energy intensive industries such as cement and alumina production and they account for one third of total emissions of carbon dioxide.

Turning back to Deputy Morgan's contribution, the economic rationale behind emissions trading is to use market mechanisms to ensure that emissions reductions are achieved in the least costly manner. The scheme thus provides a strong financial incentive for firms to reduce their emissions by investing in more efficient technology or changing their processes. By any standards, the establishment of emissions trading should be considered to be a success and demonstrates that market mechanisms have a place alongside traditional command and control measures in environmental policies.

I recently signed SI 706 of 2005, which changes the emissions trading regulations to allow credits from the Kyoto Protocol flexible mechanisms — the joint implementation and clean development mechanisms — to be traded within the EU emissions trading scheme. This will expand the scope of emission reductions available for participants in the scheme, thereby lowering overall cost of compliance. The facility will give an important boost to activity under the Kyoto Protocol's flexible mechanisms, opening up investment opportunities to the developing world, which I am sure all Deputies in the House will welcome.

The EU emissions trading scheme is initially operating on a pilot basis for the period from 2005 to 2007, which is designed to provide the Government and participating firms an opportunity to learn and to refine approaches for the next phase, which covers the period 2008 to 2012. I will bring proposals to Government in the new year on the overall allocation of allowances.

I now turn to the final element in the Government's overall approach to meeting its Kyoto Protocol target, the purchase of carbon credits by the State. There has been some disingenuous commentary about the potential costs to the Exchequer so I will make the position clear. The Government has signalled that it would, on the basis of greenhouse gas emission projections available at that time, purchase up to 3.7 million carbon allowances per year in the first Kyoto Protocol commitment period 2008 to 2012. On the basis of an assessed average price of €15 per carbon allowance during that period, the total annual cost to the Exchequer would be €55.5 million. This was mentioned in answers to parliamentary questions earlier today. The ultimate cost to the Exchequer will depend on the final purchasing requirement and the price of carbon when the credits are purchased. I am developing a strategy for the purchase of allowances in consultation with my colleagues in Government.

Returning to the provisions of the Bill, I have outlined my opposition to it on the basis that it is inappropriate to establish targets in legislation. It is further inappropriate to propose targets which have not yet been adopted by international agreement. The Bill contains a provision for the establishment of targets for the percentage of Ireland's total primary energy requirement to be provided from renewable energy and would require the Government to report to the Oireachtas on this and on the expected reductions in energy use that will be achieved through increased energy efficiency.

Climate change policy is closely linked to energy policy, but also to policies as regards industrialisation, transport, agriculture and across the range. The inter-relationship with energy policy is particularly important and in this regard policies on renewable energy have an important contribution to make in terms of the Kyoto Protocol.

Deputy Cuffe mentioned renewable energy. The Government is committed to the generation of 13.2% of Ireland's electricity needs from renewable energy sources by 2010. Indeed, the growth in Ireland's total energy requirement in line with the expansion of the economy hides the fact that overall, Ireland's renewable energy supply grew by 71% between 1990 and 2002. He is right in saying that more could be done, I absolutely agree with him. Renewable energy will be a significant contribution to reducing Ireland's greenhouse gas emissions. I agree with the central point he is making to the effect that we have to change our attitude to that. We cannot adopt a NIMBY attitude, for example, in respect of wind turbines, which has happened in many cases.

The Government's recent decision to change from a competitive tendering to a fixed price support mechanism to ensure adequate support for future renewable energy projects demonstrates our commitment to reaching the 13.2% target. On current figures, Ireland is approximately half way towards that target.

As regards reductions in energy use, I fully agree that energy efficiency is one of the key areas in which Ireland, as with other countries, can make progress. With high oil prices, we urgently need to reduce our dependency on fossil fuels through increased use of renewable energy. The other side of this coin is our demand for energy and we can address this by becoming more energy efficient. The European Commission recently identified potential savings of 20% in Europe's energy consumption by 2020. This is confirmed by today's report from the European Environment Agency on the state of the European environment, which highlights energy efficiency and renewables as two of the key measures to reducing Europe's greenhouse gas emissions.

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