Michael Finucane (Fine Gael)

I welcome the Minister of State to the House and wish him well in his new brief. I have been calling for this debate in the House for some time and I am glad we are hearing statements on the issue today because energy is of profound importance.

I presume the latest Deloitte & Touche report, which I understand the Minister for Communications, Marine and Natural Resources received prior to Christmas, will help frame policy in the future. We have not heard anything about the report's findings. Will they be revealed to the public eventually or are they so confidential that they will remain within the Department? The Joint Committee on Communications, Marine and Natural Resources has been examining the area of energy for quite some time and intends to produce a report on the issue. That the joint committee is deliberating on the matter indicates its importance. Members of the joint committee should have access to the consultants' report, as it would help the committee in framing overall energy policy for the future.

There have been a number of leaks in respect of how the report questions the dominance of the ESB in the marketplace. Perhaps the report will not be revealed because having the ESB and its dominance criticised is regarded as unpalatable coming up to a general election in 2007. In such a situation perhaps a Government would not attempt to confront the issues raised by the report. Hiding the consultants' report for this reason would be regrettable. If we are to frame energy policy, it is imperative that we examine the ESB's dominance in the marketplace.

We discussed the recent liberalisation of the electricity market but that liberalisation has not made a great difference in the marketplace due to ESB's continued dominance. It has not made a whit of difference to the domestic consumer. In the context of a domestic consumer receiving his or her ESB bill every month, all he or she sees is one particular supplier supplying electricity. Will the Minister of State elaborate on whether we will ever see the consultants' report? Will the findings be revealed? I am sure there was an excessive cost in producing the report. I would hate to see it gathering dust as it should be used in framing future energy policy.

From time to time, the House has held debates on the issue of energy sources with the Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey. Unfortunately, when one puts forward a constructive proposal or suggestion, one is criticised for supposedly trying to close down power stations. As any consumer would tell the Minister of State, there is a public service obligation section in all of our ESB bills. The validity of this obligation from the Government's point of view is in light of peat power stations and other alternative sources of energy.

It is a compensation mechanism within the bills. However, it is worth bearing in mind that the energy regulator, in answer to my questions, regards the public service obligation as an anti-competitive practice. As such, the Government should question whether it should retain the public service obligation. The dividend the Government receives from the ESB each year is in excess of the total amount retrieved through the obligation.

To a certain degree all of the regulators have been good for politics and Ministers in that they have taken the heat on electricity prices. The Minister had ultimate responsibility a number of years ago and the buck stopped there but there is now a buffer zone in the form of the regulator. If there is any criticism, the regulator will be subject to it. We have witnessed a considerable increase in electricity charges over recent years. High energy users from different parts of the country such as Intel, Wellman International Limited, Aughinish Alumina Limited and many others attended the joint committee. They could negotiate with the ESB previously but can no longer do so as the energy regulator dictates the prices. Many of these companies now say that, due to escalating electricity prices, Ireland is not as good an option as an industrial environment as it was previously. They have witnessed their indirect costs increase significantly, especially as heavy users of electricity.

One must recognise that, within the basket of fuels, we have a dependency on imported products. What happens in gas or oil producers such as the Ukraine or elsewhere impacts directly on the consumer and the ultimate user here. The Electricity Supply Board and the energy regulator state that many of these costs must be passed on to the end consumer. The chief executive of the ESB, Mr. Pádraig McManus, recently addressed the committee and indicated that he expected electricity prices to decrease by 4% in 2007 due to the all Ireland market. He also indicated that the basket of fuels involved in the production of electricity will impact on the cost of electricity. It would surprise me if the consumer experienced a decrease in the cost of electricity.

I have spoken on the topic of wind energy over a period of time. In this context, the national grid section of the ESB recently stated that it feels confident the 13.2% target figure will be reached. It is also confident enough wind energy projects are on stream, either those that have already been physically created or those waiting for final approval in the system. There is tremendous frustration among people promoting wind energy about the long gestation process from applying for planning permission to getting connected to the national grid and producing a small number of megawatt units for the electricity network. A stop-start regime seems to have operated in this respect for some time. The regulator tells people to stop so that the project can be examined. The ESB, as the primary producer of electricity, would view wind energy production as intermittent, a factor in the equation of this country's energy supplies.

I have met frustrated people who entered the market with an alternative energy project. I am sure the Minister of State has met them also. An example would be upland areas suitable for the initial location of wind meters in order to gauge the situation before embarking on the lengthy process described above. I spoke with a gentleman who, as late as August 2004, paid over €500,000 directly to the ESB to access the national grid. He is as far from finishing now as he was then despite needing to pay that money up front.

I welcome the discussion about wind energy involving the public and Ministers and the fact that people are excited about the concept but the issue is a jigsaw with many pieces and different players, such as the ESB, local authorities and the energy regulator. No one is putting the jigsaw pieces together, a view I recently expressed to the energy regulator. I have also expressed this view to the ESB and local authorities.

While the ESB spokesperson might state it has enough wind energy projects in the pipeline at national level, to what degree is this message communicated to local authorities and promoters applying for planning permission to the local authorities through the planning process? It is frustrating that many cases will never get connected to the grid. Why should they prepare impact assessments for county development plans that are being produced to identify the locations for suitable wind energy projects? Someone somewhere at some stage who has the proper type of capacity will want to get into the system. They should not spend a lot of money at that stage to prepare a planning proposal for approval.

It is exciting to talk about the issue of alternative energy but we need a type of joined up thinking that is not currently in evidence. Will the Minister of State examine the matter with his officials? We may speak about alternative energy sources such as wave power, wind power or biomass but the most credible source in the public's view is wind power. Wave power has been tried but has not proven successful despite much money being spent, leaving us with the options of biomass and solar energy.

Everybody understands the scale of economic and environmental difficulties if Ireland does not address the energy crisis. In order to neutralise the effect of global warming, it is generally agreed that the level of global greenhouse gas emissions must be reduced by 70% by 2100. As a first step the 1997 Kyoto Agreement was drawn up with the aim of reducing global emissions of greenhouse gases by 5.2% by 2012 based on 1990 levels. Under the agreement, to which Ireland is a signatory, we undertook to limit the increase of these emissions in the period 2008-12 to 13% based on 1990 levels. Without action, it is estimated our emissions would rise by 37%, almost three times the permitted level. Our emissions are currently 25% above 1990 levels. If agreed commitments on emissions are not met, Ireland will face a bill of €400 million, an appalling vista that neither I nor my party is willing to tolerate.

We must change the dynamic driving the alternative energy industry in Ireland. We must take steps to boost our production of biocrops, creating a market of biofuel, install an eco-friendly tax regime and establish a planning policy that works towards the creation of a first class alternative energy infrastructure.

Fine Gael believes the Government track record in this area is appalling and has published proposals as a response. Biofuels have the potential to provide benefits to our farmers, our environment and our economy. Most European states have kick started the biofuel industry by using setaside land for growing biofuel crops. Ireland must act now to reach European standards. Irish agricultural land offers major potential to develop alternative energy crops. In the initial stages we must be practical in developing a viable biofuel industry but it makes sense to follow the examples of other EU states that are more advanced in such technology.

Currently, the greatest potential for Irish farmers and industry lies in the development of biodiesel and bioethanol, not least because, as the Minister of State stated, such production is under way in Ireland, albeit on a small scale. We must focus on developing this area as a priority. The immediate focus must be on developing the process of fuel blending, blending standard diesel with rapeseed oil to produce biodiesel and petrol with bioethanol.

Fine Gael is calling for a number of steps to be taken to kick start the biofuel industry. These include the removal of excise duty on biofuels produced from renewable energy crops. This will reduce costs and entice more players to the market. We urgently need producer grants for producer groups, consisting of up to 50% of the cost of setting up the group, subject to a maximum of €300,000 per group. A public competition for the establishment and operation of a number of strategically located biofuel processing plants should be held. Capital start-up grants for these plants should be available to enable them to be established and begin viable processing operations. Greater links with international biofuel processors, fuel suppliers and relevant Departments, especially the Departments of Transport and Agriculture and Food, to facilitate the promotion of the biofuels industry are vital.

Production cannot flourish if there is no market for what is produced. At present, the growth of biofuels is hampered by the absence of a serious outlet in which to sell them. Biofuels are indigenous, reliable and increasingly economic and Fine Gael proposes to legislate for all motor fuels to include a blend of fuel from renewable sources. All petrol sold at petrol stations will include a 5% bioethanol mix and all diesel will include a 2% biodiesel mix. This will not require the conversion of standard motor engines and would reduce emissions from cars. It would also provide an immediate market for farmers to sell energy crops. As the benefits become clear motorists may convert their engines to allow greater use of biofuel, thus reducing emissions further. At present, Ireland's consumption of renewable energy is extremely low.

I am glad Moneypoint has been upgraded as residents in the estuary have tolerated acid rain and environmental damage. Much could be done in this area and the Oireachtas Joint Committee on Communications, Marine and Natural Resources could contribute to this debate. The Deloitte & Touche report should be published and this would assist the Department in framing energy policy. We could all contribute something to an extremely important area. Recently, we have had amber alerts and were fortunate we could use the wind generating capacity. This is a delicate phase in Ireland in terms of sustaining future productivity and the Celtic tiger. We will need more energy to be made available.