Sean Barrett (Independent)

I welcome the Minister of State, Deputy O'Sullivan. When the Minister for Communications, Energy and Natural Resources, Deputy Rabbitte, was speaking in the House on 1 February, he stated:

Towards the end of 2011, the International Energy Agency carried out its four-yearly review of Irish energy policy. The review includes a detailed assessment of the efficiency of the Irish electricity and gas sectors, taking full account of the EU regulatory context for these sectors. I look forward to receiving its assessment of our energy policy in a few months. This analysis will feed into a review of the existing 2007 energy White Paper that my Department will carry out over the coming months in consultation with stakeholders and with a view to publishing during this year a new energy policy framework for 2012-2030.

On what oil price does each alternative depend? Each is technically feasible and has very strong advocates, but sometimes what is possible in engineering terms does not make economic sense. As the Minister of State knows, the OECD, in its review of the Irish economy, which the National Competitiveness Council includes in the competitiveness challenge report for 2011, advocated the discontinuation of supports for offshore wave and tidal energy. In its view, these options are too expensive.

The Competitiveness Council recommends that the price support scheme for onshore windmills should be revised so that as we move closer to achieving our renewable energy targets, price support levels for new projects are phased out over time. There is €35 million from the PSO levy on electricity users which goes to subsidise renewable energy at the moment. It is recommended that the schemes should be discontinued for offshore wave and tidal energy, and scaled down for onshore windmills.

The council also points out that we will have to review policy because EirGrid 25 was based on anticipations of economic growth which, alas, we do not have. In fact, Professor Colm McCarthy estimates that by 2014 we will be about 40% behind where we would expect to be in the national development plan in terms of GDP. He has been making the point that one does not need the same volumes of investment to cater for an economy which - unfortunately, much as we wish to change it and will work to do so - will be substantially below what was predicted when the national development plan was drawn up. Postponing capital projects is justified in that case.

The Minister is undertaking the review, which I welcome. We look forward to hearing his thoughts later this year. I welcomed his speech here on 1 February. Independent people have cast doubts on the offshore projects I mentioned, including wave and tidal energy, as well as biomass. These are all technically feasible but they may not make sense unless the price of oil doubles. There are similar concerns that we may end up with excess capacity because economic growth in a recession will be less than expected. The €35 million in support for renewable energy, including onshore windmills, should be revised as we move closer to the target. The target will be smaller as we will be consuming less energy due to the regrettable recession.

On pollution matters, An Bord Snip's suggestion is to price those benefits on carbon tax. One can spend a lot of money for a small benefit but the carbon price gives us the shadow price. We are not alone in this situation. There has been such a strong surge without much analysis in favour of alternative energy that it is difficult to redress that. In the United Kingdom the makers of solar panels pursued a successful law case against the government. We can therefore build up irrational expectations that some activities will be worthwhile, but it would require a massive oil price rise to be so. I do not know where we fit into the picture as regards gas coming from the Corrib field. What will that do to Ireland's energy requirements?

Part of the success of wind energy in Denmark is due to a gas price which seems to be 50% higher than the price we pay in Ireland. Things that are possible in Denmark, therefore, may not make economic sense here. The Bill is important in opening up a discussion as to what the best energy policy is but we must include some numbers. When do we flick the switch to bring in these various options? Some have been ruled out, while others may be marginal. As the Competitiveness Council has said, subsidies may have to be curtailed. The fear is that if one does too much in this direction, one will reduce the chances of recovery in the overall export sector because we must keep our competitiveness strong. Energy costs are a major factor in that and they are within our control, which is why I welcome the Bill before us.