David Norris (Independent)

I move amendment No. 3:

In page 6, between lines 15 and 16, to insert the following:

" 'bioethanol' shall only be deemed to constitute a biofuel in the case of ethyl alcohol ex CN (Combined nomenclature) sub-heading Taric code 2207 1000 with an alcohol content of at least 99 per cent volume the properties of which comply at least the requirements set in document EN 15376:2007 or any subsequent revisions to this document by the EU Committee for Standardisation CEN;".

This is a series of related amendments which go right to the heart of the matter on which I have been lobbied effectively by a commercial company. I think the Minister of State will agree that in the current economic circumstances it is important that we foster and encourage potential indigenous industrial development. What we are looking for is a level playing field. It is similar to the position on Brazilian beef. I happen to love Brazil. Its people are very charming. It is a very beautiful place and I have been there on a number of occasions. Therefore, I am not anti-Brazilian, but we need a level playing field for those involved in our own industry. We have seen the agitation of farmers on the rules pertaining to beef production. We face a similar situation where the possible development of an indigenous industry may be stymied by the absence from the Bill of certain measures concerning tariffs which would bring us into line with at least eight other European countries which have introduced similar legislation. They have provided for such tariffs to create a level playing field.

Some of the language used is unattractive - natured and undenatured. "Undenatured" is one of the most ugly words I have ever come across, but, regrettably, it appears to be necessary to describe some of the technical processes involved. Undenatured or naturally produced bioethanol is the equivalent of a kind of poteen; additives are included to dilute it and so on. It is also sometimes needed for certain chemical processes and so forth. However, the transport of undenatured ethanol is a standard international practice. There is nothing against it; it is not dangerous. Therefore, there is no technical argument against it. To secure the type of investment required, which is very significant, it is essential that our domestic legislation mirrors the European legislation of which I have spoken. Sweden applies these tariffs to Brazilian ethanol, as do Belgium, Slovakia, Poland, Hungary, Austria and Spain. I urge the Minister to accept this amendment and to get involved in direct discussions with the agencies that wish to introduce this type of manufacturing into this country.

The impact of this would be to secure jobs and to provide for the security of our bio-fuel requirements within the European Union. At present, we use some of the major oil companies, which bring it in from various countries around the world. That does not confer any real benefit on the Irish industrial community. There would also be the development of plant infrastructure, and 4% of our fossil fuel requirements would be replaced by this indigenously produced material, which is very environmentally friendly. A total of 100,000 tonnes of fuel would be produced as well as 110,000 tonnes of the basic materials for animal feed. In that regard we currently import soya from various countries, including Brazil. It will also produce 60,000 tonnes of CO2 gas, which we must import at present through the British Oxygen Company. The proposed plant would be located in Waterford and would be a major industrial development for the area. It would help to alleviate the economic distress being experienced in Waterford, particularly in the aftermath of the closure of companies such as Waterford Glass. That must be a major argument for the Government.

What is being proposed is the adoption of the quality standard technically known as EN15376 which is also applied to externally sourced ethanol outside the European Union. The standard represents 99% volume purity, anhydrous - without water - and is the recommended standard used by the majority of EU member states to prevent tariff engineering of undenatured ethanol outside the EU or in bonded warehouses. The difference in both standards, in the main, is the water content of approximately 3%. The Brazilians would prefer to denature their own ethanol outside EU borders or within bonded warehouses inside the EU. This essentially means a lower bioethanol production cost per litre while obtaining maximum price within the EU. In other words, it is a tax dodge. This benefits the Brazilian domestic industry, without having to maintain EU standards of production.

We are talking about an improved security of supply and the development, construction and operation of a €100 million bioethanol facility. This is in addition to the indirect support of approximately 1,000 jobs in the Waterford area, which is an economic blackspot. It would also create new opportunities for the agriculture sector after the ending of the production of sugar beet. There is a serious problem in agriculture with the decline in sheep and cattle prices. This development would have the spin-off effect of producing feed. There would be a significant tax contribution through PAYE, corporation tax, rates and VAT to the Exchequer while there would be import substitution of 110,000 tonnes of soya animal feed through the utilisation of the distillers dried grains with solubles, DDGS, by-product, a product which is highly sustainable both in terms of environmental performance and greenhouse gas emissions savings. Furthermore, there is a knock-on effect in Brazil. Ireland, of course, will be a small player in this and Brazil is an enormous country. However, everybody is aware of the appalling impact on the rainforest. Millions of acres are destroyed partly for the production of soya. The production of bioethanol in Brazil is also having an impact. There are many environmental and commercial reasons for considering this proposal.

There appears to be a perception that there are technical problems relating to the importation of undenatured Brazilian ethanol for fuel use. It must be denatured before it can be transported. All Brazilian ethanol is produced and exported in an undenatured state. The denaturant is added within the EU borders, prior to the duty point, depending on the requirements of the individual end users and their national regulations. It is denatured as a result of European national customs requirements by adding a select number of additives listed in EN15376. Transport of denatured ethanol is rare and only happens if the end user requires it. Shipping undenatured ethanol has nothing to do with technical feasibility; it is a standard practice around the globe.

With regard to the water content in ethanol, EU oil and car companies do not want too much water in the ethanol. The Brazilians always complain about this and say that the standard is a non-tariff barrier. However, there has been an international inquiry into this issue and a tripartite committee was established, comprising membership from the United States, Brazil and the European Union. Last year, the official conclusions were reached and they were unanimous that the water content issue was not a barrier to trade. The Minister will be able to possess himself of this report.

There have been doubts about the economic viability of an Irish bio-fuel plant. There is the issue of economies of scale but this has been well researched and is supported by other major European, particularly German, chemical combines. The plant size suggested is optimised to match both Irish demand for fuel ethanol and the capacity to produce feedstuff. As an island, Ireland has a number of competitive advantages over other locations to make the plant viable. I accept that the economic viability of an Irish plant is an issue to concern the promoter. It is a market risk for the developer, but the developer will take this risk. I am asking that the Seanad create the market conditions through legislation that will enable these investors and potential Irish industrialists to develop it.

There are benefits with regard to carbon dioxide as well. We import all our carbon dioxide through the British Oxygen Company. I recall seeing its lorries travelling through Dublin transporting cylinders and my cousin was the company's chief engineer at one time. The fact that we import all this gas makes CO2 capture at the plant viable and will provide the company with an additional revenue stream. It currently costs €60 per tonne in transport charges alone to import this gas into Ireland so it will be a significant revenue stream. The CO2 capture also greatly enhances the environmental performance of the plant. One of the other by-products is distillers dried grains with solubles, DDGS. It is a valuable by-product and is a direct substitute for imported animal feed. Once again, it would mean the replacement of imported material with Irish-produced material.

I have absolutely no commercial interest in this proposal. I merely met the people concerned but I considered the proposal so valuable I put forward these amendments. Ireland's production costs per tonne are competitive within Europe. This is partly because we have the highest wheat yields in Europe due to the longer growing period. There are various other points concerning price and the impact at the fuel pumps which can be dealt with.

In terms of sustainability, the demand for land in Brazil, in particular, has been driven by the increased demand for soya, sugar cane and beef. It can be expected that an increased demand for bioethanol worldwide to fulfil bio-fuel obligations will automatically create further pressure to convert rainforest to agricultural land. Saying bioethanol is produced using sustainable methods does not guarantee that the rainforest will not be knocked indirectly by beef farms as a result of an increased demand for sugar cane. As I said, the scale of destruction is absolutely vast. Millions of acres have been destroyed. The demand for bioethanol will increase and the question is where should it be produced. I made the argument that it should be produced here to generate jobs and very valuable materials. If the Government decides not to apply the tariff which eight other European countries have successfully applied and in so doing so secured their indigenous industries, it may be unknowingly promoting the destruction of the rainforest by creating increased demand which would be contrary to its intentions. I ask the Minister of State to ensure a level playing field which would require no investment on the part of the Government. It would at least open up the possibility of securing the development of a significant industry in what is an economic black spot.

I ask that Seanad Éireann employ all of its forces in requesting the Minister of State to take this matter very seriously, on which I believe I will receive support from other sections of the House. There would be no cost to the Exchequer. The Government would simply need to create the market conditions, whereby we could develop a viable, indigenous industry and give employment to our own people during this critical and difficult period.