Joe McHugh (Donegal North East, Fine Gael)
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Question 4: To ask the Minister for Communications, Energy and Natural Resources if he will launch or bring forward a national strategy for the promotion of bio-fuels; the details of same; the role he envisages bio-fuels will play in Ireland's energy mix; and if he will make a statement on the matter. [21647/08]

Eamon Ryan (Dublin South, Green Party)
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The Government is firmly committed to the sustainable development and deployment of bio-fuels in line with the EU commitments agreed by the European Council in March 2007. We have committed to achieving a target of 5.75% market penetration by 2010, in accordance with the current EU bio-fuels directive and Commission proposals in this area. We have also committed to achieving 10% market penetration of bio-fuels by 2020 which is the target proposed by the EU Commission. These targets will be underpinned by the introduction of a bio-fuels obligation in 2009. The proposed obligation will require all fuel suppliers to ensure that bio-fuels represent a certain percentage of their annual fuel sales. By moving to an obligation market players will be given the long-term certainty to make appropriate investment decisions. Eleven other member states have chosen obligations as their preferred policy option.

My Department is actively engaged in the EU Council Working Group, which is working to agree the sustainability criteria. Currently, the feed stocks used for bio-fuels production are generally sourced on the open internationally traded commodities market with little or no information attached to these with regard to their origins. It is only through setting stringent sustainability criteria that Ireland and other member states will be able to trace the source of these fuels, and obviate the cumulative effect of unsustainable practices on developing countries. I wholeheartedly support the Commission's commitment to ensuring that rigorous sustainability criteria are put in place and complied with under the new directive.

The obligation will build on the 2005 and 2006 mineral oil tax relief schemes for bio-fuels. A total of 18 projects have been awarded excise relief between 2005 and 2010. The schemes, valued at more than €200 million aim to ensure that Ireland reaches an initial target of over 2% market penetration of bio-fuels this year. The schemes are geared towards those producing bio-fuel. As a result of the excise relief schemes, bio-fuels are already being mainstreamed in blends of up to 5% at a number of existing petrol and diesel pumps.

Ireland's national bio-fuels obligation will take full account of EU developments on bio-fuels and related sustainability. Ireland is working closely with other member states in the negotiation of the directive to ensure that all bio-fuels placed on the European and Irish market are verifiably produced by reference to appropriate environmental and social sustainability criteria.

Additional information not given on the floor of the House.

The motive for promoting bio-fuels is to reduce our greenhouse gas emissions from the transport sector and to ensure we have an alternative fuel supply to power essential transport, agriculture and industrial services in the event of a disruption in conventional oil supplies.

I will shortly be launching the public consultation process on the proposed obligation which will allow all interested stakeholders to submit their views on the proposal. Specific details of the obligation will be finalised on foot of the consultation process and will reflect EU developments over the coming months.

Joe McHugh (Donegal North East, Fine Gael)
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The Minister's colleague, the Minister for Transport, Deputy Dempsey, announced the introduction of bio-fuels schemes in 2007 at which time he promised there would be a period of consultation to be followed by the introduction of legislation. It is now mid-2008 and as of yet consultation has not taken place. Furthermore, we are still completely in the dark about the proposed legislation. Will the Minister clarify if at this late date there will be a consultation period and, more important, will legislation on this area be introduced shortly?

Some 16 companies in this sector have been granted permits for excise duty. Does the Minister consider that figure of 16 companies is adequate or should the number of such permits granted be increased to stimulate the bio-fuels industry?

Eamon Ryan (Dublin South, Green Party)
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I hope and plan to have the consultation paper prepared in July this year. There will be a consultation process prior to any legislation being framed.

We are very much driven by the proposals being developed in the European Union. This is an area where we as a small country cannot control world markets or the World Trade Organisation's negotiation rules in the area. We have to work with the Commission. I agree with the key developments it is examining. The first is to guarantee that any bio-fuels development adds a carbon emissions reduction, namely, that there is an energy gain from it. A second development it is examining is that any bio-fuels development must be from sustainable resources. We must ensure we are not in the process of developing bio-fuel targets that would lead to world hunger, that would result in the chopping down of native rainforest or infringe other ecosystems which must be protected and that we can have a clear traceability of fuels so that we know exactly from where they are coming. It is through such European negotiations, which are ongoing and should be completed by the end of this year, that we will establish our policy framework.

A bio-fuels obligation system is the right way to go rather than the taxpayer subsidising the sector. The targets in this sector are different from some of our other renewable targets in that they are not targets for us to strain to exceed or reach at any cost. We need a small supply of bio-fuel alternative fuels to ensure that if we do have a serious future oil shock, we will have an essential alternative oil supply that will run essential farming, industrial and transport services to maintain our society.

The key incentive for me in developing bio-fuels is to have a security of oil supply in the event of a global oil shock. We would obtain a 1% or 2% supply from waste material, which is a small but significant percentage. Such energy generation contributes to solving an environmental problem and it is indigenous. The more companies there are in this area, the better. We should aim to grow as many bio-fuel crops as we can without bankrupting or destabilising other aspects of our agricultural industry. There is potential to grow additional crops, particularly if there is the development of second generation bio-fuels, which involve the use of a feed stock — not a product that would otherwise go into the food chain but one such as algae or some other such product that does not interfere with the food market. We will also be purchasing bio-fuels on the international market, but that can only be done within the constraint of the new EU obligation system which, itself, will set the criteria that makes sure that they are sustainable and that their production does not cause world hunger. That is the policy framework within which we will develop a bio-fuels policy.

Joe McHugh (Donegal North East, Fine Gael)
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Having regard to all the proposals the Minister mentioned, in terms of the windfall tax that will be substantially gained by the electricity producers up to 2012 in regard to carbon tax exemption, is he prepared to take back that levy and windfall gain and discuss with those involved what he is seeking to realise within a more sustainable and environmentally friendly society?

John O'Donoghue (Kerry South, Ceann Comhairle)
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I ask the Minister to give a brief reply as I must move on to the next question.

Eamon Ryan (Dublin South, Green Party)
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My Department is looking at the details of that issue. It is an issue across the European Union because it is under the European emissions trading system that such windfall profit arises.

Joe McHugh (Donegal North East, Fine Gael)
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Will the Minister consider taking it back?

Eamon Ryan (Dublin South, Green Party)
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We are looking at the proposal. There are difficulties involved.

Joe McHugh (Donegal North East, Fine Gael)
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Will the Minister take it back?

Eamon Ryan (Dublin South, Green Party)
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I am trying to answer the Deputy's question. There is only one country in the European Union which has progressed a proposal in that regard, that is Spain. It is running into legal difficulties with it, which is a constraint, but it is something that we are looking at with the regulator.

Joe McHugh (Donegal North East, Fine Gael)
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Is the Minister looking at it or considering it?

Eamon Ryan (Dublin South, Green Party)
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I have to return to the fundamental principle I mentioned earlier. The way the Spanish are approaching this — and what Fine Gael proposes in this respect — is in terms of tax revenue, namely, that it would be taxed. Such tax yield would go back into the general tax revenue. My key point on this issue is that if we are raising any revenues, and it is not by any means certain or easy that it could be done effectively but if we can — and we are examining that — we would have to ensure that the revenue goes back into what is the most crucial investment we need to make, namely to turn this economy around to ensure a renewable, more energy efficient future.

John O'Donoghue (Kerry South, Ceann Comhairle)
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We must move on to the next question, No. 5 in the name of Deputy Coonan.