Tom Parlon (Laois-Offaly, Progressive Democrats)

I am quite familiar with the biofuel business and with a particular project in the south east, which is the Senator's area.

The responsibility for the promotion of biofuels falls within the remit of the Minister for Communications, Marine and Natural Resources. However, it is accepted that excise relief is an option in encouraging the promotion of biofuels as an alternative fuel. It may not be widely known but the biofuel made from rapeseed oil is as expensive as diesel upon which excise duty has been levied. Biofuels are an expensive option but I appreciate their importance from the point of view of the Kyoto Protocol and the environment.

From a fiscal perspective the main instrument in promoting biofuels is section 50 of the Finance Act 2004 which provides for the introduction of a scheme for excise tax relief for biofuels. The purpose of the scheme is to allow qualified and conditional relief from excise of biofuel used in approved pilot projects for either the production of biofuel or the testing of the technical viability of biofuel for use as a motor oil. A scheme which includes pure plant oil, biodiesel and bio-ethanol has been drawn up in conjunction with the Department of Communications, Marine and Natural Resources. The European Commission confirmed last year that the scheme represented a State aid and Ireland formally submitted the scheme for approval in January. State aid approval was formally granted by the Commission earlier this month. The Minister for Finance subsequently signed the necessary order.

The Department of Communications, Marine and Natural Resources will set in train the formal process of inviting proposals for the approved scheme. In this regard an advertisement from the Department will issue shortly, providing all necessary details for those wishing to apply for excise relief.

The Senator's request for a report on proposals for the promotion of biofuels would be more appropriately directed to the Minister for Communications, Marine and Natural Resources. I am aware of the time elapsed but a formal application to the European Union was required. This has now been granted with regard to the State aid and it is all systems go. The recommendation is not accepted in this case but it is an issue which the Senator could raise with the Minister for Communications, Marine and Natural Resources.