Tuesday, 9 February 2010
Energy (Biofuel Obligation and Miscellaneous Provisions) Bill 2010: Second Stage
Joe O'Reilly (Fine Gael)
The objective of the Bill is to amend the National Oil Reserves Agency Act to ensure 4% of transport fuels will contain bio-fuel. Apart from any efficacy of policy, this is necessitated by the EU target of 10% of transport energy coming from renewables by 2020. Both climate change policy and the EU directive necessitate the legislation. In that context my party has no objection in principle to the legislation. However we have concerns, the first of which centres on the fact that there is insufficient commitment in the legislation or in the Minister's speech on Second Stage to the principle that we must produce bio-fuels domestically. We must achieve much higher levels domestically rather than importing bio-fuel. This is the critical weakness in the Minister's presentation and in the legislation.
At present, 90% of Ireland's energy requirements are imported. Some 70% of our requirements in bio-fuels are imported and we spend €6 billion per year on imported fuel. We do this at a time when farm incomes are on the floor and farmers could do with second incomes, when some 437,000 people or 13 in every 100 people are without work and when the potential for green energy jobs in this country is enormous. There should be a system of much greater incentivisation of farmers to grow raw materials for bio-fuels. This is a first step. There have been tax incentives for the manufacture of bio-fuels and I accept these have had a modest level of success initially in getting us onto the pitch but they are inadequate for the future.
Given that the obligation will increase the price of petrol and diesel by 1 cent per litre, it makes it more imperative that there be a large domestic element to the production. The Irish Bioenergy Association estimates that meeting the bio-fuel obligation from Irish production will lead to €170 million in direct economic activity and create 1,700 jobs. The option of domestically producing bio-fuels is becoming more attractive as fossil fuel prices increase. Fine Gael set out a roadmap for domestic production of bio-fuels in its job creation strategy. We propose that Bord na Móna, Coillte and the National Council for Forest Research and Development should be brought under the same umbrella to create a new State energy company called BioEnergy Ireland which would invest €800 million between 2010 and 2013 in next generation bioenergy technology such as biomass, combined heat and power generation and transport. We would develop five new production plants to produce an additional 150,000 tonnes of biodiesel, a reforestation programme on an estimated 20,000 hectares and biomass combined heat and power plants at high energy demand locations such as hospitals, industrial estates and hotels. The return on this investment would come from diverting the resources we currently spend on imported fuels in these sectors and this would be the bonus.
It is worthy of mention that Teagasc has carried out considerable empirical and academic research on this matter. In a recent Teagasc report it was stated that 100,000 hectares of Irish land could reasonably be set aside for producing the ingredients for bio-fuel without interfering with food production and I will deal later with the national and international sense. A total of 100,000 hectares could be committed to the production of bio-fuels and this would provide a very significant injection to the economy and to hard-pressed farmers.
If our distinguished Acting Chairman, Senator Paul Bradford, makes a contribution later I presume he will draw the attention of the House to the sugar beet industry in his area of County Cork and in the south of Ireland which has gone by the wayside and to the great potential to replace that industry with bio-fuel production and growing crops for bio-fuel. I refer to incentives for the growing of willow and maize. I suggest the Minister goes to Cabinet to obtain a package to match this legislation in order to create a domestic bio-fuel industry for the production and processing of the raw materials. I refer to the need for tax incentivisation to be expanded and this is an important dimension.
The legislation contains a commitment to ensure sustainability but I ask the Minister in his reply to give the House the necessary assurances on where the imported bio-fuels will come from and the sustainability criteria applicable. EU law provides mechanisms for the measurement of sustainability and also for monitoring processes but I ask the Minister to assure the House these will be transparent and will work. I have the privilege of succeeding our distinguished Acting Chairman as a member of the Council of Europe. The issue is raised constantly in discussion of bio-fuel, biomass and bio-energy, that in many instances the production of bio-fuel raw materials has displaced food production and is a source of inflation of food prices. This was notably the case in 2008. While there are other factors in the acceleration of food prices, such as harvests and inflation, the displacement of food production by the production of bio-fuel raw materials is as ongoing issue and has caused a major problem. The FAO, the agricultural food organisation of the UN, has established this as a cause of the increased price of food. Oxfam and a number of non-governmental agencies have issued appeals to restrict the growing of bio-fuels in some areas.
The cutting down of the rain forests has been a significant issue in Brazil and this is another consideration. I ask the Minister to comment further on where material will be sourced internationally and what controls and transparency will be put in place. In fairness to the Minister I know he accepts we cannot tolerate a situation where we would be importing bio-fuels from countries where there was a lack of sustainability measures in the production process and I am concerned this should still be the case. It is the concerned view of the few people I spoke to who have a relative level of expertise that we cannot import the level we require without causing a lack of sustainability in areas and I ask for the Minister's comments.
The importation of raw material for bio-fuels incurs not only transport costs but also carbon emissions as a result of the ferrying of this material so in a perverse way, the overall climate change objective is being defeated. There are also the issues of the effects on indigenous populations in the countries from which they come, particularly in developing countries, and the effect on international food prices to be considered.
This serves to make my original point that the entire thrust of Government policy should be on domestic production of bio-fuels and on developing a micro-generation of wind energy for farms and the co-operative movement. The traditional co-operative movement organised creameries and was founded by Horace Plunkett and I refer to co-ops such as the Dromcollogher co-op. There is a new co-operative movement where communities come together to acquire a local generator to manufacture their own energy and to sell the excess on to the grid. The same would apply in the growing of maize, willow and other raw materials for bio-fuel production.
There are compelling arguments regarding employment needs, the needs of the domestic economy and best international practice and climate change policy to focus on domestic production. I refer to my constituency which is very proud of Senator Martin Brady who is one of our emigrés to Dublin. The constituency has no internal railway system, a limited bus service outside of the N3 and therefore cars are a necessary part of going to work. Any increase in the price of petrol or diesel is of significant economic importance in those areas and is a disincentive to employment and economic recovery and activity. Consequently, anything that would cause that should have a corresponding beneficial impact and hence the compelling need to develop domestic bio-fuels.
I acknowledge the legislation proposes to deal with this but there are questions about the level of carbon emissions to be prevented by bio-fuels. It is said that the carbon absorbed in the growth of the raw materials is then burned out at processing and is carbon-neutral in that sense. There is also an assertion that the level of efficiency is just 35%. I am aware that there are mechanisms in the legislation. I would like the Minister to comment on that point. It is important for us to achieve that. I am pleased that it will be possible to sell the certificates. They will be a marketable quantity. A company that produces extra bio-fuel will be able to trade its surplus in a reasonable manner to a company that is producing less bio-fuel. That is a good proposition. I am reasonably satisfied with the policing mechanisms in the legislation. We will examine that further on Committee Stage.
I will conclude by setting out my essential view of the legislation. In principle, it is correct that we provide for the 4% obligation. In practice, however, we are putting the cart before the horse. We are not placing a sufficient focus on the indigenous production of raw materials for bio-fuels. It should not be beyond the genius of the Government to ensure it becomes a native industry. It is an indictment of the Government that it has acquiesced in importing to such a degree. That is my essential concern. My secondary concern is to ensure we do not import to the detriment of vulnerable people, as we did over 100 years ago.