Róisín Shortall (Dublin North West, Labour)
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Question 57: To ask the Minister for Communications, Energy and Natural Resources the position regarding the percentage of bio-fuels in the market here; the percentage that is imported; the origin of these imports; and if he will make a statement on the matter. [10124/10]

Catherine Byrne (Dublin South Central, Fine Gael)
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Question 87: To ask the Minister for Communications, Energy and Natural Resources the measures he is planning to introduce to promote bio-fuel production domestically in view of setting a bio-fuel content for petrol and diesel target of 4%. [10163/10]

Eamon Ryan (Dublin South, Green Party)
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I propose to take Questions Nos. 57 and 87 together.

The national bio-fuel obligation will require suppliers of road transport fuels to ensure that 4% of their volumes sold on the Irish market is bio-fuel. The legislative basis for the obligation is provided for in the Energy (Biofuels Obligation and Miscellaneous Provisions) Bill, which has recently been introduced in the Oireachtas with a view to its enactment in the coming weeks and entry into force by July next.

My Department calculates that in a full year, approximately 220 million litres of bio-fuels will be required to deliver the 4% target. In 2008, the last year for which data are currently available, 85 million litres of bio-fuels entered the Irish market. My Department currently compiles information on the origin of bio-fuels imported under the mineral oil tax relief schemes, MOTR. Under the schemes, approximately 30% of eligible bio-fuels were produced in Ireland in 2008, with the remainder being imported.

The production of bio-fuel in Ireland has been incentivised to date under the mineral oil tax relief schemes, which have resulted in 18 projects being awarded excise relief on specified volumes of bio-fuel they produce. At least five bio-fuels plants have been constructed or redeveloped on foot of excise relief granted under the schemes. A number of others are either at an advanced stage of planning, or have received planning permission.

Prior to the introduction of the excise relief schemes in 2005, market penetration of bio-fuels in Ireland was almost non-existent. While a figure for market penetration for 2009 is not yet available, it is expected to be in excess of 2%. The steady growth in indigenous bio-fuel production is reflected in the fact that it represents over 50% of bio-fuel production to date. The excise relief schemes were designed as an interim measure to increase the level of bio-fuels in the fuel mix and to encourage the development of an indigenous bio-fuels industry in advance of the introduction of the national bio-fuel obligation.

The national bio-fuel obligation will, by definition, incentivise the sustainable growth of the Irish bio-fuels market and will support indigenous bio-fuel producers and expand the sustainable indigenous production of bio-fuels. The EU sustainability criteria will also provide competitive advantage for Irish and other EU producers by ensuring that non EU imports meet strict environmental guidelines.

Liz McManus (Wicklow, Labour)
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I welcome the forthcoming legislation. It is common sense in terms of the percentage determined. However, I am sure the Minister is aware there has been quite harsh criticism from the indigenous and developing bio-fuels industry that it is simply being left up to the market to determine how this will develop. Will he accept that if he pursues the current policy, if it can be called a policy, we are in danger of simply replacing one imported fuel with another one?

Has the Minister a strategy to develop the indigenous enterprises in a coherent way? I have no doubt the Minister, as is his wont, will make very flowery speeches about the bio-fuels sector as he does about the wind sector and other renewable sectors which are very often still stuck and underdeveloped because of a lack of a strategic approach by the Government. I have several questions on the indigenous bio-fuels sector and sustainability. How does the Minister intend to ensure Ireland exceeds the 30% target? How does he propose to ensure rigorous sustainability criteria are applied to imported bio-fuels? How will sustainability be tracked to create confidence that Ireland is not part of the problem in the developing world, particularly with regard to the effects of bio-fuel production on agriculture?

Eamon Ryan (Dublin South, Green Party)
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Bio-fuels are not an area in which the market can be left to its own devices as to do so would result in unsustainable fuels being imported from rainforest regions and other unsustainable sources. This is the reason I was active and supportive of the European Union proposal for sustainability criteria to be the first requirement. This means legislation set in Brussels rather than individual markets would be the deciding factor. The crucial issue in this respect is that a carbon reduction requirement of 35% would exclude a whole market from exporting bio-fuels to this country. The United States corn to ethanol market, which caused considerable damage and undermined domestic Irish production, has been stopped by the imposition of sustainability criteria.

While I wish to pursue the development of an indigenous market, this must be done within the rules of the World Trade Organisation, particularly given that our agriculture sector lives by the rules of that organisation. We cannot breach WTO rules in one area while seeking the protection of the WTO in other areas in which we may have commercial advantage.

The first requirement for the development of an indigenous industry is to have a secure, stable market in Ireland. Significant domestic supply sources, both in waste products and the agriculture sector, will have commercial viability in a more stable market. The first requirement is to find out how this works under the European Union's sustainability criteria.

Simon Coveney (Cork South Central, Fine Gael)
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I understand Ireland can take three specific measures in conjunction with the legislation to promote the indigenous bio-fuels industry. Different countries take different views on import tariffs, with Germany and Britain taking different approaches. Which country's approach does the Minister favour? The French have decided to ignore the issue of import tariffs by requiring localised production of bio-fuels before they can be used in the blending process. What is the Minister's view of the French position?

I understand it is possible to require that ethanol be of a certain quality before it can be blended. I refer to ethanol rather than bio-diesel because the former has been the subject of more discussion. Imposing such a quality standard would effectively preclude the use of sugar cane in the production of bioethanol. What is the Minister's view on having such a requirement?

Eamon Ryan (Dublin South, Green Party)
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These are complex technical issues which are, I understand, related. In the systems adopted by the countries to which the Deputy referred, a defining choice must be made about whether one discriminates against unrefined ethanol products versus refined products. I understand that refined ethanol can be transported from Brazil to Europe, whereas unrefined ethanol would not survive such a long journey. A number of European countries, of which Germany, I understand, is one, have introduced a requirement that bio-fuel imports must be non-refined. In so doing, they have protected sources of domestic production. My Department has met a number of those who are examining this complex and difficult issue. A difficulty is that if a similar requirement was in place here, we would have to import bio-fuels from European sources, rather than Brazil and it is not certain that such circumstances would be better for Irish farming.

While the Department is open to considering various regimes, I am reluctant to follow a particular course until the European Union publishes or establishes sustainability criteria. It would be best to administer the system on the basis of continuing review to ensure it supports indigenous producers. How one does this is not as clear or simple as following a German or British model.

Simon Coveney (Cork South Central, Fine Gael)
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The Minister failed to answer my questions on two of the three issues I raised. Irish farmers do not have a problem competing with other European countries in the area of ethanol production. Competing with sugar cane plantations in Brazil is making life potentially impossible for them. The Minister raised the prospect of importing unrefined ethanol from other European countries. The Irish market is capable of competing with other European markets.

Eamon Ryan (Dublin South, Green Party)
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Such a scenario may not meet our common objective of giving Irish farmers a viable market supply. If we were to go down this avenue and we ended up importing these products from Rotterdam or elsewhere, it would not be of any benefit to the Irish agricultural sector. In that case, it would not be the correct course of action.