Mary Coughlan (Donegal South West, Fianna Fail)

The EC biofuels directive sets indicative targets for member states of 2% market penetration for biofuels by end 2005. The targets in the directive are indicative and not mandatory. Ireland is starting from a very low current production base and the 2% target therefore represents a considerable challenge. The objective of the Minister for Communications, Marine and Natural Resources, who has primary responsibility for the development of renewable energy, including biofuels, is to ensure that Ireland meets the 2% target by 2008 mainly through targeted fiscal measures designed to stimulate market development.

I am very conscious of the central role that agriculture can play in supplying the necessary raw materials for the production of biofuels. These raw materials can include oilseed rape, wheat and sugar beet for the manufacture of liquid transport biofuels, and forestry by-products and other farming and food by-products such as meat and bonemeal and tallow for energy and heat generation. Tallow can also be used in biodiesel production. Factors such as the increasing cost of oil, the need to reduce carbon dioxide emissions and the opportunity for farmers to explore alternative land uses following CAP reform, mean that the potential of this area must be fully explored.

For the purposes of contributing to the development of policy on biofuels, the Department of Agriculture and Food in conjunction with COFORD and Teagasc has examined the potential of energy crops, wood biomass and farming and food by-products. In general, the production of energy crops for biofuels will need to be demand-led and production by farmers will only occur if the economic returns are greater than those offered by traditional crop enterprises. The production of liquid biofuels from energy crops, in the absence of fiscal incentives, is not economic at current oil price levels. The budget announcement of a major extension of the mineral oil tax relief scheme to cover, when the relief is fully operational, some 163 million litres of biofuels per year, should further stimulate the production of crops for the manufacture of liquid biofuels. This initiative will benefit the environment in terms of a reduction in CO2 emissions, enhance security of supply of fuels, and create jobs and outlets for agricultural production.

As announced in the budget, the Minister for Communications, Marine and Natural Resources also intends to launch several innovative grant schemes relating to biofuels, combined heat and power, biomass commercial heaters and domestic renewable heat grants. Within my area of responsibility, a range of developments are already under way or in the pipeline that will encourage the production and use of biofuels. These include grants to promote and develop sustainable forestry, including alternative timber use to reduce dependence on fossil fuels; promoting the use of wood biomass, for example by the installation of a wood heating system at the Department's offices at Johnstown Castle; funding of forest-to-energy pilot projects; willow planting promotion; supporting biofuels research under the research stimulus programme; grant aiding the application of new technologies such as anaerobic and aerobic digestion and fluidised bed combustion, with a renewable energy dimension; and the use of by-products for incineration and co-incineration in place of fossil fuels.

There are also a number of important developments on the horizon at EU level. The Commission has recently produced a biomass action plan and a strategy for biofuels. These are on the agenda for next week's meeting of the Agriculture and Fisheries Council. In this context I will be seeking a review of the operation of the energy crops scheme.

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