Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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2. To ask the Minister for Communications, Energy and Natural Resources the way the falling price of oil will effect renewable energy development. [3934/15]

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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How will the falling price of oil affect renewable energy development, not just in Ireland but throughout Europe, and what impact might this have on our strategy for renewable energy?

Alex White (Dublin South, Labour)
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The overarching objective of the Government's energy policy is to ensure secure and sustainable supplies of competitively priced energy to all consumers. Security of energy supply is crucial to every society and economy. A well-balanced fuel mix that provides reliable energy, minimises costs and protects against supply disruptions and price volatility is essential to Irish consumers and businesses. The Sustainable Energy Authority of Ireland, SEAI, publication, Energy in Ireland 1990-2013, noted that oil and gas are a critical component of our energy mix, providing 76% of primary energy requirement in 2013. While Ireland has made considerable progress with regard to the use of renewable energy, it is the case that fossil fuels will continue to provide the largest share of the energy mix well into the future.

The 2009 EU renewable energy directive set Ireland a legally binding target of meeting 16% of our energy requirements from renewable sources by 2020. To meet this target, Ireland is committed to meeting 40% of electricity demand, 12% of its heat and 10% of its transport from renewable sources. Figures for 2013 show that 20.9% of electricity demand was met from renewables. Oil price fluctuations will not impact on our 2020 renewable electricity commitment.

Ireland is regarded as a stable and favourable investment environment for renewable energy production supported by a variety of policy initiatives, including the renewable energy feed-in-tariff, REFIT, scheme, the employment investment incentive scheme and an accelerated capital allowance scheme. It is the case that the development of renewable energy in Ireland is lowering our exposure to the volatile fossil fuel imports market in the long run. The existing feed-in tariff reflected in the public service obligation, PSO, levy is a very cost-effective tool to support this development, as outlined in a report published by the Council of European Energy Regulators this month.

I am continuing to develop policy and options aimed at increasing our security of supply, addressing our dependence on imported fossil fuels and achieving a more secure energy mix, while capitalising on indigenous renewable and conventional energy sources. My Department continues to refine various policy options for my consideration and I intend to publish, as the Deputy knows, a definitive energy policy in September.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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I am heartened to hear that it will not have an impact. The public has an expectation that energy prices are going to reduce. As the Minister knows, some companies have announced a reduction in prices and there probably will be and should be further reductions. However, it should not impact on our strategy for renewable energy. Oil prices will fluctuate. I am heartened to hear that this has been taken into account by Government.

The Minister mentioned the public service obligation levy. In energy bills, VAT is applied to the public service obligation levy. I do not know if this is within the remit of the Minister or that of the Revenue Commissioners. However, it is the equivalent of having VAT on VAT. It is wholly wrong and should be changed. Will the Minister raise this issue with the Revenue Commissioners?

Alex White (Dublin South, Labour)
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The Deputy said he is heartened by my response and I am heartened by his support for the general direction of policy in respect of the mix of our energy sources which we need to have in this country. The fall in the price of oil on the international markets has been significant, but we know that when we plan our energy policy, we need to take a medium to long-term perspective. We all know that the price of oil on the international markets has varied not just over the months and years but over the decades. It is a dynamic factor. We need to stick to the course we have adopted in terms of ensuring that we have energy security, meet our targets and have a sustainable energy policy. We should not be thrown off that course. The Deputy is right on this.

On the application of VAT, this is not a matter for me. It is a policy matter on the application of taxes such as VAT. I take and understand the Deputy's point, but it is not something over which I, as Minister, have any control.

Michael Colreavy (Sligo-North Leitrim, Sinn Fein)
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Will the Minister raise this issue with the Revenue Commissioners, because it is patently wrong? It is the equivalent of VAT on VAT.

Alex White (Dublin South, Labour)
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I am willing to get for the Deputy the rationale for the application of VAT. I will not stray into other people's areas of responsibility but I am not sure that I completely agree with him that it is tantamount to VAT on VAT. However, I understand the point the Deputy is making. I will arrange for him a briefing note on it.