Tuesday, 25 April 2006
Energy (Miscellaneous Provisions) Bill 2006: Second Stage (Resumed).
I welcome the opportunity to speak on the Energy (Miscellaneous Provisions) Bill 2006. I refer to the key statement made in section 3:
9B.—(1) It shall be, and be deemed always to have been, a function of the Commission to participate in the development of an all-island energy market, including the preparation of proposals and the provision of advice to the Minister in regard to any part or aspect of the establishment, management and operation of such a market.
It is opportune that the House is discussing this Bill when energy is such a concern as a result of the rise in oil prices. That rise, global instability and general acceptance that oil reserves will grow ever less dependable should act as a wake-up call to those who think we can continue as we are and not risk major economic problems in the decades ahead.
In 2003 the price of a barrel of oil was $35 while this year it is well in excess of $70. Economists warn that the day may not be far off when it will reach $120 a barrel. Even natural disasters such as the devastating hurricane Katrina put upward pressure on oil prices and demonstrate the susceptibility of Ireland's economy to events beyond our control. Coupled with this price pressure are the repercussions of Ireland's failure to meet its commitments under the Kyoto Agreement.
To neutralise the effect of global warming on the earth's population, it is generally agreed that the level of global greenhouse gas emissions will need to be reduced by 70% by 2100. As a first step, the 1997 Kyoto Agreement was drawn up with the aim of reducing global emissions of greenhouse gasses by 2012 by 5.2% based on 1990 levels. Under the agreement, to which Ireland is a signatory, this country undertook to limit the increase of these emissions in 2008-12 to only 13% based on the level of emissions in 1990. Without action, it is estimated that our emissions will rise by 37%, almost three times the permissible level. Currently, we are at 25% above our 1990 levels. If agreed commitments on emissions are not met, Ireland will face a bill of up to €400 million.
Sustainable Energy Ireland states that renewable energy has been contributing nearly 2% of Ireland's primary energy supply since 1990. Most of this has been delivered by traditional biomass, waste wood used by the timber processing industry for drying and wood burnt by the residential sector for home heating. The second most significant contribution has been from the large-scale hydro power plants, whose output has varied from year to year depending on rainfall patterns. The growing contribution from wind energy is also evident. In 2003, biomass contributed 1.2%, hydro power 0.34% and wind energy 0.26% of Ireland's energy requirements. However, as the price of oil increases even more and supply becomes less secure, we must try to strike a better balance. Our European partners already have made a start. In 2001, Austria was sourcing 22% of its energy consumption from renewable sources.
The first step to tackling Ireland's energy crisis lies with how we use energy at home and at work. Statistics show the following. Between 1990 and 2003 coal usage dropped by 52% and the share of coal fell from 27% to 10%. Sod peat usage dropped by 69% and its share fell from 26% to 6.4% over the period. Peat briquette usage reduced by 40% and its share fell from 7.1% to 3.4%. For briquette usage there was a large reduction of 17% in 2003 alone, but oil usage increased by 195% and its share in the residential sector grew from 16% to 37%. Natural gas usage increased even more significantly, by 360%, or 12% per annum, and its share rose from 5.4% to 19.5%. Renewable — mainly wood — usage increased slightly by 1.2% but its share dropped from 1.9% to 1.6%. Given the inexorable rise in the price of oil, the huge increase in the use of natural gas and the worrying drop in the use of renewable energy to heat our homes, something must be done.
According to the strategy report of the campaign for take-off for renewable heat pumps in Ireland, produced by Arsenal Research for Sustainable Energy Ireland, of the 1.2 million dwellings in Ireland, three quarters were built prior to the introduction of the draft Irish building regulations in 1976. Some 86% were built before the more stringent 1991 building regulations. This implies that some degree of energy inefficiency exists in most Irish dwellings. The report states:
Irish insulation levels are among the poorest in Northern Europe. The extent of double-glazed windows, at 36%, is very low relative to other countries. Ground floor insulation, at one-in-four households, is likewise paltry. Similarly, less than two-in-four households have draught sealing or wall insulation.
To tackle this, householders and businesses must be grant-aided to ensure that heat is not lost and energy is not consumed unnecessarily. Sustainable Energy Ireland states that insulating the 50 sq. m. attic space of a typical house costs approximately €254 and could save approximately €76 a year. It would, therefore, pay for itself in about three years.
Using alternative energy sources and moving away from the burning of fossil fuels makes sound environmental and economic sense. Unfortunately, the initial capital outlay can deter householders and businesses from making the switch. In Britain, the Clear Skies programme has sought to remedy this. Funded by the Department of Trade and Industry and managed by Building Research Establishment, Clear Skies aims to give householders and communities a chance to realise the benefits of renewable energy by providing grants and access to sources of advice. Householders can obtain grants of between £400 and £5,000, while not-for-profit community organisations can receive up to £50,000 in grants. Grants are given to the following renewable energy installations: solar thermal, wind turbines, micro-small-scale hydro turbines, ground source heat pumps, room heaters-stoves with automated wood pellet feed and wood fuelled boiler systems. The model has been a success in the UK and the scheme has offered grants to 6,562 households and 304 community organisations. In 2006, the Government finally moved on this important agenda and it is time to move further still.
The economic case for a move to generating electricity from alternative energy sources is unquestionable. At present, only approximately 4% of Ireland's electricity is generated from renewable sources. This compares to 47% generated from natural gas, 26% from coal and 12% from oil. That involves costly extraction methods, ever increasing importation costs and, above all, a total lack of stability. Our economy cannot withstand this. It is imperative that the mix of sources from which we derive our electricity is improved. My party believes that it is eminently possible to shift our dependence from imported non-renewables to indigenous, renewable energy for electricity generation.
Wind energy is vital in the effort to meet our Kyoto targets. A number of problems exist with wind energy: cost; structural problems, including the control of the national grid by the dominant supplier and generator of electricity; planning problems, which we all have experienced, including the lack of a national policy favouring the construction of wind farms from which the relevant authorities can take a lead; and reliability, which, with our climate, is probably greater here than in most countries. My party believes these problems can be overcome and wind energy can play a large part in meeting our energy needs.
According to the Department of the Environment, Heritage and Local Government, landfill remains the predominant waste management practice in Ireland. An estimated 1,901,864 tonnes of municipal waste, or 79%, was consigned to landfill in Ireland in 2002. At landfill, bacteria cause the organic fraction of deposited waste to decompose under partially anaerobic conditions, producing a biogas. This biogas consists primarily of methane and carbon dioxide in the ratio of 2:1, with small quantities of other gases also present. Landfill gas emissions can be minimised through effective recovery systems which harness the gas and use it as a renewable and valuable fuel. In addition to electrical power generation, landfill gas can also be used for combined heat and power, for kiln firing and as a heating or vehicle fuel. Landfill gas is similar to natural or fossil gas and can be fed into the natural gas network.
Nationally, Ireland's landfill capacity will last for roughly another ten years. It is vital that we use this period to make the most of the natural resource that landfill produces. In 2004 there were 34 authorised landfill sites in Ireland. Of these, only five have been developed to generate a total of 15 MW of electricity that is fed into the national grid. Development of these sites has been supported under the alternative energy requirement scheme run by the Department of Communications, Marine and Natural Resources. Meanwhile, our wastewater treatment plants provide all the inconvenience of a so-called "disamenity", without any of the potential economic and environmental benefits, including the harnessing of valuable methane gas.
Approximately half of the total amount of electricity generated from renewable energy sources comes from hydro energy. According to the report entitled Tidal and Current Energy Resources in Ireland, produced by Sustainable Energy Ireland and published in August 2005:
There are many similarities between wind and tidal current generating systems both in terms of devices and the nature of the driving force. Compared to wind technology, tidal systems are in their infancy and there have been only a small number of prototype scale demonstrations of plant with an installed capacity of over 100kW. It is expected to take several years before items of equipment are produced for purchase and installation.
The same report states that hydro energy could produce approximately 2.18% of the predicted electricity consumption for the year 2010. This figure could increase to 6.27% of the predicted electricity consumption between 2010 and 2015.
Ireland's peat industry faces a major challenge in the years ahead. As our peat reserves are exhausted and existing peat contracts with Bord na Móna come up for renewal, it is important that other uses are found for the infrastructure in place while also examining the introduction of renewables as a source of fuel for electricity generation. Fine Gael proposes that grants of between €500 and €3,500 should be paid to householders wishing to convert their home heating to renewable energy. Grant aid to householders who wish to insulate their homes properly should be available up to €500. With regard to electricity generation, we propose a move to generate 33% of Ireland's electricity needs from renewable resources by 2025. We will consider a complete separation of the ESB from the national grid to ensure a level playing field for all energy suppliers.
Fine Gael proposes that investment and commitment to wind energy should be predicated on the putting in place of the necessary interconnecting infrastructure which can ensure continuity of supply in the event of a reduction in supply from wind. We will seek to recover landfill gas in all landfill sites and waste water treatment plants as far as is practicable for electricity generation to be fed into the national grid and for private use. Fine Gael will increase research and development funding in the offshore hydroelectric sector to ensure established targets are met and commit to a review of progress with a view to exceeding those targets should conditions permit. Bord na Móna should be included in the overall development of energy policy given its experience and expertise as an energy provider and its ability to play a meaningful role.
I refer to biofuels and the role of agriculture. Fine Gael proposes the abolition of all excise duty on biofuels produced from renewable energy crops and to establish grants for producer groups, which would comprise up to 50% of the costs of setting up the group, subject to a maximum of €300,000 per group. We propose the reform of the energy crops scheme by examining whether the current rates of payment are adequate to promote energy crop expansion and whether the sugar beet crop should be included under the scheme to facilitate development of the bioethanol industry. A public competition for the establishment and operation of a number of biofuel processing plants, strategically located in a selected number of locations will be undertaken. Capital start-up grants for these processing plants would initially be provided to enable these plants to become established and begin viable processing operations. Fine Gael proposes greater links with international biofuel processors and-or fuel suppliers and the relevant Departments, especially the Departments of Transport and Agriculture and Food, to facilitate the promotion of the biofuels industry. A public awareness and promotion campaign will be undertaken to encourage the growth of biofuels. Throughout the public and private forestry sector, the growing of trees with a high carbon sequestration capacity to make a further contribution to meeting Kyoto requirements will be encouraged.
Clear targets should be set for the wood energy sector in Ireland. No targets are in place to allow for the replacement of imported fossil fuels with domestic wood energy. Targets and a clear policy direction would promote better forest management and stimulate the growth of the forestry sector. Forestry grants must be repositioned to promote and develop sustainable forestry. There must be a greater focus on the potential of a vibrant forestry sector through alternative timber use to reduce dependence on fossil fuels. In particular, there must be a greater emphasis on short rotation coppice forestry such as willow.
With regard to transport, a significant shift in the allocation of capital transport funding is necessary to facilitate a meaningful increase in the development of public transport infrastructure projects. Vehicle registration tax, VRT, will be reformed by Fine Gael through the establishment of a system of energy efficiency labelling for motor vehicles, with lower rates of VRT for those cars with more efficient engines, and we will create a market for biofuels by legislating to provide that all motor fuels must include a blend of fuel from renewable sources. All petrol sold at filling stations will include a 5% bioethanol mix and all diesels will contain a 2% bio-diesel mix. An immediate increase in the number of buses providing commuter services into our major cities should be introduced, especially feeder buses to rail connections.
A public transport regulator should be established as a priority with the aim of assisting in the provision of increased public transport services. Action should be taken on the provision of increased rail services as a viable transport solution to reduce dramatically our current reliance on the car. All public transport vehicles and public service vehicles should be required to convert, where practical and feasible, to forms of biofuel, whether in a pure or blended form.
A centre of excellence for alternative energy should be established, charged with ensuring Ireland develops a world class alternative energy sector. The centre should incorporate the existing Sustainable Energy Ireland and should be located within an institute of technology with outreach points in other academic institutions nationwide.
With regard to planning for the future, Fine Gael proposes that all public buildings should run on alternative energy sources as soon as is practicable and feasible. The national spatial strategy should include major renewable energy infrastructure projects. Our renewable energy infrastructure should constitute an element of regional development plans, while a community dividend should be provided to act as compensation for those living close to important infrastructure that aids the entire country reach its alternative energy commitments. Fine Gael is committed to these proposals and I am pleased to have had the opportunity to be the first to place them on the record of the House.
I welcome the Bill. Since the Oireachtas Joint Committee on Communications, Marine and Natural Resources was established at the commencement of this Dáil, two Ministers and three Ministers of State have been appointed to the Department of Communications, Marine and Natural Resources. Deputy Broughan, Deputy Ryan and I have been committee members since October 2002. While I do not take away from the contribution of other committee members, we are the longest serving members and we hold a certain responsibility because we have detailed knowledge of the energy issues faced by the State.
On 25 occasions over two years the committee dealt with energy and natural resources issues. We received presentations from the Department, the current Minister and his predecessor on five occasions, the Commission on Energy Regulation on four occasions, Sustainable Energy Ireland on three occasions, the ESB on three occasions, Airtricity, the Irish Wind Energy Association, Meitheal na Gaoithe, Viridian Power and Energy, ESB National Grid, Bord Gáis, Cork City Council, Cork City Energy Agency, Coillte, COFORD, Teagasc, Clearpower Limited, the IFA, the Irish Bioenergy Association, Burton Bioenergy, the Environmental Protection Agency, the Economic and Social Research Institute, IBEC, Dr. Brian Ó Gallachóir of UCC, Mr. Mark O'Malley of UCD, Bord na Móna, Ballina Chamber of Commerce, the Northern Ireland Authority for Energy Regulation, Mr. Colin Campbell and Mr. Chris Skrebowski on global oil production, the Bantry Concerned Action Group on difficulties of getting connections to the national grid, the Consumers Association of Ireland, Professor Awerbuch, an energy economist, Mr. Paul Hunt, a UK-based energy consultant, Ms. Anne Grete Holmsgaard of the Danish Parliament and concluding with the European Commissioner for Energy, Andris Piebalgs.
We expect to publish our report shortly. We had a meeting today and we are finalising the recommendations. I hope that we can have consensus, even though there are different views within the committee. I hope to publish the report based on the findings and the public hearings of the committee over the past two years. I hope it will be received by the Department and the Minister and that the recommendations form part of the policy decisions to be made in the future.
There are major energy issues facing Ireland. When he recently met the committee, Commissioner Piebalgs identified the six main issues facing Europe, namely, fully competitive energy markets in Europe, security of supply, energy mix, a climate change goal, technology and external energy policy. If these are the concerns of Europe, then they must be the concerns of Ireland. Some of these are being addressed in this Bill and I welcome the moves to facilitate full gas market opening, the underpinning of the all-island energy market, granting power to the Minister to provide for the taking of emergency measures by ministerial order in the event of a sudden crisis in the energy market, the conferring of the power on the Minister to issue policy directions to the CER, the expansion of the functions of the CER and the removal of the legislative constraints to facilitate regulated electricity interconnection not owned by the ESB.
However, these last few points give rise to a concern of mine about regulation. We set up the CER and a major thrust of this Bill is the correction of deficiencies in the workings of regulation. Regulation is here to stay, be that as an EU-imposed need to have regulation or a Government move to have regulation. Since I was elected to the Dáil we have moved to regulate all sorts of operations. We have a financial regulator, an aviation regulator and ComReg to regulate the telecom sector. We are awash with regulators and every time I hear of a proposal to set up a regulator, I believe we are inventing the wheel all over again. Surely it is not beyond our ability to have joined-up thinking on regulation and produce a generic model for regulation regardless of the sector or industry that is being regulated. For such a model of generic regulation all that is needed is to bolt on the specifics that are relevant to that industry or sector.
No legislative proposal to set up a regulator should come before this House where that legislation does not give the Minister the ability to issue a policy direction to the regulator being set up. After all, that is one of the issues we are dealing with in this Bill and the Minister has the power to issue policy direction for ComReg. This applies not only to the areas under the remit of the Department of Communications, Marine and Natural Resources but also to any regulator that may be established in future or that has already been established.
For the health, transport or sports sectors, we should have one model of regulation and implement this across all areas of Government and only add on to this base model of regulation the specifics relative to the area being regulated. I suggest that this could also apply to the setting up of any ombudsman. In this instance, we should also have a generic model that has the same standards across any office where there is an ombudsman with only the specifics having to be added on. I am tired of constantly designing the wheel as if we were living in a land where everyone was ignorant of its invention.
This leads me on to another concern of mine, which is the working of the regulatory impact analysis or assessment. I welcome the introduction and I look forward to the full implementation of the regulatory impact analysis to every legislative proposal, be it primary legislation in the Bills that come before this House or in statutory instruments. The Taoiseach is to be congratulated for his initiative. I want to see the day when the regulatory impact analysis is embedded in the DNA of the entire Civil and public service. I use the phrase "embedded in the DNA" because I first came across it when a member of staff in the Department of the Taoiseach made a presentation to the joint committee.
I would like to see the RIA process expanded to include an impact assessment of the effectiveness of the regulation regime. Therefore, when a Bill has passed Second Stage and is referred to a select committee, that committee could review the RIA before it considers the Bill on Committee Stage. A legislative process such as a committee reviewing an RIA would have been of enormous benefit in the case of the recent Sea-Fisheries and Maritime Jurisdiction Bill 2005 which caused so much concern and division in this House and in the fishing industry.
I commend this Bill and look forward to a good debate when it is referred to the committee. I hope the Government takes on board the comments I have made about a generic model of regulation and the regulatory impact analysis.
This Bill at long last seeks to give this country a more complete energy policy and that in itself is welcome but, like the curate's egg, it is merely good in parts. The energy and fuel landscape has changed and is changing radically. The move away from a confined number of fuel supplying countries to a more expanded market and efforts to secure long-term supplies of energy need common policy with our EU partners. In that respect the Bill is welcome, but the simple truth remains that this movement has more or less passed us by owing to the inaction and lack of forward planning by the Government. Our dependence on traditional fuel supplies has increased when, all around us, warnings were given that such reserves were dwindling and that alternative energies should be sourced.
Nobody would argue against the proposal for an all-island energy market, while the need to achieve advanced interconnection with Britain and Northern Ireland is urgent. In a recent written question that I put to the Minister, I received a reply that planning for the construction of a North-South interconnector is advanced and that it could be operational by the year 2012. If this Government was serious about energy, these interconnectors would have been up and running long before now and shortly after it came to power in 1997.
Energy is another area in which it appears that the Government has no head in that it only takes action when hounded to doing so.
It is most welcome that measures are being introduced to regulate electricity and gas installations and to provide safety in the industry because poor standards have applied in this area for far too long. It is a minor miracle that there have not been more deaths in the construction of buildings and the installation of electricity and gas facilities. I welcome any measure which improves safety in the industry, however late its introduction.
This Bill confers upon the Minister the power to issue policy directions to the Commission for Energy Regulation, a body which was set up as an independent commission under the Electricity Regulation Act 1999. The granting of this power to the Minister diminishes the independent standing of the commission and it is not enough to constrain his power by providing that he can only act upon the conclusion of a public consultation process. The commission is either independent or it is not. There should be no grey areas or ministerial interference in this matter.
Provisions are made in the Bill for the taking of emergency measures by means of ministerial order in the event of a sudden crisis in the energy market and for price regulation of the market. It will be interesting to learn how this Minister will construe a crisis, given that it took the Tánaiste years to wake up to the fact that a crisis existed in the health service. It is a pity she did not have similar emergency powers.
At a time when fuel prices are rising, ordinary consumers are being forced to pay more to heat their family homes and run their cars, and businesses are seeing their operational costs increase. The only issue clearly visible to the consumer is the increase in revenue this Government is collecting from the scandalously high rates of VAT it levies on fuel. In the recent past, when the Government was asked to temporarily reduce VAT on fuel, it resisted strongly because it feared that a precedent could be set that would be repeated in other sectors of industry. Precedent be damned — we should look after the ordinary citizens of this country because they elected us in the first place.
The Bill provides for increased inspection powers to monitor the installation and supply of electricity and gas throughout the country. In the past 18 months we have seen inspectorates fail to monitor nursing homes, the labour employment market and child care and crèche facilities. Does anyone in their right mind think that an inspectorate in the area of electricity and gas will succeed when all around it have failed miserably?
The idea of establishing such an inspectorate is to be welcomed but, for once, we should grant the body with adequate resources, a full staff complement, proper financial backing and, most important of all, arm it with the power to take action where it finds shoddy standards.
This Bill is good in parts but we should not settle for that. The bad should be cast aside and a long-term cross-party approach should be put in place to allow us to meet EU directives and national requirements.
I welcome the opportunity to speak on this Bill, one of the effects of which will be to take the initial steps towards opening up an all-Ireland energy market. Energy is a major issue which impacts on every aspect our daily lives. Every time we use the word "energy" we think about how fuel is becoming more expensive on a daily basis. People in the transport sector can outline how much it costs to bring our goods to us. Renewable energy has received closer attention but action is needed in terms of increasing the percentage of energy taken from renewable sources.
The ways in which we consume energy have changed in recent times. In the past, we depended mainly on coal and solid fuels but most homes are now oil or electricity dependent. Society must adapt to these changing consumption habits.
We are all becoming experts on wars in the Middle East and their effects on our lives in terms of jobs and the price of energy. These issues have gone to the top of people's agenda.
We should encourage greater use of renewable resources. If grants existed for housing insulation, the country would get a return on its investment one way or another. Many people now live in 3,000 sq. ft. houses, yet one home may be much more energy efficient than its neighbour. We should investigate these matters with a view to ensuring that houses can be more easily heated and less reliant on electricity.
A single electricity market in Ireland will not merely provide opportunities for cheaper power through economies of scale but will also provide a better basis for dealing with the crucial issues of ensuring future security and diversity of supply. The Bill also clearly charts a course towards the logical concept of a genuine all-Ireland energy market and acknowledges the fact that two small energy markets on the island do not make sound economic sense. In European terms, we are unfortunate in not having a neighbouring country to which we can link for supplies. Energy stability throughout the island of Ireland will be a major factor in attracting inward investment. Many of our industries are leaving and the cost of operating in Ireland is a major disincentive for companies locating here. We have enough difficulties in retaining the jobs we already have here and companies have a big battle on their hands with this issue.
As the island, North and South, is generally regarded as a single economic entity, it follows that a single electricity market is a logical next step. Ireland has the seventh most expensive energy prices among the 25 EU member states, largely due to a lack of competition among the two State companies, ESB and Bord Gáis. This expense makes it difficult for companies to create jobs here. It is important that Northern Ireland and the Republic of Ireland look to the longer term of 2020 and beyond when considering future energy policies. North-South collaboration in an all-Ireland energy market as well as in electricity is the most effective way of going about this. An all-Ireland electricity market will have as its aim the provision of competitive, sustainable and reliable markets in electricity at the minimum cost because businesses need cost effective markets. This single market should also be capable of meeting the increasing electricity and energy requirements of the island in ways that are compatible with national and EU sustainable energy policies and targets.
Policies should be developed to encourage and facilitate greater contributions from renewables, combined heat and power and energy efficiency. Renewable energy comes from energy sources which are continuously replenished by nature. The main sources of renewable energy are wind, solar energy, hydro power, wave and tidal energy. We are not making sufficient use of these resources and we should be harnessing them because they are free. Our power should come from these sources in future.