Paudie Coffey (Fine Gael)

I welcome the Minister of State to the House to debate this important Bill. Fine Gael welcomes its general thrust. We tabled amendments in the Lower House and will also table amendments in this Chamber to try to make improvements, where necessary.

This is a very complex issue and a new departure in electricity generation and the cost of electricity to consumers. All sides of the House acknowledge that people are not generally aware of the increased costs from their electricity bills. This applies equally to households and businesses. The purpose of the levy is to incentivise the reduction of carbon-based emissions related to electricity generation. Most find the issue difficult to understand. As the Minister of State outlined, free allowances apply for the period from 2008 to 2012. However, the SEM committee agreed that generators would collect the levy and they have been doing so since 2008. The costs have been based on generators' average figures in the 2003-04 period. In those years the Celtic tiger was at its peak. Electricity generation and certainly consumption levels are now lower than they were in those years. Does this factor have any impact on costs?

It is regrettable that the Government did not move sooner to introduce legislation to introduce this windfall levy. In June 2008 Deputy Coveney introduced a Private Members' motion in the Dáil calling on the Government to recoup the cost. Unfortunately, the Government parties voted to reject the motion. The Minister of State referred to a loss to the Exchequer of €6 million to €7 million a month if we delay in implementing the legislation. Given that it could have been implemented two years ago, a considerable amount has already been lost to the Exchequer. Is there any mechanism under this legislation which could be use to recoup the arrears?

Fine Gael introduced its motion at a time when the economy was coming under pressure. Our proposal what that the levy should be used to reduce the rate of VAT from 13.5% to 12.5%, which was a very reasonable proposal. It was money which had been collected from citizens and should have been utilised in a way that would have benefited them. Reducing the rate of VAT would have stimulated the economy, increased retail trade and helped our competitiveness. Unfortunately, the Government turned a deaf ear to that very positive Fine Gael proposal made more than two years ago. At the time it indicated that the Attorney General had difficulties with the legislation and was not sure whether it could be implemented. Obviously, the Attorney General has now cleared the way and agreed to allow the Government to introduce the legislation. What has happened in the past two years to changed that way of thinking?

The Minister of State from Carlow has arrived in the House. I refer to a matter affecting her constituency, the draft national renewable energy action plan. It is welcome that we have practical and tangible targets that we can achieve. I am a member of the Joint Committee on Climate Change and Energy Security, to which officials from the Department of Communications, Energy and Natural Resources brought a report two weeks ago. Many of the stakeholders affected by the targets set in the plan consider they have not been adequately consulted which could have consequences for various industries. I will give one example that applies to the Minister of State's constituency.

Renewable energy targets in electricity generation in respect of co-burning have been set. Bord na Móna has proposed that the by-products of the timber industry, the off-cuts, shavings and wood chips, be used in co-burning with its product. The plan to be submitted to the European Commission contains targets in that regard. There are concerns expressed by SmartPly and Medite. Medite is based in Clonmel, while SmartPly is based in the Port of Waterford. These two companies employ 300 people in manufacturing board from timber by-products such as wood chips and wood shavings. The value of goods they export comes to €160 million per annum. Their manufacturing processes reuse and recycle all of the natural timber by-products. The industry indicates that it is a very finite resource and that insufficient timber is being grown here. They are very concerned that if wood chips and wood shavings are diverted towards co-burning as proposed in the Government plan to be sent to the European Commission at the end of the month, it could put these industries in jeopardy. We need to consider the impact of such targets in moving from fossil fuel based electricity generation to renewables based electricity generation. I am all for renewables based electricity generation, but we need to consider the impact if we are to divert an entire stream of by-products from the timber industry from successful manufacturing companies such as Medite and SmartPly which are under the auspices of Coillte. They generate €160 million per annum in the export of their goods. The issue should be considered very carefully and as it relates to the Minister of State's constituency. She should look at it and bring it to the attention of the Minister.

Fine Gael more or less welcomes the Bill, although we will submit amendments on Committee and Report Stages to improve it. Collection of the windfall is a complex area and there should be more transparency in this respect. The Minister of State, Deputy Conor Lenihan, outlined in his contribution the complexity of the collection process, and this will apply to all generators rather than just the ESB. Close scrutiny will be required and I welcome the fact that the Comptroller and Auditor General and all the State agencies will keep a close eye on how the money is collected and spent.

Money has been collected on the backs of ordinary consumers, domestic householders and businesses. They are not fully aware that it has been collected over the past two years and will be collected for a further two years. It is important this money be used to the best advantage by the Exchequer. Fine Gael proposals have been very positive and were a mechanism to try to stimulate employment and our economy by reducing VAT. The Government should consider this positive proposal with the best intentions in stimulating the economy.

I have no more to say at this time but my colleague, Senator Buttimer, will contribute later. I am also interested in the views from the other side.