Frank Fahey (Galway West, Fianna Fail)

I thank Members of Seanad Éireann for raising the important issue of energy policy and the role of renewable energy in addressing Irish energy needs. This motion has given the Government a valuable opportunity to set out the range of initiatives under way to drive forward the sustainable energy agenda. Irish energy policy belongs in the global and EU context. Global demand for energy is growing faster than ever and we are in an era of sustained high oil and gas prices. Growing energy demand coupled with a decline in new oil and gas reserves will keep prices high for the foreseeable future. Security of supply concerns are not helped by supply disruption and instability. Energy policy for all economies must address environmental challenges, notably climate change.

The European Union is the second largest energy market in the world. Europe has a growing dependency on energy imports. The sharp rise in oil and gas prices also has an impact on jobs and economic growth. Europe has been to the forefront of the climate change agenda, setting ambitious targets for emissions reductions, promoting new and renewable energy sources and developing new technologies. The Government welcomes the renewed focus at EU level on energy issues. The Commission's Green Paper on energy policy sets out the framework for a common energy strategy encompassing security of supply, sustainability and competitiveness. The Government is working positively with Europe to address the collective energy challenges. We welcome the strategic focus on infrastructure, renewable energy, energy efficiency and research and innovation. We also welcome the explicit recognition by the Commission and the European Council that certain decisions including energy mix remain the prerogative of member states.

Ireland's strong economy gives rise to increasing energy demand. Our distance from the main EU market and small scale present challenges in security of supply and competition. We have few domestic fossil fuel resources and no significant hydro resources. We have opportunities also. The all-island energy market will increase the scale of the market and improve competition. We are well placed to develop renewable energy with consequent economic, social and environmental benefits. We intend to give particular focus to energy efficiency over the short to medium term with direct benefits for consumers, the economy and the environment.

I can advise Senators that the Government intends to publish an energy policy Green Paper shortly. This will set out the framework for national energy policy and will address the challenges of security of supply, competitiveness and environmental sustainability. Senator Finucane mentioned the Deloitte & Touche report, which will be published in the context of the forthcoming energy policy paper as an input into the process of reviewing the electricity sector. Working together, ministerial colleagues have developed a series of integrated and innovative programmes that are addressing energy production, supply and demand across the entire economy, from the farmer in the field to the electricity supplier, the business community and the private individual, all of whom have an interest in the strategic development of this resource.

I would like to set out the Government's key priorities and achievements to date. We have doubled our renewable electricity capacity in the past two years and are on track to meet our 2010 targets, if not exceed them. Our current capacity is 846 MW. A further 630 MW has signed connection agreements. To ensure that these projects are delivered, we have launched the renewable energy feed in tariff, REFIT, programme. This programme, which will cost in the region of €119 million over 15 years, will underpin the viability of these projects by offering 15-year contracts to developers. In addition to these initiatives, a further 1,300 MW of wind projects were released into the connection process in the last few weeks. Recognising that bio-energy offers particular benefits for electricity production and dispatch is of increasing importance in terms of security of supply, environmental objectives and development of the rural economy. We have provided for a significantly higher biomass feed-in price in the REFIT programme. Biomass will attract a tariff of €72 per megawatt hour, compared to €57 for wind-powered plant.

In addition to our renewable electricity programme, we have rolled out a series of initiatives to stimulate the development of a renewable transport fuel market, which will further develop Ireland's bio-energy sector. In 2005 we launched an innovative pilot biofuels excise relief programme, which has resulted in eight biofuels projects coming on stream, and 16 million litres of biofuels being placed on the Irish market over a two-year period from 2005 to 2007. Building on the success of the pilot programme, we have put in place a new five-year excise relief package of €205 million which will see Ireland exceed 2% market penetration of biofuels by 2008 and will result in 163 million litres of biofuels being placed on the Irish market by 2008. The programme will be underpinned by capital grant aid for biofuels facilities and will be rolled out this year.

We are delivering an ocean energy strategy, which will put Ireland at the forefront of ocean energy development and position us to capitalise on this resource. The programme, which was developed by the Marine Institute and Sustainable Energy Ireland, was launched last month in Galway. As the first stage in implementing this strategy, we have opened an ocean energy test site a mile and a half off the coast of Spiddal, County Galway. This 37-hectare site will be open to test prototype ocean energy devices. The first wave energy device, WaveBob, has already been deployed on site. We have also upgraded the Hydraulics and Maritime Research Centre in UCC. SEI and the Marine Institute are currently supporting a number of other ocean energy research and development initiatives. Ireland has one of the most promising ocean energy resources in world and we are positioning ourselves at the forefront of development of this resource. The wave power off the west and north-west coast is the second most significant wave power in the world.

We are supporting important EU initiatives in energy efficiency, energy research, biomass and biofuels, including the Green Paper on energy policy, biomass action plan, biofuels communication and the Commission paper on energy efficiency. We are establishing an Irish energy research council to advise on energy research priorities. Our objective in this area is to ensure that research policies and programmes are fully aligned with overall energy policy as well as with policies for transport, environment, agriculture, enterprise, science and education. We have launched a €27 million domestic renewable heat grants programme, which has been greeted with enthusiasm by the public. Some 1,100 grants have already been approved in just over a month since the programme was launched. The five year greener homes grants programme provides grants of up to €6,500 for renewable heat technologies, including wood pellet boilers and stoves, solar heating and heat pumps. Our aim is to provide renewable heat systems for at least 10,000 homes. This is a real boost for individual householders who face rising fuel bills and are anxious to play their part in developing a sustainable energy economy.

We are launching a major grant aid package for commercial-scale wood chip and wood pellet boilers. The scheme builds on the success of the pilot bioheat programme which Sustainable Energy Ireland launched in 2005. It will allow businesses to avail of lower-cost heating and is designed to facilitate the development of a biomass sector in Ireland. Energy crops and energy from waste materials and the forestry sector comprise a growing part of Ireland's renewable energy mix and are providing new opportunities for both farmers and foresters.

We will launch a combined heat and power programme, which will provide funding for commercial interests to install their own electricity generation and heating systems. The programme will include funding for combined heat and power generated from natural gas, as well as from biomass, reflecting our ongoing policy to promote market penetration of biomass technologies.

To complement the demand-side initiatives for bio-energy, we are introducing a number of initiatives on the forestry and agriculture side of the supply chain, which include a grant scheme to promote and develop sustainable forestry. We are finalising a scheme of supports for the purchase of specialist wood biomass harvesting equipment and we are considering proposals to reactivate establishment grants for SRC. We are undertaking research trials on miscanthus and providing direct funding, to support priority research projects on biofuels through the Department of Agriculture and Food's research stimulus fund programme.

We are developing renewable and sustainable energy policies on an all-island basis. The 2004 all-island energy market development framework sets the blueprint for the achievement of an all-island energy market. The all-island 2020 Vision, published as a consultation paper last July, will also culminate in an agreed joint policy paper later this year, with a particular focus on renewable electricity and generation. To ensure the implementation of the strategy for renewables, we have commissioned a joint all-island grid study into the accommodation of different renewable technologies in the electricity grid systems.

We are supporting the deployment of renewable and sustainable energy through a range of innovative programmes delivered by Sustainable Energy Ireland. These are aimed at the industrial, commercial, public and domestic sectors and we have achieved significant results in this regard. For example, Sustainable Energy Ireland's large industry energy network currently has 80 members, representing 51.3% of the total primary energy requirement for industry in Ireland. In total, the emission of over 580,000 tonnes of carbon dioxide has been avoided by this group since the scheme commenced. In addition, Sustainable Energy Ireland's low-income housing programme has addressed fuel poverty in almost 8,000 homes. The agency's public sector programme has seen the building of several superior-quality, energy-efficient public buildings across the country. It has also included an initiative in which four Dublin colleges have been assisted in cutting their energy bills by 6.3%.

Sustainable Energy Ireland's house of tomorrow programme, which complements the greener homes domestic grants programmes, provides funding for housing developers and for the development of superior energy-efficient homes. Some examples of typical energy-efficient refurbishment projects last year include an energy-efficiency retro-fit of 100 Dublin city flats, the development of 100 low-energy houses in Castleblaney, County Monaghan, and the Elm Park development, which comprises hospital consulting suites, a day-care centre, a residential block of 110 apartments, a crèche, a leisure centre, a pool and 100 senior citizen apartments.

Sustainable Energy Ireland is also critically involved in energy research and development and runs extensive programmes to increase awareness of energy efficiency. In addition to these programmes, we intend to launch a major national energy-efficiency campaign targeting individual consumers as well as specific economic sectors through industry, SMEs, schools and the public sector. This multi-annual campaign aims to persuade consumers of the benefits of more efficient use of energy, thus changing behaviour and reducing consumption through more energy-efficient equipment and processes.

These existing and proposed policy actions will be set out in the energy policy Green Paper which will provide the framework for national energy policy for the medium to long term. The Government has adopted a cohesive and dynamic approach to delivering on our sustainable energy agenda, the fuel diversity imperative and the national potential for renewable energy. The Government is working as a team to deliver on the cross-cutting issues, including bio-energy and biofuel strategies. We are working with colleagues in the North to progress the all-island energy market and in Europe to optimise benefits for Ireland under EU energy initiatives and to play our part in addressing the energy challenges for Europe. This constructive, forward-looking approach will continue to be the hallmark of the Government's energy policy. I commend it to the Seanad.