Thomas Pringle (Donegal South West, Independent)
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6. To ask the Minister for Communications, Energy and Natural Resources the amount Ireland will have to pay in annual fines if it does not meet the European Union Directive target of 12% of heating coming from renewable sources, by 2020; and if he will make a statement on the matter. [16283/15]

Thomas Pringle (Donegal South West, Independent)
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This question relates to the requirement under European Union legislation to achieve a target of generating 12% of energy in the heat sector from renewable sources by 2020 and the level of fines that may be levelled against Ireland if we do not reach the target.

Alex White (Dublin South, Labour)
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The 2009 EU renewable energy directive set Ireland a legally binding target of meeting 16% of our overall energy requirements from renewable sources by 2020. To meet this target Ireland is committed to achieving a 40% renewable energy contribution in electricity, 12% in heat and 10% in transport. In 2013, some 7.8% of Ireland's overall energy requirement was met by renewable energy with renewables accounting for 5.7% of the energy in the heat sector.

Measures currently in place, including Part L of the building regulations and the combined heat and power supported under the REFIT 3 scheme, are expected to increase the uptake of heat from renewable sources. However, analysis by the Sustainable Energy Authority of Ireland, SEAI, suggests that in the absence of further measures, a shortfall of between 2 and 4 percentage points could emerge in the renewable heat sector. This would represent between 1 and 2 percentage points in terms of the overall renewable energy target. Any shortfall in meeting the overall renewable energy target in 2020 would need to be addressed by purchasing so-called renewable energy credits from another member state. While the cost of such credits has yet to be established, the SEAI has estimated it could be in the range of between €100 million and €150 million per percentage point shortfall. This means a shortfall in the heat sector could cost between €200 million and €300 million in renewable energy credits. There could also be penalties associated with any shortfall.

Analysis underpinning the draft bioenergy plan published in October last year indicates that an additional bioenergy focused measure in the heat sector would constitute the most cost-effective means of meeting a number of different policy goals, including addressing the potential shortfall in our renewable heat levels. The draft plan recommends the introduction of a renewable heat incentive in 2016 to incentivise larger heat users in the industrial and commercial sector to change to heating solutions that produce heat from renewable sources.

Thomas Pringle (Donegal South West, Independent)
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Will the Minister clarify whether countries with a shortfall will be required to purchase energy credits on an annual basis? If so, the Exchequer will face a significant annual cost for failing to meet its target. Does the Sustainable Energy Authority of Ireland or Department have plans to produce an incentive for home owners to switch to renewable sources of heat? The previous system of grant aid for home owners was abolished. It would be in all our interests to encourage home owners as well as large businesses to avail of the benefits of using renewable energy for heating. The focus always seems to be on providing incentives to business, while neglecting home owners.

Alex White (Dublin South, Labour)
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It is not clear to what extent the cost arising from any shortfall in meeting the targets by 2020 would be an ongoing one. I would prefer to leave that matter and perhaps discuss it with Deputy Pringle subsequent to this engagement.

The Deputy raises an interesting issue in respect of renewable generation of heat in the domestic sector. It is not that the case that we want to favour big business or larger operations. However, when the Government intervenes by providing incentives it wants to obtain a return and larger-scale projects tend to provide a greater return. That is the issue that arises in respect of the domestic sector. The analysis I have seen suggests it would not be cost-effective or efficient at this stage to introduce a new renewable heat incentive for domestic users.

Thomas Pringle (Donegal South West, Independent)
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I am a little concerned that the Minister wishes to leave the question as to whether the fine in the case of a shortfall would be imposed every year. Surely the need to purchase energy credits should be a major incentive to the State to achieve its targets, especially as the potential cost to the Exchequer is €300 million per annum. With a little imagination - the use of clustering, for example - the domestic element could play a significant role in achieving the renewable energy target for heat. If we are to raise awareness of renewable energy sources and build a society that takes a proactive approach to renewable energy generation, we should ensure domestic users can avail of any incentives that are provided. While I accept the point the Minister makes on the issue of scale, he appears to be focused on easy targets rather than seeking a change in culture or to develop a sense of the importance of renewable energy sources. It seems to be a case of making an easy buck and trying to benefit businesses.

Alex White (Dublin South, Labour)
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The Deputy is correct. I would not like him to interpret anything I said as an effort to underplay the real risk and threat posed by fines and penalties if we do not meet the renewable energy targets that have been set. I would not like anything I said to be interpreted in that way. Any shortfall in meeting our target would have a cost and we need to ensure we apply a high level of imagination, not only in the business and larger scale sectors but also in the domestic environment. However, the point I was making was that we must constantly assess the cost of incentives and balance their impact with the cost incurred through Exchequer investment.

This issue highlights the importance of pulling together all the strands of Deputies' experience and their views and insights on what should be the proper mix of incentives and supports to be put in place for renewable energy across the board. We have spoken a great deal about electricity. The Deputy is correct, however, that we must also discuss heat and transport because they are part of the picture.