Thursday, 29 January 2009
Alternative Energy Projects
The matter I raise is the need for the Minister for Communications, Energy and Natural Resources to improve existing methods of carbon emissions reduction and support the development of alternative methods. It may surprise the Minister to learn that I have received a large number of representations recently about the slow development of alternative methods of energy generation. This is especially surprising given the significant and important Green Party element in the Government. I wonder why this is the case. The reason may be that such representations are made by vested interests. I see nothing wrong with vested interests where alternative energy is concerned. It is our job to promote the vested interests of alternative energy producers because they coincide with the national interest.
This issue is especially topical this month because of the initiatives which have been taken by President Obama in the United States where carbon emissions regulations have been lifted and now appear to be a matter for individual states. This measure will obviously give a major boost to alternative energy initiatives and will, I hope, change regulations for the better. It is certainly a turnaround from the hardline stance taken by President Bush and other governments on alternative energy. I suppose it has been taken in light of the bail out in Detroit and the need to create alternatives to using fossil fuels.
The impression is abroad that whereas bio-fuels are a problem for Ireland owing to the distance to areas where sugar cane is grown, other alternatives are not sufficiently promoted. I have been requested specifically to ask the Minister what action is being taken on the use of seaweed as a source of energy. Ireland has a fantastic opportunity to improve its carbon emissions reductions by promoting seaweed or algae as an energy source. It is easy to generate energy from seaweed and the material is reasonably cheap and accessible.
I understand heating and fuel account for approximately 75% of our energy consumption. Seaweed would be a particularly appropriate source of energy for this purpose. The reason the use of seaweed as a source of energy is not being more actively promoted by the Government is not clear. I am interested in learning from the Minister what the obstacles are to encouraging the use of seaweed as an alternative source of energy.
I have received representations, over several years, about wave energy. I have knocked my head against the wall about various projects of this type. I am happy to admit the representations came from people who wanted to promote wave energy projects and who found the frustrations of dealing with bureaucracy almost impossible to overcome. Many of them have given up, some have died and some are old and dispirited because their championing of wave or tidal energy has been so frustrating. The outlook now, based on the latest figures, suggests that wave energy is 20 years away and tidal energy might be five years away. I see the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan, is shaking his head.
Wind energy is another matter which it would be interesting to hear about. There are two types, offshore and onshore, and offshore is double the expense of onshore. I understand the Minister for the Environment, Heritage and Local Government, Deputy John Gormley, said that the Government wants to reach a wind energy target of 30% or 40% by 2020, whereas we currently get approximately 6% or 7%. Those aims are quite unambitious. The issue is not simply that fossil fuel is expensive and may run out, but also that it is damaging to the environment and we have alternatives which we can promote more rapidly. I know there is a funding problem but it is a long-term investment which I suspect will pay off in the end.
The main obstructions, about which I hear from people involved in all of these industries, are not just ESB and the grid infrastructure — which is being delayed, particularly in the area of wind energy — but also the regulator. The complaints I receive are that the allocation of contracts by the regulator is on a first-come, first-served basis and that it might be better if a clearer, more competitive and totally transparent basis were used for the allocation of contracts so there would be no delays. There is no excuse, if the alternatives are available and there are entrepreneurs ready to promote them, in having bureaucratic or semi-State obstacles to prevent this particularly laudable form of alternative energy being promoted. It has not only good financial effects but also great environmental effects.
I welcome the opportunity to respond to the points raised by Senator Ross and to outline some of the developments which will, hopefully, give some reassurance to the people he has talked to regarding the development of renewable energy power within our island.
It is centre stage in Government policy to pursue, with the greatest haste and proper management, the development of such resources. That is why I went to Government and got agreement on a change in the targets we are setting ourselves so we can move towards a 40% renewable energy component in our electricity supply by 2020. I did so on the back of real concerns. One concern is that we are facing a peak in global oil production and the secure availability of alternative fossil fuels is far from clear. We have seen the gas supply cut off from Russia to Ukraine this year. This is, I believe, a warning we should heed and switch to our indigenous resources. The commitments we are entering into at European and, I hope, international level to tackle climate change require us to do everything we can to reduce our electricity from such high carbon emission sources. The target for 2020 is an interim one and is not a limit to our ambitions. We should be aiming to decarbonise our power generation sector to go towards a 100% carbon-free power supply in the next number of decades.
I will concentrate on what the State can do to assist the private sector and the country to meet the targets. Another thing which gives us confidence to reach those targets is a very important piece of planning work we did which was published a year ago, the all-island grid study. It looked at the whole island of Ireland and what level of renewables could be reached by the system if the grid was built in a certain way. It may not seem topical, high profile or sexy but it is the key development consideration. If one looks at developments in Europe, yesterday an announcement mentioned the support for grid development was centre stage in the economic renewal package. In the United States it was agreed yesterday that grid development was the cornerstone of anything being done on the energy side. It is the same here.
Unless we develop that grid we will not be able to meet our targets. I will be looking for support from this House for EirGrid, which is tasked in its Grid 25 study to do exactly that. It will deliver, effectively and quickly, on the east-west interconnector, which is the first major project in developing the grid, with the support of the European Union, as announced yesterday. Other projects, such as the development of the north-south interconnection and transmission line and the building up and reinforcing of our transmission system across the country, particularly in the north and west, are centre stage. The plan is in place, it is progressing and we have engineers delivering on it today. It is the first priority, even though it may not be glamorous or high profile.
Another issue is to provide a market environment which encourages the development of renewables, and to put in place pricing and other regulatory systems, which is complex. In the last year changes in oil prices from $50 per barrel to $150 and back down to $30 messed up many business plans people may have had. The financial crisis we are seeing is having an effect in the energy area, as it is in every other area in terms of the availability of capital. It behoves us to give some price and investment certainty in this area.
I believe the support price system we have in place in the correct one. People can argue for an alternative, such as in the UK where one has a renewables obligations certificate. In practice, if one looks at what has worked in countries such as Germany, Spain, Portugal and others, it is guaranteed prices over a certain timeframe which is the correct mechanism. We have the correct price supports in areas such as wind, particularly where we have a very extensive resource in comparison to other countries, and it is important to have that mechanism in place.
There have been difficulties, which are ongoing, in getting grid connections, as Senator Ross has said, and in the queue for projects to proceed in that regard. The regulator has set out its strategy on the further development, which comprises some 3,900 MW of additional projects it now has in a gate system where we try to bunch projects together so that grid development goes hand in hand with the development of projects. I have heard from the Irish Wind Energy Association and others that while they are constantly looking for refinements or improvements, we should proceed in the direction we are going in because certainty and clarity of purpose are more important to them than an approach which chops and changes.
I am always available for suggestions and encouragement to try to push the process more quickly. However, when I listen to the bankers and project managers involved, they are saying the pricing mechanism and grid connection system are improving and are not the impediment to development they have been, particularly when we had a moratorium on any developments some two or three years ago.
I will now deal with the issue of wind offshore and onshore because the bulk of our renewables target will have to be met by wind power. It is not simply close to commercial reality but is now cheaper than the alternative and its supply is much more secure. It is interesting to see that the regulator published a report the day before yesterday with a detailed analysis behind the targets the Government has set and the implications for energy prices for us in meeting such renewable targets. It is very encouraging that, at a time when energy price rises are a real concern for many industries, its modelling analysis has shown it will lower prices significantly. This is a technology which will be good for the environment and, crucially, good for our economy.
The initial large tranche will come from onshore wind but in the follow up, real opportunities exist offshore. The scaleability of offshore and its ability to go towards much larger plants without planning difficulties is where the real opportunity exists. I hope it can go in tandem with what Senator Ross mentioned, which is the development of wave and tidal energy. I can see the prospect down the line of having a common regulatory and planning system that treats that offshore resource in a well-thought out, transparent and fair manner.
I shook my head when the Senator indicated that wave power would be 20 years off because that goes against the information I am receiving from some serious international investors who are looking to come here. They are indicating that within two to three years we will see the deployment of fairly sizeable but pre-commercial devices on a scale above anything we have at the present time. Beyond that five-year time horizon, however, they expect such pre-commercial projects to translate into larger commercial ones that will be deployed in Irish waters.
It is not certain what technology will be used, or how, because the technology is still evolving. Even in the past year, since my Department published its updated planning for the process, we are seeing greater confidence that such technology will be scaled up and will prove to be commercial. Our planning in that respect is important because one must give investors long-term certainty. One cannot do this through a chop-and-change or stop-and-start process.
We have a ten-year planning horizon on it which began about three years ago. Last year, we went through the first quarter phase. There is a four-stage process as we move towards commercialisation which set out an initial two and a half year timeframe to do the sort of research required, including the first offshore trial in Galway Bay and the development of wave testing centres and prototype devices. We said that at the end of the first quarter of that ten-year period, we would do a review and then decide whether to go on to the second phase, which is what we decided last year. In doing so we gave clear signals to the international community that we want to be a centre of this development. We gave a support price of 22 cent per kw/hour, which is twice the retail electricity rate, as a signal that we want to encourage those prototype commercial and sub-commercial devices. We set out a commitment to grant support for new prototype devices as well as a new offshore grid-connected test facility which we are now developing in Belmullet, County Mayo. We also agreed a number of other measures. That sort of proper planning is crucial to attracting investment for a ten, 20 or 30-year time horizon for this technology. We must arrange our offshore planning within that context.
I welcome the work that has been done by the Joint Committee on Communications, Energy and Natural Resources, including its suggestions for an integrated approach to foreshore licensing and planning for offshore energy facilities. I will work with that committee on these matters, together with the Minister for the Environment, Heritage and Local Government, to establish a planning regime to give such certainty for investment. That is the crucial next step in the wave and wind energy area. We do not want it to become a speculative, haphazard, queue system, but rather one that takes into account more than the time of an application. It also needs to take into account the possibility of a developer proceeding to scale up the technology.
The bio-fuels area has seen significant difficulties and changes in recent years. I have consistently said that we need the development of bio-fuels as a strategic supply in the event of an oil crunch. I believe we can get a significant percentage that would be useful in running strategic public transport, agriculture or other industrial equipment in the event of a real oil shortage. However, it is not the panacea for the peak oil environment ahead of us. The approach of the European Union is correct in setting out a graduated approach towards increasing the level of bio-fuels here. Crucially, it seeks to encourage the generation both of electric vehicles, which will be a major development and will benefit our storage of wind power supplies, and of second generation bio-fuels. The latter includes the development of algae and seaweed for such uses.
From what I understand of the science, it is one of those technologies that is not yet at the commercial application stage. While some of the basic chemistry, biotechnology and biopharmacy applications are now coming closer to reality, the commercial one would require very large ponds close to power generation so that one could use a combined heat and power approach. That scaling up of test-tube technology into the real world is not yet complete, however. A number of universities on the west coast are examining this technology in some detail, which is exactly what we should be doing as part of the Government's overall strategy for a smart, innovative and green economy. There will be solutions from that basic research but it is not equivalent to wind energy or biomass heat markets that are now grant supported towards commercial deployment rather than towards research and development.
It has been said that the bureaucratic system is slow and that we are not responding quickly enough. However, Senators should heed the Government's words that this is not a time for a slow or poor response from State bodies. The situation requires us to be innovative, flexible and quick to attract investment. It also requires us to take risks, be bold and trust our ingenuity and ability to adapt to new tasks. The regulatory system, the energy agency and Departments must bend to those tasks. In these difficult economic times we need to instil a sense of confidence, vision and purpose. The public service is required to provide that, just as much as the private sector, so that we can get jobs from the new emerging technology. In addition, we will save money that is going out of the country to Kuwait or Qatar. In the process, we will also protect the planet from irreversible climate change.
That is one of the most outrageous performances I have ever come across on the Adjournment. I think the Minister does not understand the protocol here. Ministers usually read a speech that is written before they hear a Senator's question and then sit down. I am being facetious. I am grateful to the Minister for the fact that he actually listened to what I had to say and responded to it, which is unique in this House. It sets a precedent that should be followed by other Ministers. Whether we agree or disagree, it is extremely helpful to have a Minister who take one's points and responds to them individually. The normal procedure in this House is that a Minister — sometimes the wrong Minister — reads a script and then disappears. I am grateful that he took my contribution seriously and addressed it point by point.
The Minister stated that seaweed is not well developed. Is it Government policy to depend on the leadership of Europe in this regard? Will the Government introduce initiatives in this area, since we are well placed to exploit it ourselves?
This approach to questions means one's ignorance can be exposed quickly and my knowledge of seaweed is limited, other than a lifelong career pass in Kilkieran where there is a seaweed processing business which extracts nutrients and iodine, in particular, for use in industrial processing. The bio-fuels strategy we are following encourages the development of such second generation technologies. Our bio-fuels obligations scheme gives incentives to the development of such technologies and the obligations will be adjusted accordingly regarding what suppliers must do. In this circumstance, it is no harm to go hand in hand with Europe on policy formulation because it provides a wider market and a scientific certainty that also helps. When standards are being set on bio-fuels, it is difficult for a country of our size with a relatively limited seaweed capacity, even though we have a long coastline. It is much better to do this in co-operation with other countries.
In fairness to Commissioner Piebalgs, one of the experiences I have had in Government is that the European Commission has been more progressive in the energy area than many national governments. Far from slowing it up, it has kicked a few governments into action.