Seán Fleming (Laois-Offaly, Fianna Fail)

I welcome the opportunity to speak on the Energy (Biofuel Obligation and Miscellaneous Provisions) Bill 2010. We are amending the National Oil Reserves Agency Act 2007 to take account of the bio-fuel obligation, which will be dealt with under the principal original National Oil Reserves Agency Act. We are here to deal with this topic by way of amendment to existing legislation. The Bill is not new legislation, it is a new aspect of the issue and this is the most appropriate way to address it because it will be monitored, controlled, administered and levied through the National Oil Reserves Agency.

I want to make some general points about the Bill and have one suggestion for a specific amendment the Minister might consider. I hope he will be able to consider it in detail between now and Report Stage.

The purpose of the Bill is to introduce the bio-fuel obligation in Ireland. Bio-fuels have a central role to play in the delivery of the target under the EU renewable energy directives and the reduction of greenhouse gas emissions as one of the few available and effective means of reducing emissions from transport. The Government programme and the Government White Paper on energy policy also commit to the introduction of a bio-fuel obligation which will underpin delivery of the national bio-fuel targets and which will take account of EU developments. Under the obligation, suppliers will be compelled to use bio-fuel in the fuel mix to ensure that they represent a certain percentage of their annual fuel sales, thus providing a valuable boost to the bio-fuels industry generally. The effective initial penetration rate will be 4% and this will be increased to 10% by 2020.

The Bill provides that the bio-fuel obligation will apply to all road transport liquid fuels equally, and that obligated parties will be able to apply for certificates in aggregate without separate provision for petrol and diesel. Gas fuel has not been dealt with in the Bill, but it is detailed and complicated legislation.

The Bill provides that oil companies that sell road transport fuel include a certain volume of bio-fuels in their sales. The obligation will only relate to the bio-fuel component of the fuel. It also provides that National Oil Reserves Agency shall automatically open an account for each obligated party currently paying the NORA levy and that bio-fuel obligation certificates may be traded between account holders and sets out the criteria as to how this can be done. Like all these issues, I hope the commercial aspects of trade in these certificates will be well monitored. There are specific provisions for bio-fuels that may be exported, so they will not be doubly certified, on production here and on entry into a second country. Similar issues must also be addressed when bio-fuels come into Ireland. The Minister has taken power by way of statutory instrument to make specific regulations on ethanol content.

There is a general view in the House that there should be a fortress Europe mentality on this and I have a problem with that. We change the definition to suit what we can produce, even when a similar or almost equivalent product is available internationally at a much lower price. That is a feature of the problems in Europe that cause unemployment and a recession: we have built high costs into the economy that did not stack up against international comparisons. We then wonder why people do not do business in Ireland. We should not introduce further artificially high costs into the fuel sector.

We all know the difficulties that will be caused by the new changes being introduced on 1 May. There is a fundamental flaw in how the EU does its business. It looks at everything in terms of the internal market, as if the world begins and ends at the EU's borders. The EU, however, is only a small part of a larger planet and we must look at everything we do with the European Union in terms of global trade. We cannot operate a fortress Europe mentality because Irish consumers pay for it at the end of the day and their needs must be at the heart of this legislation.

The legislation will be of benefit in that it can displace the import of fossil fuels, which will help our balance of payments and improve our fuel security, provided we are not forced to meet our obligation by importing bio-fuels. There is a risk that the Irish industry will be unable to meet the targets being set in the legislation and we will have to import bio-fuels. That would be counterproductive. Opportunities exist for the industry to supply the agriculture, waste and industrial sectors.

The Minister is right that it is better to prescribe a national obligation and national target in terms of the bio-fuel obligation rather than doing it through short-term tax incentives. Those existed in the oil trade tax relief scheme, which were trial runs to see how the situation worked. They ran into difficulties when the operators, despite the massive concessions in excise duties, could not find sufficient outlets for their products. Legislative determination of the requirement will give greater certainty to those selling fuel that they must use a certain amount of bio-fuel. That will give a floor level at which people can be guaranteed a market. We have learned the lessons from the previous tax relief scheme.

The growing and harvesting of products such as rape seed for bio-fuels was mentioned by Deputy Sherlock. We are both from areas close to the sugar factories that closed in Mallow and Carlow. Many people used to grow sugar beet and there was a rush to grow crops to produce bio-fuels. All the time, however, I felt farmers were happier growing crops for food rather than for fuel production. I do not believe the Irish economy will obtain a high standard of living from agriculture and food production alone but farmers see themselves in the food business rather than in the fuel business. There is a psychological issue present. I know very few farmers who, given the choice to produce crops for food or for fuel, would not produce crops for food. There may be an inherent resistance among some farmers to take that route.

The Bill has a complicated structure. Deputy Coveney mentioned the new section 44(X). In Part 2 of this Bill-----

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