Jimmy Deenihan (Kerry North, Fine Gael)

That is all right.

As previous speakers have stated, this Bill will introduce a bio-fuel obligation in Ireland. Under the terms of the legislation, an initial bio-fuel penetration rate of 4% is being set, with this to be increased over time in line with EU targets and further commitments on climate change and energy security.

This legislation marks a significant step forward for Ireland. From the date of the introduction of the obligation, 1 July 2010, all petrol and diesel on sale in this country will include at least 4% bio-fuel. This means that within the first year of the operation of the obligation some 220 million litres of fossil fuels will be substituted with bio-fuels. This penetration is expected to increase to over 500 million litres by 2020, in line with EU regulations.

As the House will be aware, the bio-fuel obligation will be administered by the National Oil Reserves Agency on behalf of the State. Its introduction follows movement at European level, in particular the introduction and approval of the renewable energy directive by the EU Commission in 2008. This directive has set out mandatory targets for bio-fuel penetration in road transport fuels within the EU of 10% by 2020.

It is vital that the bio-fuel obligation comes into force, as planned, on 1 July 2010. Any delay in the implementation date of the bio-fuel obligation would have a severe and negative effect on Ireland's burgeoning bio-fuel sector, which is one of the areas identified for growth. I hope, therefore, this will experience a quick passage through Committee and Report Stages.

The bio-fuel obligation will help the market for biodiesel in Ireland to grow, and this will be good for the development of a strong, indigenous bio-fuels sector. It is worth mentioning here the development in County Wexford operated by GBI. The company met some of us some time ago. It is very impressive and its achievement should be recognised. The company has a state-of-the-art bio-diesel facility, it employs 22 people and has the capacity to grow further as the market expands. This legislation is important for the company. It will not only present it with further opportunity but, I hope, also attract other investors in the market to which I will refer.

The introduction of this bio-fuel obligation is good for Ireland's environment. Like all European Union countries, Ireland has agreed to reduce carbon emissions as part of its international environmental commitments. An important step towards reaching our goals in this regard will be to increase the use of sustainable and renewable energies, including bio-fuels. This new obligation will take a considerable amount of fossil fuels out of our vehicle engines and replace them with green and renewable energy. The introduction of this bio-fuel obligation will lessen Ireland's dependence on the importation of fuels. Bio-fuels are being manufactured in Ireland and by producing these fuels at home we are helping to make Ireland more energy-independent. This is vital for our country which is currently dependent to a large extent on the importation of various forms of energy from overseas and is, therefore, at risk should the supply of these energy sources be compromised.

Investing in renewable energy sources such as the production of bio-fuels offers Ireland a considerable opportunity for growing an indigenous bio-fuel sector and for generating employment within this sector. Green Biofuels Ireland uses waste materials to manufacture a renewable diesel substitute which is then distributed through the forecourts to the consumer, thus reducing greenhouse gas emissions and improving Ireland's security of fuel supplies.

The market in Ireland is not attractive to operators. I support a biodiesel project operating successfully in Argentina. I have copies of the agreement between the company and the Government of Argentina. The difference between Argentina and Ireland is that the price is guaranteed in Argentina. As the price fluctuates, the farmer will receive a certain amount of profit for his product. Currently, the price in Argentina is $28 per tonne of biodiesel delivered and this is the price guaranteed to the grower, irrespective of fluctuation in price. Farmers know the price they will receive and the refinery knows the profit it can and must make. This system works very well. The project is being led by a former Munster rugby prop, Federico Pucciarello,who left Ireland a year ago. He would like to undertake the same project in Ireland but the figures do not add up. The Minister of State may not be aware that a group in Foynes also spent two years trying to set up a first-generation project but the figures did not add up. I welcome this project but we have a long way to go before we have a dynamic bio-fuel industry in this country, unless the Government is willing to intervene. This Bill provides a framework but we have a long way to go.

The Minister has promised to table an amendment on Committee Stage which will have significant implications for one company in particular, Endesa Ireland Limited. I have an interest in Endesa and so also should the Acting Chairman, Deputy Kathleen Lynch, as it has plants in both our constituencies. Endesa has plants in Tarbert and in Great Island. It purchased the plants at the top of the market price and paid €450 million. It is prepared to invest another €0.5 billion in converting both plants to gas. However, this Bill could penalise the company if the Minister goes ahead with his proposed amendment. Along with other Members, I have received a briefing from Endesa.

The Minister proposes to bring forward an amendment on Committee Stage to impose a levy on electricity generators in respect of windfall profits derived from the free allocation carbon allowances, EUAs, European Union allowances. Endesa Ireland is concerned that the levy to reclaim windfall profits will also affect those that have not enjoyed windfall profits, namely, Endesa Ireland.

As part of the asset strategy agreement between the ESB and CER, the ESB divested 1,068 MW of generation plant which had been purchased by Endesa Ireland when the economy was at its peak. The company probably paid €200 million over the odds but the country benefited considerably from this purchase. As part of the package, Endesa Ireland purchased the EUAs allocated to these stations and the rights to future allocations in the period 2008 to 2012, valued at 2008 spot price. Since 2008, the value of the EUAs has fallen, meaning Endesa Ireland has suffered a loss relating to the EUAs rather than the windfall profits enjoyed by all the other generation companies in Ireland.

Endesa Ireland is looking to make significant investments - €500 million - in its stations in Great Island and Tarbert, bringing much-needed jobs to those regions. Its ability to invest is diminished with each additional reduction in its income. The projected incomes from the existing units have fallen significantly since Endesa's purchase of the stations. The introduction of an emissions levy when it is not profiting from any profits on its EUAs would further reduce these incomes.

Endesa Ireland considers that the levy should not apply to its stations as it has not enjoyed the windfall profits as received by all other generation companies in the country. The company is of the view that the legislation deals unfairly with it and asks that it not be treated unfairly. Such a levy will further reduce its income and this might affect its future plans to invest in Ireland. The board of the company will probably take a very poor view of what has happened. The company bought at the height of the market and would be discouraged by this imposition.

The Minister's amendment should be drafted in such a way as to take account of circumstances where ownership of an installation changes hands and market value has been paid to the original recipient in respect of the corresponding EUAs. Given that Endesa Ireland's existing units are old and inefficient, they are not scheduled to run in the market. Generally these units run only when EirGrid needs them due to changes in wind patterns to support wind power generation, congestion in the network or line outages. These stations are used to provide critical support to the system. If the legislation were drafted so that the levy only applied to generation units that were included in the market schedule by the single electricity market operator, Endesa Ireland could be largely exempted from it. I hope the Minister will take this into account.

Endesa Ireland purchased all the carbon allowances, EUAs, allocated to its stations from the ESB as part of the competition organised by the ESB to divest some of its assets. The competition rules required the participants to include a separate line item setting out the value for the 2008 carbon emissions allowances that was included. The 2009-2012, EUAs, were valued at the expected market rate of €25 per tonne at the time and included in the total offer. Since taking ownership of the assets, the value of the EUAs has fallen, so rather than a windfall gain, Endesa Ireland has suffered a loss. EUA prices are now around €12 per tonne compared with the €25 per tonne that Endesa paid to ESB. If any company has enjoyed windfall assets, it is the ESB.

Endesa Ireland is seeking to make significant investment, approximately €500 million, in generation stations in Great Island, County Cork, and Tarbert, County Kerry, bringing much needed jobs to the areas. Converting the Tarbert station to gas would create 300 jobs over two years. It would also ensure the provision of a gas pipeline from Foynes to Tarbert, bringing a natural gas supply to the county for the first time, either through Bord Gáis or Shannon LNG. A plant like Kerry Group's Kerry Ingredients, employing 700 people in Listowel, County Kerry, would have its energy bills reduced considerably. The Minister must examine Endesa's case for an exemption from the levy.

The 2009 Endesa's running hours were 50% less than 2008 and in 2010 they are expected to fall by half again. The capacity payment was reduced by 15% from 2008 to 2009 and this too is expected to fall further in 2010. The introduction of an emissions levy would further reduce Endesa's income. This levy is seeking to recover windfall profits which it has not enjoyed. I hope the Minister will consider Endesa's unique position in this regard. There should be a level playing field for all companies in this area and none of them should be penalised by this legislation.

This legislation is the start in moving over to bio-fuels. To make up the other 6% target by 2020, most of the fuel will have to be imported unless incentives are put in place by the Government to ensure it is profitable for Irish operators, such as Wexford-based Green Biofuels Ireland Limited, to come into the market .

Endesa's unique position is recognised by Deputy Simon Coveney, Opposition energy spokesperson. I am sure the Acting Chairman, Deputy Kathleen Lynch, also has an interest in the company's position considering Great Island is in her constituency. I hope the Minister will continue to meet with Endesa's representatives and work out some solution to the levy.

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