Brian Cowen (Laois-Offaly, Fianna Fail)

I stated previously that taxation can play a part in attaining environmental objectives, including the promotion of energy efficiency and the reduction of emissions. Using taxation as a mechanism to subsidise activity that yields overall benefits to the economy is a tool that has been used by successive Administrations, often delivering very positive results.

To promote the development of bio-fuels in Ireland, I provided for an appropriate excise relief scheme in the Finance Act 2006. Under the scheme, bio-fuels produced under approved projects are exempt from excise duty. This serves to reduce the additional costs associated with the production of bio-fuels and consequently allows them to compete with conventional fossil fuels. With regard to whether this approach represents a cost-effective way of reducing emissions, I will point out that this relief is in place for a period of five years to assist in the development of a domestic bio-fuels industry. Long-term general excise reliefs are not anticipated.

In this regard the Deputy might wish to note that there are additional non-fiscal measures that can be used to promote bio-fuels. To provide further market certainty and encourage projects of scale, the Government has signalled its intention to move to a bio-fuels obligation by 2009, which will require all fuel suppliers to ensure that bio-fuels represent a certain percentage of their annual sales. The obligation will fall under the remit of the Department of Communications, Energy and Natural Resources.

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