Dáil debates

Tuesday, 13 February 2007

 

Biofuels (Blended Motor Fuels) Bill 2007: Second Stage

8:00 am

Tom Parlon (Laois-Offaly, Progressive Democrats)

I am pleased to address the House on this Bill. The development of a bio-fuels market is important from several perspectives. From an energy perspective, bio-fuels offer one of the few options available to governments to reduce harmful greenhouse gas emissions in the transport sector.

Unlike the heat and electricity sectors, the transport sector in Ireland has been growing exponentially in recent years. Final energy use in this sector grew by 151% in the 15-year period between 1990 and 2005, and road transport accounts for 65% of fuel consumption in the sector. The Government is fully aware of the need to reduce emissions from this growing sector and has taken a series of important steps towards replacing polluting fossil fuels with more sustainable renewable fuels. The bio-fuels obligation announced by the Minister, Deputy Noel Dempsey, will have the effect of taking the equivalent of 200,000 cars off the road. This is more than the number of new cars registered in 2006.

The bio-fuels obligation also provides a long-term framework, to 2020, for the development of a bio-fuels sector and will allow Ireland to reduce its dependence on imported fuels. Ireland currently imports more than 99% of its transport fuels. Two thirds of these are imported fully refined and a further one third are refined at the Whitegate facility in Cork. It is clear, therefore, that the new bio-fuels strategy will not only contribute to our environmental objectives but will also lessen our dependence on imported fuels.

The bio-fuels obligation, coupled with the projects that are already emerging from the Government's bio-fuels excise relief programmes, also offers significant potential for rural development and the farming community. It is estimated that 75,000 hectares of land would be required to support 2% market penetration of bio-fuels, if those bio-fuels were to be produced from energy crops alone. Obviously, waste products such as recovered vegetable oil and tallow will be part of the overall mix in our bio-fuels sector, but waste supplies are limited and there is enormous potential for the farming community arising from a 5.75% target by 2010 and a 10% target by 2020.

In formulating its renewable energy strategies, the Government has been constantly mindful of the opportunities which renewable energy presents in terms of rural development. The benefit is three-fold because it also replaces imported energy and contributes to environmental objectives. Recognising the potential role of the farming and forestry sector in renewable energy generation, the Government has already introduced a range of initiatives.

The €26 million bioheat programme provides a new and growing market for wood chip products. Through this programme and the €47 million greener homes programme, we are developing a new market for wood energy products. The Green Paper on energy policy estimates that renewable biomass heating will account for 5% of Ireland's heating needs within three years. The establishment of targets for the renewable heat sector, ahead of any EU initiative in this area, is a welcome move for Ireland and for biomass producers in Ireland.

To encourage farmers and foresters to take advantage of the new demand for renewable heat products, which has been created through these programmes, the Minister for Agriculture and Food recently announced an €8 million scheme to provide establishment grants of up to 50% for farmers planting miscanthus and willow on set-aside land and on areas that have been subject to an aid for the EU energy crop premium. The scheme is being piloted this year and will allow up to 1,400 hectares of willow and miscanthus to be grant-aided in the first year. I am glad to note the Minister for Agriculture and Food's clarification today that REPS farmers are not excluded from the new bioenergy scheme for willow and miscanthus. The remainder of their land continues to be eligible for REPS payment. The Minister said she was reviewing the overall position in the context of preparations for the introduction of REPS 4.

In his budget 2007 speech, the Minister for Finance also announced that funding would be available for specialised biomass harvesting machinery. This will assist farmers and foresters to add value to their forestry plantations by providing new markets for waste wood products.

A key feature of the Government's strategy for renewable energy and, in particular, bioenergy, is the introduction of a top-up to the energy crop payment. While farmers have begun to diversify into the growing of energy crops, the €45 per hectare European energy crop payment has not been sufficient to attract large numbers of farmers into the energy sector. Last week, as part of the Government's bioenergy crops scheme, the Minister announced that the Government would provide an €80 per hectare top-up to the payment allowing farmers to avail of a payment of €125 per hectare.

This is a significant increase and is timed to coincide with the new market demand measures introduced by the Minister for Communications, Marine and Natural Resources. It is part of the joined up Government approach which is central to renewable energy policy in Ireland. In July, the Minister, Deputy Noel Dempsey, established a bioenergy ministerial task force. Ministers from seven Departments were represented on the task force, including the Ministers for Agriculture and Food; Finance; Environment, Heritage and Local Government; and Enterprise, Trade and Employment. The combined initiatives announced in the three months by the Minister for Agriculture and Food and Minister for Communications, Marine and Natural Resources were firmly rooted in the work of the task force and were fully backed by the Minister for Finance. These initiatives are designed to deploy renewable energy in a manner which maximises all of the opportunities for Ireland, including benefits for the environment, security of energy supply and rural economic development.

The new measures also build on the success of previous programmes. The two bio-fuels mineral oil tax relief schemes launched in 2005 and 2006 have demonstrated that there is a strong appetite in Ireland for the development of an indigenous bio-fuels sector. While EU state aids rules do not allow the Government to provide tax relief to fuels only produced in Ireland, a range of projects have emerged from these two schemes, which will see new facilities being developed on the island using feedstocks which include Irish energy crops and waste products.

Eight projects were approved under the first scheme and 16 have been successful under the second scheme announced in November. The projects range in size from smaller pure plant oil facilities to producers of high blends of biodiesel made from recovered vegetable oil and oil seed rape, for use in captive fleets, and to largescale production of bioethanol and biodiesel that is already being blended and sold in regular fuel pumps. The move to a bio-fuels obligation will provide a serious new opportunity for the farming community to diversify into energy crops.

I note that ten member states are now opting for bio-fuels obligations as the preferred policy options. Member states which initially had difficulty kick-starting their bio-fuels markets are now rising to the challenge and I have no doubt there will be increasing opportunities for Irish growers and producers not just in Ireland but in the wider European market. This is particularly relevant when we consider that Ireland is committed to a target of 10% by 2020 and that this target is in line with proposals currently being considered at EU level.

The Minister, Deputy Noel Dempsey, has already alluded to the fact the Bill, as presented, cannot be accepted because it would contravene existing EU legislation. The measures announced by him this week provide a workable and more ambitious solution to developing a bio-fuels market in Ireland and I strongly commend the Government for its ongoing initiatives to support this growing sector.

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