John Browne (Wexford, Fianna Fail)

I am pleased to have the opportunity to speak on the Government's bio-fuels policy and on our renewable energy policy generally. I reiterate our disappointment with the Bill as presented by the Opposition, which puts forward a policy which cannot be legally implemented. As my Government colleagues have already pointed out, the proposal as put contravenes the EU fuel quality directive. The European Commission made this clear in its bio-fuels directive consultation document published last April.

The preferred policy options for member states have been excise relief programmes and bio-fuels obligations. Ten member states have now signalled their intention to move to a bio-fuels obligation. Ireland is among those ten and is one of the first to signal a long-term 2020 target for bio-fuels. The targets of 5.75% by 2009 and 10% by 2020 are ahead of the EU directive timelines and are fully in line with current EU thinking on bio-fuels. The decision to move to a bio-fuels obligation is timely and follows the roll-out of two excise relief programmes valued at almost €220 million. As a result of these programmes, a range of bio-fuels are now coming on stream in the Irish market and a number of innovative bio-fuel projects are already up and running.

Studies commissioned on behalf of the Department of Communications, Marine and Natural Resources have assessed the impact of various policy measures and concluded that excise relief measures provide the necessary short-term market stimulation but that bio-fuels obligations provide longer-term certainty for market players.

Having kick-started an indigenous bio-fuels sector in Ireland through the two bio-fuels excise relief programmes, the decision to move to a longer-term bio-fuels obligation reflects a sensible and strategic policy approach to developing Ireland's bio-fuels market.

It is also part of a "whole of Government" approach to renewable energy policy which is exemplified in the establishment of the ministerial bio-energy task force. The report of the task force will be published shortly, but integrated Government thinking on bio-energy policy is already very much in evidence.

In 2006, following the roll-out of the pilot projects under the first bio-fuels mineral oil tax relief scheme, the Minister for Finance introduced a 50% reduction of VRT on flexible fuel vehicles which are capable of running on blends of up to 85% ethanol. Since the VRT rate was reduced, 200 flexi-fuel vehicles have been bought in Ireland.

The Department of Finance and the Department of the Environment, Heritage and Local Government have launched simultaneous reviews of vehicle registration tax and motor tax to link those tax rates with CO2 emissions.

In addition to measures to stimulate demand for bio-fuels, the Government has introduced a range of initiatives to encourage farmers to diversify into the growing of energy crops.

Last week, the Minister for Agriculture and Food announced the introduction of a top-up of €80 per hectare on the current energy crop payment, bringing the total payment to €125 per hectare.

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