Noel Dempsey (Meath, Fianna Fail)

The communication on biofuels published on 8 February is part of the broader EU biomass action plan published in December 2005 and proposes a range of detailed policy measures to encourage biofuels and remove market barriers. I welcome this initiative by the Commission and my Department is examining the communication in conjunction with the Department of Agriculture and Food and the Department of Transport in the context of the policy debate on the overall biomass action plan.

The EC biofuels directive sets indicative targets to member states of 2% market penetration for biofuels by the end of 2005. Noting that we are starting from a very low current production base, we aim to meet the 2% target by 2008 through targeted fiscal measures designed to stimulate market development.

Under the 2005 scheme for mineral oil tax relief for biofuels, eight projects have been awarded excise relief, including four pure plant oil, three biodiesel or other biofuel and one bioethanol proposal. It is estimated that the pilot scheme will result in 16 million litres of biofuels being placed on the Irish transport market by next year.

Building on the success of the pilot biofuels scheme, I have agreed with the Minister for Finance a further targeted package of excise relief valued at €205 million, which was announced in the budget. The new excise relief programme, which is subject to state aid approval, will run to 2010 and will enable us to reach the initial target of 2% market penetration by biofuels by 2008. I am also providing funding towards the capital cost of developing biofuels processing facilities, which will critically underpin the excise relief package. Set in the context of EU developments, work is ongoing to put in place a policy framework for the development of the Irish biofuels market taking into account the perspectives of agriculture, transport and other relevant sectors.

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