Dáil debates

Tuesday, 30 November 2010

4:00 am

Photo of Eamon RyanEamon Ryan (Dublin South, Green Party)

I propose to take Questions Nos. 17 and 40 together.

The Government's policy on renewable transport fuels is underpinned by the EU renewable energy directive of 2009, which sets a binding 2020 target of 10% renewable energy in transport for all EU member states. The most achievable and promising means of introducing renewable energy into the transport system are liquid bio-fuels and electric vehicles. In respect of renewable energy for the haulage sector, the mineral oil tax relief schemes, MOTR, and the bio-fuels obligation scheme are the most relevant measures.

The mineral oil tax relief schemes, which expire at the end of the year, 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 objective was to establish and develop the potential of domestic bio-fuel production and to introduce early volumes of bio-fuels into the supply chain. MOTR II involved the granting of more than 660 million litres worth of excise relief to 16 companies, following an open tender competition in 2005. Prior to the introduction of the schemes, market penetration of bio-fuels in Ireland was almost non-existent. In 2007, market penetration was 0.6% and by 2009 it had increased to 2.2%, approximately 42% of which was imported.

The bio-fuel obligation scheme, which came into effect in July of this year, establishes a clear, stable and long-term framework for the delivery of the national target of 10% renewable energy in transport by 2020. The obligation delivers the best balance available in providing a stimulus to the market. It will underpin the ongoing development of an indigenous bio-fuels industry, while keeping the cost to the consumer as low as possible. The legislative basis for the obligation is provided for in the Energy (Biofuel Obligation and Miscellaneous Provisions) Act 2010. The Act is the framework for ensuring that Irish consumers have access to appropriately priced, sustainable and reliable sources of bio-fuel by creating a guaranteed market that will require in excess of 200 million litres of bio-fuel in 2011.

Domestic producers can access the market by a number of means, including sale of bio-fuel direct to obligated parties or alternatively, producers can sell into local markets or sell certificates earned to obligated parties. This trading mechanism allows the scheme to provide a stable market, protecting consumers from structural rigidities in the fuel supply market, which could result in episodic periods of high fuel prices, while also ensuring delivery of targets.

The level of obligation set for 2011, at 4%, represents almost a doubling of size of the existing bio-fuel market in Ireland. I am confident that the obligation will promote the sustainable growth of the Irish bio-fuels market, thus supporting the growth of sustainable indigenous production of bio-fuels. In the first few months of the obligation, the 4% market penetration target is already being achieved. This is early testament to the effectiveness of the obligation mechanism. The bio-fuel is primarily reaching the market blended with mineral petrol and diesel. The vast majority of Irish motorists are now using bio-fuels in their fuel mix at blends of up to 7%. A number of road haulage operators have already converted trucks to run on pure plant oil. Each litre of pure plant oil brought to market is eligible for a bio-fuel obligation certificate, which can be traded to obligated parties. This incentive will underpin further development of the sector.

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