Martin Ferris (Kerry North, Sinn Fein)

The fact that this Bill sets out the objective of achieving a 4% market penetration of transport fuel usage is in itself an admission that previous targets have not been met and is a less ambitious target than was referred to several years ago, with 2010 set as the target date. The figure of 5.75% was targeted as a staging post towards 10% by 2010, in line with EU targets. A figure of 2% was set as the target to be achieved by 2008 but this had only reached 0.5% by 2007. While current levels are not accurately known, one estimate I have heard is that it is around 2.5%, which is well behind the rate of growth that would be required if this country is to achieve those ambitious targets. It would be unfair to blame the Government totally for this, although I would question the overall strategy. However, it illustrates the difficulties related to this area. The same failure to achieve the 5.75% target also applies to the EU overall.

Some of the reasons for the shortfall have to do with the pricing of fuels which incorporates bio-fuels. It was estimated a number of years ago that bio-fuels for vehicles would only become economically viable when oil cost more than $73 a barrel. The current price is $83 per barrel but there has not been the predicted increase to the levels that would be required if the targets set for usage were to be met. There is also the issue of where the crops necessary for production and the plants to convert them into fuels will come from. There are concerns about the danger that food production, particularly in the less developed countries, might be affected. Some of the leading producers of energy crops are in that category and there would be a strong incentive on the part of countries like India, for example, to devote more land use to energy crop production if the value of those crops was greater than for food and if there was, as there is, a large demand from developed countries for bio-fuels.

The amount of land that would be required to meet the current 5.75% target and the 10% target set for 2020 is massive. For example, it was estimated that if France was to have met its target of 5.75% bio-fuels in vehicles by 2008, two years ahead of EU 2010 target, it would require some 2 million hectares to be used for production of energy crops. The total current agricultural area of France is approximately 33 million hectares. In other words, France would need to use 7.5% of its agricultural land for growing energy crops. The equivalent for Ireland would be 327,750 hectares, which is equivalent to current total crop area, to attain the same target.

It is highly unlikely that any EU country will devote so much of its agricultural area to energy crop production, but as the figures show, even if it did, domestic production would never meet the demand that would be set if even 10% of vehicle fuels was comprised of bio-fuels. The reality, then, is that if targets are to be met most of the demand will come from imports which replaces one form of dependency on fossil fuel imports for another. However, there is still scope for increasing the level of energy crop production in this country from the current low levels. There is land that is suitable for the growing of willow, for example, which would represent a better use and a potentially better return to the farmer. There is an ongoing debate about the incentives for farmers to be become involved in this area and few farmers seem to be interested in the area.

There is a clear need to increase that involvement. Only 200, or less than 0.1%, of farmers were engaged in the production of alternative energy in 2005, compared to an EU average of 0.4% of farms engaged in energy crop production. However, the area of willow and miscanthus grown in Ireland has increased. It was just 300 hectares in 2006 but grew to 1100 hectares in 2007. The area under oilseed rape, used to produce liquid bio-fuel, increased from 4000 hectares to 6000 hectares in 2007. I am not sure what the current figures are now, but they will have shown some increase on those years.

There are ambitious targets for the expansion of the sector in the western counties. Under its wood energy strategy and action plan, the western development commission forecast a 300% growth in the wood energy sector over the next ten years which would add approximately €15 million annually to the region's income and create up to 900 full-time jobs as well as saving 620,000 tonnes of CO2 emissions every year. When fully operative it would have a demand from local farmers for 472,000 tonnes of thinnings worth approximately €1.7 million annually.

The fact that grants are also tied to the farmer having a contract with an end user of the crop means that a more holistic approach needs to be taken in order to tie the production of the crops in with the actual production of the bio-fuels. That would involve either farmers as individuals, in co-operation with one another, or in a business relationship with a processor willing to take their crops, creating a local market for their produce, which would also be dependent on the processor of bio-fuels having a market for the end product.

With the restructuring of the European Union sugar market, which made the sugar production sector here redundant, there were suggestions that the existing crop and the old sugar factories at Mallow and Carlow could be used for the production of bio-fuels. The company in question, Greencore, had no interest in this and there are no existing plans for the growing of sugar beet as an energy crop. The potential for the redirection of the sugar crop, and even of the remaining processing plant has been lost. At the time Greencore closed the sugar factories the then Minister for Agriculture, Fisheries and Food, Deputy Mary Coughlan, said that she raised the possibility of using Mallow to process beet for bio-ethanol but that Greencore showed no interest. Greencore would have received only 75% of their compensation had they not dismantled the plant with the consequent loss of hundreds of jobs.

A study commissioned by Cork county council in 2006 concluded that ethanol production was viable at Mallow if there was price support for farmers producing beet and wheat, but that this price support would be less than existing incentives. It also pointed out that the cost of converting the factory to that use would have been approximately 25% if a new factory for ethanol production had to be built. The report said that if there was a reasonable margin for beet and wheat growers an estimated 40,000 hectares would be available for beet production for ethanol at Mallow and 12,000 hectares for ethanol at Mallow. This would have yielded 2 million tonnes of beet and 102,000 tonnes of wheat, and would have provided sufficient feed stock for an ethanol production capacity of 180 million litres from beet and 36 million litres from wheat.

The annual maximum production capacity of ethanol at the Mallow plant would have been 135 million litres from beet and 35 million litres from wheat, resulting in a full capacity of 170 million litres per year. This would have been twice the target for Irish production of 85 million litres by 2010 and 75% of the EU directive target of 220 million litres by 2010. I only refer to this as it demonstrates the great potential that was lost in favour of Greencore selling the properties with the loss of hundreds of jobs, many of which would have been saved as well as contributing massively to the meeting of plans for bio-fuel production and use.

It is too late to save those factories, but there is still scope for the development of a strong indigenous energy crop sector using various crops, and to use them as inputs into the production of ethanol in processing plants here. It is to be hoped that the sentiments contained in the Bill are supported by positive measures to encourage the production and processing aspects.

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