Dáil debates

Thursday, 12 March 2009

2:00 pm

Photo of Seán PowerSeán Power (Kildare South, Fianna Fail)

The bio-fuels mineral oil tax relief schemes resulted in 18 projects being awarded excise relief for the years 2005 to 2010. The schemes were designed as an interim measure to enhance the level of bio-fuels in the fuel mix and to encourage the development of an indigenous bio-fuels industry.

The Government's bio-energy action plan, which was published in 2007, made clear that a national bio-fuels obligation would replace the relief schemes by the time those schemes came to a close at the end of 2010. Proposals are being finalised for the introduction of the obligation scheme next year. Another excise scheme will not be introduced.

Since the start of the relief schemes there has been a steady increase in bio-fuels used in Ireland, albeit from a very low base. Prior to the introduction of the schemes, market penetration of bio-fuels was almost non-existent. In 2007, the latest year for which figures are available, market penetration had risen to 0.6%. Continued increase in penetration is anticipated in the 2008 statistics.

At least five bio-fuels plants have been constructed or redeveloped on foot of excise relief granted under the scheme. A number of others are either at an advanced stage of planning, or have received planning permission.

It is the case that, generally, the European bio-fuels industry has experienced difficulties with a prolonged period of price volatility culminating in recent negative trends, which have seen the price of mineral diesel falling considerably. This has been exacerbated by rises in the price of feedstock for bio-fuels production. These two factors have caused severe competitive difficulties for the European and Irish bio-fuels sector. In addition, the availability of US subsidised bio-diesel, known as B99, has placed considerable commercial pressure on the European and Irish industries.

In this overall context, progress on constructing all of the facilities benefiting under the mineral oil tax relief scheme has been inevitably slow, despite some early successes. The Department has been working closely with the Department of Enterprise, Trade and Employment to support official EU measures to counter the US export subsidy accorded to B99. A response from the EU Commission was made today, which I am sure will be well received both by European and Irish producers. Both EU action in the short term and the introduction of the bio-fuels obligation in 2010 should provide the Irish bio-fuels sector with the certainty it needs to invest and grow its business in a sustainable way.

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