Thomas Pringle (Donegal South West, Independent)
Link to this: Individually | In context

Question 3: To ask the Minister for Communications; Energy and Natural Resources if he has considered the development of a wood biomass industry to offset home heating oil imports, to create indigenous jobs and to reduce carbon emissions here; and if he will make a statement on the matter. [24144/11]

Pat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

The 2007 Energy White Paper set overarching targets for penetration of renewable energy in the electricity, heat and transport sector. These targets are 40% renewable electricity, 12% renewable heat and 10% renewable energy in transport. These three sectoral targets are in line with meeting our renewable energy directive target which sets a binding 16% penetration of all energy from renewable sources.

Currently, Ireland imports some 90% of its fuel to meet demand at a cost of approximately €6 billion per annum. Developing renewable sources of energy, including energy from biomass, will help Ireland to reduce its dependence on these imports. In addition, because sustainable biomass is considered carbon neutral, it will also assist Ireland in meeting its climate change commitments under the Kyoto Protocol and the 2020 European Union targets.

In order to support renewable energy from biomass and waste, my Department is in the process of introducing new tariffs for biomass technologies under the renewable energy feed in tariff, REFIT, scheme. REFIT is designed to provide certainty to renewable electricity generators as to the price they receive. It has been in operation for wind, landfill gas and hydro power since 2006, acting to ensure a guaranteed price for each unit of electricity exported to the grid by paying the difference between the wholesale price for electricity and the REFIT price. The tariffs for biomass technologies will range from 8.5 cent per kilowatt hour to 15 cent an hour depending on the technology deployed and will include higher tariffs where the heat generated by a plant is being used more effectively. These biomass REFIT rates are in the final stages of being cleared through the State aid process by DG Competition in Brussels.

Other measures that will assist the development of biomass include the Department of Agriculture, Fisheries and Food's bio-energy scheme, which offers supports to farmers to grow miscanthus and willow for use as energy crops, and afforestation grants to encourage new forests. Full details of all these scheme supports are available from the Department of Agriculture, Fisheries and Food.

Thomas Pringle (Donegal South West, Independent)
Link to this: Individually | In context

I thank the Minister for his reply, although only the last two sentences address my question. There is great potential to create an indigenous wood for home heating industry which would offset the importation of home heating oil. Given that, as the Minister stated, we are currently importing all the heating oil we use, such a development would greatly assist with our balance of payments. The industry would be based in rural areas, where we already produce more wood than is needed to heat the entire country. It would create jobs, something of which we have heard so much from the Government under the so-called NewERA.

Unfortunately, the Minister did not address these aspects in the opening part of his answer. Will the Government support the development of a wood for home heating industry and thus facilitate the creation of indigenous jobs and a reduction in imports of home heating oil? That would be of significant benefit to the economy and would help to address fuel poverty.

Finian McGrath (Dublin North Central, Independent)
Link to this: Individually | In context

Hear, hear.

Pat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

I meant no disrespect to the Deputy. It is conventional to provide this type of background information; not everybody is as knowledgeable about REFIT and the subsidy to the industry as is Deputy Pringle. I did no more than elucidate that point.

I do not disagree with what the Deputy said, but his expectation for an indigenous industry is somewhat exaggerated. I agree with the general thrust of his contribution in terms of the capacity of this area to make a contribution to our electricity and heating needs and to contribute to rural development and the creation of jobs in rural areas. However, in all fairness, one of the reasons I wanted to explain how REFIT works is that there may be an assumption by some people that all it requires is the press of a switch and we will have a biomass industry. As stated in my reply all of this involves a subsidy and people should understand that. I also stated that the tariff will range from 8.5 cent to 15 cent. That is a consideration. The net point as far as the Deputy is concerned is that this matter is being progressed. It has been with the relevant DG of the EU for some time and I expect a decision on the matter in the next couple of months.

Thomas Pringle (Donegal South West, Independent)
Link to this: Individually | In context

I suggest that the Minister's officials contact the Donegal Woodland Owners Association and Western Development Commission, which is currently running the RASLRES programme that is examining the potential of this industry. I believe that a policy rather than a subsidy is what is required to encourage and develop this industry and I do not believe the EU-IMF-ECB or anyone else would have a problem with that.

Pat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

We are agreed on the desirability of building a renewable sector that can make a contribution to the targets that we must meet in a European context. I accept that biomass is an aspect of that. I reiterate, however, that I would not be as optimistic as Deputy Pringle in terms of the quantum that will be contributed. That does not mean that it is not important. I accept that it is important in the context of rural development and indigenous employment.

Éamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context

Question 4: To ask the Minister for Communications; Energy and Natural Resources if he intends giving approval to the REFIT programme; and if he will make a statement on the matter. [23963/11]

Pat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

The renewable energy feed in tariff scheme known as REFIT was introduced in 2006 for certain categories of renewable energy, including onshore wind. Since then, the tariffs have been increased, where applicable, by the annual consumer price index. Adjustments to the rate are by way of indexation annually and by the annual increase, if any, in the consumer price index in Ireland.

REFIT is based around 15-year power purchase agreements between generators and suppliers which provide wind energy developers with the necessary certainty required to finance their projects. The scheme is funded through a public service obligation, PSO, levy, paid for by all electricity consumers. With the support of REFIT, the sector has continued to grow strongly and there is now approximately 1,800 MW of renewable generation capacity connected to the electricity grid. In addition, there is a further 1,100 MW of renewable generation capacity with signed connection offers. This capacity will build out over the next few years.

The next batch of generation capacity is referred to as the Gate 3 process and consists of approximately 4,000 MW of renewable generation capacity. The projects in this category are scheduled to be connected to the grid between 2012 and 2020. EirGrid currently forecast that approximately 4,500 MW of renewable generation capacity is required to be connected by 2020 to achieve our national renewable electricity target of 40% of all generation from renewable technologies.

The original REFIT scheme was designed with a view to delivering our 2010 renewable electricity target of 13.2% of electricity consumption from renewable technologies. It was successful in achieving that target and Ireland was one of only six member states to achieve its 2010 target level. Officials from my Department are currently finalising state aid clearance with DG Competition in Brussels to continue to offer REFIT for the next batch of renewable energy projects that are in the Gate 3 process. It is proposed to offer the same rates of tariff as in the original scheme.

Additional Information not given on the floor of the House.

There are two state aid clearance processes underway, one in respect of onshore wind, landfill gas and hydro technologies and a second in respect of various biomass categories. The Commission is currently finalising its assessments on both applications and I am confident that we will have a positive outcome shortly in both cases. As this is a Commission decision process, it is not possible to give an exact conclusion date. Once these clearances have been received from Brussels the final proposed schemes will be brought, as soon as is practicable, to Government for sign-off before being opened for applications.

Any additional REFIT rates beyond these technologies will have to be considered carefully by the Government given the cost implications to the electricity consumer. The Public Service Obligation levy is imposed against all consumers' electricity bills, domestic and commercial. The objective is to balance the imperative of increasing the penetration of renewable energy with the retention of competitive affordable energy supply.

Éamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context

Is the Minister willing to hold back on the decision in regard to the new REFIT, which is fundamentally different from the old one, until an Oireachtas committee has had a chance to examine the issue? There are people who believe that this is a great giveaway, which will give so-called suppliers, namely, big companies such as the ESB, Airtricity and Bord Gáis, a licence to print money to the tune of €1 billion on the backs of Irish taxpayers.

The reason is that the new REFIT works on the basis that the producer, that is, the person with the wind farm receives a fixed tariff, that the supplier receives a fixed margin, with virtually no risk, and if the price increases due to the cost of oil the supplier, rather than the producer, gets the benefit. In view of all these serious public concerns about this scheme, which was devised by his Department, is the Minister willing to hold back on any decision on the new REFIT programme until the Oireachtas committee has had an opportunity to examine whether the concerns raised by people of good bona fides and knowledge are founded? It would appear to me that they are well founded.

Pat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

The application is with DG Competition of the European Commission for 18 months or longer and is in the final stages so I do not see how I can pull back. Certainly, I am more than willing to go into committee with Deputy Ó Cuív and other members to tease through this issue because there are questions that need to be examined with regard to this system. I am assured there is no basis for the claim that REFIT is a licence to print money. As I said to Deputy Thomas Pringle what is involved here is essentially a subsidy, whether it comes from the consumer or the Exchequer, and for that reason it must be measured very carefully. The whole idea is to bring more competition into the market to make us less reliant on fossil fuels and to use a natural resource, of which we have a bountiful supply, but I accept there has to be a balance.

Éamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context

Will the Minister leave the issue with the Commission while we examine it? Will the Minister agree that no REFIT contracts will be entered into under the new scheme pending discussion by the committee? The allegation made is that a margin is given to the supplier - not the person with the wind farm who must operate through a supplier - for virtually no risk and if the price increases the supplier gets all the benefit. If the price is low the State foots the bill and if the price is high the supplier, rather than the producer, gets all the benefit. Therefore, there are two major gains for the supplier for virtually no risk. These are not the people who build the wind farms but the major companies who would put the electricity on the market. Will the Minister clarify the amount to be paid to the supplier multiplied by the total number of megawatts he intends to produce, multiplied by the 15 years these contracts would be place? Will he hold back on issuing any REFIT contracts until the Oireachtas committee has had an opportunity to examine what, prima facie, appears to be a serious giveaway from the State?

Pat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

I am assured that the contribution is no more than is necessary to encourage new entrants into the marketplace, which is what we are seeking to do. If there are these big holes in it - the scheme was devised by Deputy Ó Cuív and his colleagues - I do not know when it dawned on him that there are such holes in it. I am happy to go into committee and examine it. I appreciate the Deputy holds strong on it, about which we have spoken briefly privately. I am anxious to submit it to that type of scrutiny but the professional advice I have is that, contrary to Deputy Ó Cuív's conviction in the matter, the scheme is well balanced. It simply would not function unless there was some element of REFIT.

Éamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context

Absolutely. Like the old REFIT.

Pat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

Therefore, all we are debating is the quantum.

Éamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context

No. The Minister has been-----

Michael Kitt (Galway East, Fianna Fail)
Link to this: Individually | In context

We are running out of time. We are dealing with a priority question.

Éamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context

The reality is-----

Pat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

The Deputy is behaving like a new Member of the House. He is mad for action. I believed he would be tired-----

Bernard Durkan (Kildare North, Fine Gael)
Link to this: Individually | In context

So did I.

Éamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context

No. The Minister looks exhausted.

Pat Rabbitte (Dublin South West, Labour)
Link to this: Individually | In context

-----after all the years he spent making the wrong decisions. I believed he would be worn out.

Éamon Ó Cuív (Galway West, Fianna Fail)
Link to this: Individually | In context

I have great stamina and do not look exhausted.