Róisín Shortall (Dublin North West, Labour)
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Question 8: To ask the Minister for Agriculture and Food if she is satisfied that Ireland is meeting its obligations on biofuel production; the role of the agriculture industry in meeting this requirement; and if she will make a statement on the matter. [5931/06]

Mary Coughlan (Donegal South West, Fianna Fail)
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The EC biofuels directive sets indicative targets for member states of 2% market penetration for biofuels by end 2005. The targets in the directive are indicative and not mandatory. Ireland is starting from a very low current production base and the 2% target therefore represents a considerable challenge. The objective of the Minister for Communications, Marine and Natural Resources, who has primary responsibility for the development of renewable energy, including biofuels, is to ensure that Ireland meets the 2% target by 2008 mainly through targeted fiscal measures designed to stimulate market development.

I am very conscious of the central role that agriculture can play in supplying the necessary raw materials for the production of biofuels. These raw materials can include oilseed rape, wheat and sugar beet for the manufacture of liquid transport biofuels, and forestry by-products and other farming and food by-products such as meat and bonemeal and tallow for energy and heat generation. Tallow can also be used in biodiesel production. Factors such as the increasing cost of oil, the need to reduce carbon dioxide emissions and the opportunity for farmers to explore alternative land uses following CAP reform, mean that the potential of this area must be fully explored.

For the purposes of contributing to the development of policy on biofuels, the Department of Agriculture and Food in conjunction with COFORD and Teagasc has examined the potential of energy crops, wood biomass and farming and food by-products. In general, the production of energy crops for biofuels will need to be demand-led and production by farmers will only occur if the economic returns are greater than those offered by traditional crop enterprises. The production of liquid biofuels from energy crops, in the absence of fiscal incentives, is not economic at current oil price levels. The budget announcement of a major extension of the mineral oil tax relief scheme to cover, when the relief is fully operational, some 163 million litres of biofuels per year, should further stimulate the production of crops for the manufacture of liquid biofuels. This initiative will benefit the environment in terms of a reduction in CO2 emissions, enhance security of supply of fuels, and create jobs and outlets for agricultural production.

As announced in the budget, the Minister for Communications, Marine and Natural Resources also intends to launch several innovative grant schemes relating to biofuels, combined heat and power, biomass commercial heaters and domestic renewable heat grants. Within my area of responsibility, a range of developments are already under way or in the pipeline that will encourage the production and use of biofuels. These include grants to promote and develop sustainable forestry, including alternative timber use to reduce dependence on fossil fuels; promoting the use of wood biomass, for example by the installation of a wood heating system at the Department's offices at Johnstown Castle; funding of forest-to-energy pilot projects; willow planting promotion; supporting biofuels research under the research stimulus programme; grant aiding the application of new technologies such as anaerobic and aerobic digestion and fluidised bed combustion, with a renewable energy dimension; and the use of by-products for incineration and co-incineration in place of fossil fuels.

There are also a number of important developments on the horizon at EU level. The Commission has recently produced a biomass action plan and a strategy for biofuels. These are on the agenda for next week's meeting of the Agriculture and Fisheries Council. In this context I will be seeking a review of the operation of the energy crops scheme.

Mary Upton (Dublin South Central, Labour)
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I thank the Minister for the detailed reply. It was disappointing to hear Greencore's chairman say it would not be seeking to develop the biofuel business. This is a golden opportunity to do that and one that is being neglected. What type of information is being given to farmers to encourage them at least to examine the options in biofuels? Is an information and marketing programme being made available to them?

Mary Coughlan (Donegal South West, Fianna Fail)
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There is a considerable amount of information and the new Minister of State will move on that agenda item fairly soon once she gets her feet on the ground, so to speak. A good deal of work has been done already on this initiative in the Department, with a specific proposal to drive it forward quickly. One of the issues is that farmers will regard €45 per hectare as a nonsense. That is the reason I am raising the issue at Council on Monday because if we are to encourage people to grow energy crops, we will have to pay them. That will be a better incentive. We are doing a number of pilot projects as well. There is a good deal of interest in that and we hope to develop it over time.

Denis Naughten (Longford-Roscommon, Fine Gael)
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I support the Minister on the issue of the €45 per hectare. It is wholly inadequate and if we are serious about this issue, we should put serious money into it because we are facing a significant bill in respect of carbon credits.

Will the Minister comment on the plans, if any, she has to stimulate the use of sugar beet for the extraction of bioethanol? It is critically important we get some direction from her in that regard. When has the Minister met specifically with the Minister with responsibility for energy on the co-ordination of a biofuel industry in this country? The Minister is right. There is not much point in encouraging the use of biofuels if there is not the demand for it. To date, the Government has done nothing to encourage demand. There is little point in talking about production of 163 million litres of biofuel unless it will be utilised. The issue of demand is critically important. We have seen what happened in other countries. Are we prepared to do anything here?

As the Minister of State has a good working relationship with the Minister with responsibility for energy, will she take the lead on this matter and ensure there is some type of co-ordination? Will she not agree that the frustration exists because there does not appear to be any co-ordination among Departments in terms of getting their act together on this issue?

Mary Coughlan (Donegal South West, Fianna Fail)
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That is another factually incorrect statement from the Deputy. We have a very good working relationship. The Minister of State, Deputy Browne, met the energy people last week and there has been continued work——

Denis Naughten (Longford-Roscommon, Fine Gael)
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When did the Minister, Deputy Coughlan, meet the Minister of State?

Mary Coughlan (Donegal South West, Fianna Fail)
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The Minister of State had a designated role in this issue. I work in consultation with my Ministers, whom I trust and who are more than capable of delivering the service. I worked to support them in this initiative. At the time, the Minister of State, Deputy Browne, was anxious to progress it quickly. We have done so. The demand was a difficulty but the excise duty issue has been dealt with by the Minister for Finance who is very supportive of alternative energies for many reasons. We also had the issue of hybrid cars, which was dealt with in the budget. Furthermore, we have had a large number of initiatives which were mentioned in the budget by the Minister, Deputy Noel Dempsey. They will be available very soon. They link in with the work I am doing with willows and thinnings. All these issues are being dealt with but the issue of the €45 per acre will be the key that will unlock this issue.

With regard to sugar beet, as Deputy Upton said, diversification is an option. A number of young farmers in north Cork spoke to me about that. Sugar beet is not included under the EU energy crop scheme but there is nothing to say we cannot pursue such a possibility given that many sugar beet farmers would like to continue to grow sugar beet.

Trevor Sargent (Dublin North, Green Party)
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Does the Minister accept there is a need to bring about a significant cultural awareness of biofuel? Following the precedent she mentioned of woodchip installation in Johnstown, perhaps she would suggest at the Cabinet table that the ministerial cars be converted to biofuel or biodiesel or whatever might be feasible at the time. Does she accept that would be the strongest possible message to send out in the same way as we advocated using recycled products in Oireachtas stationery? It would also be a practical step to take.

Has the Minister met or does she intend to meet an entrepreneur or anybody else interested in taking up the opportunity for bioethanol production, particularly with the demise of the sugar beet industry in Carlow? Would she be open to such a meeting given that there are people who need the reassurance of a long-term commitment when it comes to such a capital investment as would be taken to instigate a bioethanol industry? Has she taken any steps to meet people in that regard?

Mary Coughlan (Donegal South West, Fianna Fail)
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On the last question, those specific issues are a matter for the Minister with responsibility for energy, Deputy Noel Dempsey. However, we have a good working relationship and I have indicated on a number of occasions that any support we can give, in whatever way, will be forthcoming. The farming organisations have expressed an interest in alternative energies. One of the candidates was very forthright on that issue and continues to be. I assume that working relationship will continue. It is a question of all of us working together. On the State cars issue, I will express that view to the Minister for Justice, Equality and Law Reform.

Denis Naughten (Longford-Roscommon, Fine Gael)
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They could use woodchip.

Trevor Sargent (Dublin North, Green Party)
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I am being serious.

Mary Coughlan (Donegal South West, Fianna Fail)
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I am aware of that. I will get a ministerial bicycle.