Denis Naughten (Longford-Roscommon, Fine Gael)

I move: "That the Bill be now read a Second Time."

I wish to share time with Deputies Olivia Mitchell, Connaughton and Hayes.

Our current use of energy is unsustainable. The oil era is coming to an end and we have not developed sustainable alternatives that can meet our energy needs in the next century. In 2003 the price of a barrel of oil stood at around $35. In 2006, it reached $70 and economists warn that the days of $100 per barrel of oil may not be far away.

Coupled with this price pressure, there are repercussions from Ireland's failure to meet its commitments under the Kyoto Agreement. Under the agreement, to which Ireland is a signatory, this country undertook to limit the increase of these emissions by 2008-12 to only 13% based on the level of emissions in 1990. The recently leaked EPA report revealed that Ireland has the highest level of CO2 emissions per head of population in the world which means we have reached a crisis in terms of the damage to our environment. The current Government has failed to treat this area as an urgent priority and it is time for new thinking and clear policies that will deliver.

The latest report, which is for 2005, is likely to show that the latest rise has been driven by a major increase in emissions from the transport sector, which grew by about 8%. This is significantly higher than the modest 2% rise for transport predicted in the Government's emissions trading report of last March.

This Bill proposes a mandatory bio-fuel component for all motor fuels. Our proposal would force fuel distributors to include a 5% bio-fuel mix in all petrol and diesel. This would not cost motorists as it would not require car engine modification. It would be mandatory that both petrol and diesel, used as vehicle fuel, be blended with ethanol and rape seed oil respectively. The transport sector has been identified as one of the largest offenders in terms of greenhouse gas emissions.

Another benefit is that blending motor vehicle fuels with bio-fuels would kick-start the process of reducing our dependency on oil. Our blending proposals would tackle our unacceptably high level of carbon emissions and create a viable alternative enterprise for farmers. This would help Ireland meet its Kyoto targets and reduce environmental emissions from the transport sector. It would also stimulate a market for farmers to produce bio-fuel crops and make Ireland more self-sufficient in meeting future energy needs. This Bill would give the bio-fuel industry the kick-start it so badly needs to become a viable, developing industry with the capacity to provide a long-term alternative to oil.

The Fianna Fáil-Progressive Democrats Government has consistently failed to develop a comprehensive policy on the development and promotion of bio-fuel. It has done little more than tinker. We have heard much talk from the current Government but have seen very little action on climate change. As my party's spokesperson on agriculture, I have consistently urged the Minister for Agriculture and Food, Deputy Coughlan, to stop stalling on this issue and persuade the Minister for Finance that we must kick-start mandatory blending and give wider support to rural communities to develop alternative energy generating projects. Rural communities and farmers are positively disposed to playing their part in tackling Ireland's energy crisis and in producing cleaner, greener energy. All that is missing is the Government's commitment to addressing this growing crisis.

There is no point encouraging farmers to grow renewable energy or bio-fuel crops, as the Minister for Agriculture and Food and the Government pretend to be committed to, when there is no market for them. The policy vacuum at the heart of the Fianna Fáil-Progressive Democrats Government is exposed by its failures in this area. There are no plans to legislate to ensure blended bio-fuels replace petrol and diesel, no proposals for the extension of the removal of excise duty on bio-fuels, no plans to open a public competition for capital start-up grants for bio-fuel processing plants, no plans to require public transport and other public service vehicles to convert to bio-fuels where feasible and no proposals to make a major capital allocation to bio-fuels instead of wasting money buying carbon credits.

There is significant support for bio-fuels throughout Europe. Commercial fuel is subject to mandatory blending of bio-fuel in Austria. Germany produces one third of bio-fuels in the EU. Ireland has stuck its head in the sand and has done nothing to introduce bio-fuels.

Yesterday's announcement by the Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey, showed a belated recognition by this Government of the importance of bio-fuels, which Fine Gael has highlighted repeatedly. The Minister did not propose any legislation, nor did he make it mandatory to produce bio-fuels, displaying a major lack of commitment to the future of our energy supply.

Similarly, the energy crop scheme announced by the Minister for Agriculture and Food last week has many weaknesses, most notably the exclusion of REPS farmers from the scheme and the exclusion of lands in receipt of disadvantaged area payments. Under the Minister's proposals for a new bio-energy scheme, farmers will receive grants to establish miscanthus and willow. However, if in receipt of this grant, they will not be able to draw down their REPS payments or their disadvantaged area payment on lands used to produce bio-mass crops. This could amount to a reduction of €12,000 on 100 acres used for renewable energy crops. It seems incredible that a scheme supposed to protect and promote the environment is excluding farmers from producing bio-fuels that could have a very positive effect on Ireland meeting its Kyoto targets. There is a clear conflict between the grants of which farmers can avail, cancelling any incentive for farmers to engage in bio-fuel production.

The structure of the scheme puts farmers in poorer parts of the country, especially in the BMW region, at a disadvantage. These farmers receive an acreage payment know as the disadvantaged compensatory allowance. However, under the Minister's proposals, farmers cannot collect this payment while participating in the new scheme. Growing miscanthus and willow is the only way forward despite a ready market. Unfortunately, farmers in poorer parts of the country who could provide willow and miscanthus will not be able to take advantage of it because of the major structural disadvantage. One arm of the State is contradicting the other arm of the State.

Consumers pay a levy on electricity bills to support Bord na Móna for its peat production. Peat cannot compete with oil and coal so this levy makes up the shortfall. It is a commendable proposal because it supports an indigenous energy source. It is vital to extend it to other indigenous energy sources, such as renewable energy crops. However, renewable energy crops are now at a disadvantage as they are not receiving the support available to peat producers.

The Government has a track record of facilitating and supporting the production of bio-fuels outside the country and foreign imports. The Minister for Communications, Marine and Natural Resources granted relief on excise duty to two companies, namely, the Goodman group and One51. Neither company intends to produce here. The Goodman group has a site in Pembrokeshire in the UK, and One51 also intends to import bio-fuel. Under the current scheme some 90% of bio-fuel will be imported. Those who made an investment and supported the development of a micro industry have had support withdrawn. This was done in favour of major players importing bio-fuels. Government policy serves only to support countries cutting down rainforests to generate renewable fuels. This will not benefit the environment in the medium or long term and will certainly not benefit the development of an industry in Ireland or support Irish agriculture. It is difficult for European companies to justify investing in renewable energy products in Ireland rather than in better supported neighbouring countries in the European Union, or even in the United States.

Fine Gael's blending proposal is a "no-brainer". There is nothing to prevent the establishment of a blending regime here. The proposal represents a win-win situation for our environment and our farming community. Moving to bio-fuels in the wake of the sugar beet industry wipe-out will give farmers new markets, new opportunities and allow Ireland to live up to its responsibilities to its people and to the planet. The Government must not continue the actions it took to wipe out the sugar industry and prevent the creation of a renewable energy sector in its place. It chose to ensure that Greencore would develop the sugar factory sites in Carlow and Mallow for residential and other purposes, rather than use the closure of the industry to kick-start the bio-fuel industry. Ireland's production of bio-fuels remains low by European standards and it is playing catch-up. Many farmers, however, will not change over to bio-fuel production unless they are confident there is a market for their product and that it has a long-term future.

It is hypocritical of the Government to give farmers less than one month in which to decide whether to avail of the scheme that the Minister for Communications, Marine and Natural Resources announced last week. The Government knows that without a market in place and leaving such a small window of opportunity for farmers to avail of the scheme is a political ploy to wrap the green flag around itself before the general election to say it is as green as any other party.

See this speech in context