Brian O'Shea (Waterford, Labour)
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Question 70: To ask the Minister for Communications, Energy and Natural Resources his views on IBEC's concerns regarding potential loss of competitiveness in view of the renewable energy sector here; and if he will make a statement on the matter. [14675/08]

Eamon Ryan (Dublin South, Green Party)
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Our capacity to deliver a secure energy supply at competitive cost is critical for Ireland's ability to attract and retain foreign direct investment. It is also critical for all sectors of indigenous Irish enterprise competing in global markets. Increasing the contribution of indigenous renewable energy will improve security of supply by substituting for expensive and volatile fossil fuel imports. It will also enhance environmental sustainability by reducing CO2 and other emissions. Renewable energy contributes, therefore, to the creation of a long-term, secure and stable energy investment framework and to competitive energy supply.

The exponential rise in gas, oil and coal prices on global markets during the past 12 months is the key factor in increased energy costs for Irish business and consumers. In an era of high fossil fuel prices, the competitiveness of renewable energy technologies will continue to grow demonstrably. Ireland is a price taker in terms of fossil fuels. Indigenous renewable energy sources will progressively reduce our dependence on fossil fuels. Some renewable technologies are already at or near market competitiveness and their relative position will only be improved in the face of increasingly expensive fossil fuel prices.

Some international experts are of the view that increasing renewable energy usage also helps reduce overall prices by reducing the fuel risk exposure of companies to volatile fossil fuel price rises. We are investing significantly in national energy infrastructure, which is critical for social, economic and regional development. IBEC has endorsed the priority need for investment in transmission and distribution networks, power generation capacity and electricity interconnection. This investment will underpin economic competitiveness and enable the integration of renewable energy on to the grid.

Liz McManus (Wicklow, Labour)
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This question was tabled in the context of job losses and the concerns expressed by the business community and Forfás regarding inflation and the high cost of services, not only in the energy sector but in the extremely expensive area of telecommunications. I fully endorse what the Minister stated. The business sector and IBEC support the policy he promotes. However, questions arise as to how that policy will be paid for. When one considers the extent of infrastructural investment required, one must also ask how we will get from here to there. The ESB referred to an infrastructural investment of €22 billion and the relevant report indicates that an investment of approximately €800 million will be required in respect of the grid. These are enormous commitments.

Apart from a notional commitment in the Department's Vote, which was discussed, in the context of the Revised Estimates, at this morning's meeting of the Select Committee on Communications, Energy and Natural Resources, the Government is offering nothing in respect of the developments to which I refer. I presume consumers will be obliged to pay the bill. The latter is the issue that concerns those in business and the people who are paying these bills at present. During this morning's debate at the select committee, it emerged that the dividend paid by energy companies to the Government is not included in the figure for appropriations in aid. I presume that money could be invested in infrastructural development. Will the Minister clarify how he envisages how the bill will be paid?

Eamon Ryan (Dublin South, Green Party)
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As I understand it, the dividend is paid to the Department of Finance. Our overall budget allocation is then given to us by that Department.

The issue of high energy prices is crucial. We are engaged in a retreat from fossil fuels. At the same time, my Department is promoting an advance in digital technologies. The latter requires a great deal of electricity. As the advance into such technologies proceeds, it is a real competitive issue to have good, clean, green electricity available for use. There were several reasons electricity prices here were so high in recent years. However, the key reason was our exposure to fossil fuel as a percentage of our fuel mix.

Liz McManus (Wicklow, Labour)
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Those prices were artificially managed for reasons of competition. What the Minister is saying is not strictly true.

Eamon Ryan (Dublin South, Green Party)
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It is my opinion.

Liz McManus (Wicklow, Labour)
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I do not believe the Minister is correct.

Eamon Ryan (Dublin South, Green Party)
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The second reason related to very poor performance by a number of ESB plants during peak periods. We have, therefore, an urgent need to keep electricity prices here low. By investing in renewable sources of energy, we can do so. The fuel price is free. As already stated, renewable energy often provides a good hedge against varying gas prices and brings the overall cost of electricity down. It also subvents the public service obligation to support peat power plants. It is open to us to develop a renewable energy industry that will bring about price competitiveness rather than increased costs.

We must, however, consider the long-term position. We are approaching a peak in global oil production and we are also at the end of the gas supply lines. If we continue to rely on fossil fuels for 90% of our needs, we will be placed in an increasingly poor competitive position. It makes economic sense to switch to renewable sources of energy because they are cheaper and represent a direct return for the people.

Liz McManus (Wicklow, Labour)
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No one is arguing about the need to move to renewable sources of energy. I wish the Minister would not give the standard reply on each occasion these issues are raised. This matter revolves around businesses surviving in an extremely difficult economic climate. The Minister must respond in respect of the difficulties businesses have at present in the context of paying high energy bills. I presume those businesses will also be obliged to pay for the infrastructural development required to move to renewable sources of energy. This is a practical and short-term issue and concerns have been expressed about it by IBEC. Who is carrying out the economic analysis required to ensure that people who can pay the bills relating to the development of our infrastructure are employed here?

Simon Coveney (Cork South Central, Fine Gael)
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There is no need for the Minister to convince us on the merits of the shift to renewable energy. The issue at hand is how we are to adapt existing infrastructure to facilitate that shift. One of the factors in the increasing price of energy is that we are required to factor the cost of carbon into the price of electricity. Is the Government examining ways in which some of that money can be recouped? Electricity producers such as the ESB are given their allocation of carbon for free but they factor the cost of carbon into the price they charge to consumers. Is the Minister considering introducing something similar to, for example, a windfall tax which could create the type of fund, to which Deputy McManus referred, that is needed to facilitate competitiveness and infrastructural development?

Eamon Ryan (Dublin South, Green Party)
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Yes. I explicitly support the development of the emissions trading scheme in such a way that rather than giving free allocations, energy providers will be obliged to auction in order to purchase. I look forward to the introduction of such a change to the scheme so that we can obtain greater efficiencies in our electricity system. This change will also deliver funds that will help develop some of the infrastructure we need.

Simon Coveney (Cork South Central, Fine Gael)
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That will not happen until after 2014.

Eamon Ryan (Dublin South, Green Party)
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No, it will be 2012. If possible, we will do it sooner. However, it must be done within the European Union context. We will need to develop the infrastructure, particularly that relating to the grid, and this will help us deliver some of the technologies to which I referred earlier. That will probably be one of the biggest constraints.

I replied to Deputy McManus's original question in the context of IBEC's concerns. While we may agree regarding the wisdom of switching to renewable energy sources and the competitive advantage that comes therefrom, it is clear that work remains to be done with IBEC in this regard.

Liz McManus (Wicklow, Labour)
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IBEC supports the Minister.

Eamon Ryan (Dublin South, Green Party)
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Perhaps what we should do is cite the work of the CBI — IBEC's counterpart in the UK — which has drawn up a very progressive and ambitious programme of change.

Liz McManus (Wicklow, Labour)
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The Minister is being very unfair. I do not normally defend IBEC because it is not my role to do so. In this instance, however, he should listen to what IBEC has to say.

Eamon Ryan (Dublin South, Green Party)
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I listen with due consideration and every respect to IBEC. However, I cite the CBI's recent report as a best case example of industry groups seeing the opportunities as well as the challenges that exist in the context of our new energy future.