Clare Daly (Dublin North, Socialist Party)
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Question 9: To ask the Minister for Communications; Energy and Natural Resources if any cost benefit analysis has been carried out to determine the possible advantage of semi-State led development of the world's best wind and wave renewable energy resource off the Irish coast using EIB loans; and if he will instruct that such a cost benefit analysis be organised. [35738/12]

Pat Rabbitte (Dublin South West, Labour)
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While offshore wind is already being deployed in a number of EU member states, it is still a very expensive technology to deploy. Offshore wind currently costs in the region of €3 million per MW to deploy compared to the cost of onshore wind which is about half of that. Wave energy technology is still very much at the research and development stage and the commercial and technical feasibility is not yet proven. While there are very promising wave technology devices in development, they are at pre-commercial stages. Hence, it is not yet at a stage where large scale commercial scale development for the generation of electricity could take place.

The national wave energy sector has been supported over recent years through the ocean energy development unit in Sustainable Energy Authority of Ireland, SEAI. Support has included a prototype development fund of research grants to industry, the enhancement of the wave tank test facility in the hydraulics and maritime research centre in Cork and the development of a quarter scale prototype wave test site in Galway Bay. Further work includes preliminary design and survey work on a full scale wave test site off County Mayo.

Ireland has a very small electricity market, with around 2 million electricity consumers. Given the very significantly higher price of developing offshore wind compared to the lower cost onshore, it makes economic sense that we focus on developing less costly onshore wind resources to deliver Ireland's binding EU targets for renewable electricity. It is not the Government's intention that Irish consumers fund offshore wind development through a feed-in-tariff. Wave energy technology is not yet commercially viable and is therefore appropriately supported by research and development funding. This position applies to all projects, irrespective of whether they are developed privately or by the semi-State companies. The best future for Ireland's offshore wind resource lies in becoming an export industry.

The renewable energy directive provides the mechanism by which the renewable value of electricity can be traded. I am working bilaterally with my UK colleagues to create the necessary framework to enable trading between our two countries. Any project development that takes place for export has to occur under the auspices of a legal inter-governmental agreement with the UK under Directive 2009/28/EC. There are currently a number of project developers that have expressed interest in renewable export. The manner in which projects falling under the intergovernmental agreement would be selected remains to be established.

Additional information not given on the floor of the House.

The agreement with the UK will be developed in a way which ensures a mutually beneficial arrangement and to ensure tangible economic benefits for Ireland. If renewable energy power is being exported and consumed in the UK, then UK consumers will have to provide the necessary financial support to make the development commercially viable. These costs will not fall on Irish energy consumers.

Clare Daly (Dublin North, Socialist Party)
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The Minister's response is disappointing and seems to contain contradictions with the Labour Party's energy revolution policy proposal. In opposition, the Labour Party had identified the enormous potential of wind and wave power on environmental grounds and in terms of job creation. Some 20,000 jobs in ocean energy, 10,700 jobs in wind energy and 7,000 jobs in construction were talked about three years ago. The basis of the Minister's answer dampens the potential of this area. The question asked whether the Department had carried out a cost benefit analysis and I must pose the question again. We pose the question on the day the National Competitiveness Council scorecard came out and rated Ireland's performance as abysmal in terms of environmental sustainability. We are 24th out of 28 in energy from renewable sources. We have slipped two places since the last scorecard. It is just not good enough and the Government will be judged on this. Private companies are considering this. Why should they be the ones to benefit from it? The geographical conditions are unique and the semi-State sector should make this investment for all the reasons proposed by the Minister when the Labour Party was in opposition.

Pat Rabbitte (Dublin South West, Labour)
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Deputy Daly is confusing many things in that peroration and, in the process, misrepresenting the policy of the Labour Party then and of the Government now. This matter is attracting enormous concentrated attention. We will proudly deliver on our extraordinarily ambitious target of 40% generation of electricity from renewables by 2020. As I said in my reply, I am in negotiations with the British Energy Secretary with a view to concluding a memorandum of understanding on an international framework to permit trade in renewable energy from this country to the neighbouring island. That holds out the prospect of significant employment. We have a relatively small market in Ireland, amounting to some 7,000 MW on an all-island basis. We may well have the capacity to generate much more provided we have an export outlet. There is no point, however, in generating electricity which we cannot use because storage is a problem. It is a very exciting area and some of the proposals announced in recent weeks by large-scale players in the industry are very interesting. However, they cannot proceed until an intergovernmental framework is in place, which I hope will be the case by the end of the year.

Clare Daly (Dublin North, Socialist Party)
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The 40% target was agreed upon when the Labour Party was in opposition. Unfortunately, the figures show there has been some slippage since then. The point is that we have a hugely undervalued potential resource. As the Minister observed, wave energy is hugely expensive. Although its development is essentially in its infancy, it is progressing well and there is no reason that we cannot be world leaders in this area. Why should a semi-State company not spearhead that development rather than leaving it to the private concerns lining up on the wings to benefit out of it, as they will do in the case of the Corrib gas field? This is a resource for the people and something which can stimulate job creation. That is what the Minister's party argued for in opposition - I have read the document - and I would have assumed its policy in government would correspond. Will the Minister respond to my question on the cost-benefit analysis?

Mick Wallace (Wexford, Independent)
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The National Competitiveness Council report to which Deputy Clare Daly referred indicates that Ireland is among the countries in Europe most dependent on oil as a source of energy consumption. The latest figures show that in the first quarter of this year, exports increased by some 2.5% while imports rose by 5%. The price of oil, over which we have no control, is a huge factor in that. Does the Government see any potential to address this problem by way of investment in renewable energies? There is a serious difficulty in that oil prices are something over which we have no control.

Pat Rabbitte (Dublin South West, Labour)
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I commend Deputy Clare Daly on her reading matter. I recommend, however, that at least for the month of August she might apply a more eclectic test to her reading by moving beyond Labour Party policy documents.

Clare Daly (Dublin North, Socialist Party)
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I can guarantee the Minister that I will.

Pat Rabbitte (Dublin South West, Labour)
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I am delighted to hear it. I do not know why the Deputy is complaining about what we are doing in the area of wave energy technology, given that she acknowledges it is in its infancy and is only at the research stage. I do not see how I am supposed to pull a switch and work wonders until such time as the technology is proven. In the interim, we are supporting research in this area by the Sustainable Energy Authority of Ireland's ocean energy development unit. In these times of extraordinary constraint of resources we are managing to keep it going. I recently approved funding, for example, for new facilities at the Beaufort research laboratory in Ringaskiddy, which will support the wave research testing that is going on there.

The potential for the development of an export capacity in this area is very exciting. However, Deputy Daly will have to explain from where, if it is to be done exclusively through the State companies, the huge investment that is required will come. People tend to think of wind energy as nice and fluffy and green and to observe that there is plenty of it about the place. However, there are economic issues at play here and the investment undertaken by the large-scale industry players is enormous. We do not have those levels of resources to work with. This is not to say that I do not foresee a role for some of the State companies as these projects develop. We have thousands of acres of cut-away bog and 7% of our land is under afforestation. In the ESB we have one of the most successful indigenous energy companies anywhere in the world, comparing scale with scale. I would be very partial to that body playing whatever partnership role it can in this process and getting a share of the action. However, the notion that we can source billions in order to fund developments in this area is not realistic. Although I wish it were possible, it simply is not.

Clare Daly (Dublin North, Socialist Party)
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I asked the Minister whether a cost-benefit analysis has been undertaken in respect of obtaining loans from the European Investment Bank in order to carry out this work.

Pat Rabbitte (Dublin South West, Labour)
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Yes, it has. It is only possible to obtain EIB loans for projects which the bank approves and where matching or better State financing is being put up. We are not remotely in that space. We should bear in mind that there is no template here and no intergovernmental agreement in place. If something emerges from our negotiations with Britain, it will be the first such agreement as between any two trading states. If we can, as I am confident we will, develop an export capacity in this area, it will be one of the most exciting developments in the industrial sector in decades. The notion that we can exploit a plentiful indigenous resource and that a neighbouring island has a matching need in order to meet its renewable targets and energy requirement, which would suggest a win-win situation, is a very exciting prospect. We are proceeding with all haste in this matter.

Deputy Mick Wallace is correct in his observation regarding our dependence on oil and our enormous import bill of some €6 billion per annum. What we are discussing here will certainly facilitate our efforts to reduce that dependency, ensure greater reliability of renewables and, in the process, provide cheaper power to consumers and businesses. The Corrib gas field, about which Deputy Bernard Durkan expressed concern some moments ago, will supply 60% of our need at peak, but it will not, unless we are successful off Dalkey, obviate the necessity to continue importing oil. One never knows what might happen and there would be a considerable welcome in the area for a major oil field. In the absence of such a discovery, we must import oil. Our objective is to reduce that dependence and enhance the reliability of renewables.

Michael Kitt (Galway East, Fianna Fail)
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Deputy Luke 'Ming' Flanagan has indicated. We have already gone over time, but I like to give an opportunity to Members who turn up for the debate. He may ask a brief question.

Luke Flanagan (Roscommon-South Leitrim, Independent)
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The Minister is probably aware of the Bill brought forward by his party colleague and my constituency colleague, Senator John Kelly, to increase the requirement regarding distances between onshore wind turbines and residential properties. Does he consider this proposal a runner and might it have any impact on efforts to reduce oil dependency?

Deputy Pat Rabbitte: Yes. One can only obtain EIB loans for projects which the bank approves and if the State is putting up matching or better finance. We are not even remotely in that space. We should bear in mind that there is no trmp It has obviously come from complaints from people in my general area who are unhappy with the current guidelines for building wind turbines beside people's houses. What does the Minister think of what he proposes, or is he aware of what he proposes?

Pat Rabbitte (Dublin South West, Labour)
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I am very aware of it. As recently as yesterday, the Minister of State, Deputy O'Sullivan, and I met Senator Kelly and some of his colleagues about his Bill. His Bill has certainly attracted a great deal of support, which I acknowledge. He raised an issue which is a matter of concern for some residents. The Minister of State, Deputy O'Sullivan, and her officials are engaged in further discussions with him in the matter of the appropriateness of the guidelines to which the Deputy referred.

My view is that this issue is better dealt with through more flexible guidelines than through rigid primary legislation. We had some discussion for over an hour and a quarter yesterday about the kind of things such guidelines would have to encompass. A turbine 500 m from one's house, which happens to be behind a mountain, is not exactly intruding on one's house but if it is twirling over one's roof, one has a different view. Many issues have to be taken into account and the Minister of State, Deputy O'Sullivan, who has responsibility for planning in this area, is dealing directly with Senator Kelly.