Denis Naughten (Longford-Roscommon, Fine Gael)
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Question 160: To ask the Minister for Communications, Marine and Natural Resources the steps he is taking to promote the use of biofuels; and if he will make a statement on the matter. [18739/05]

Noel Dempsey (Meath, Fianna Fail)
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My Department is responsible for the promotion and development of renewable energy including biofuels and I am committed to the development and promotion of a biofuels market in Ireland's transport fuel sector.

In March 2004, my Department secured an amendment to the Finance Act 1999, which provides for the introduction of a pilot scheme for mineral oil tax relief for biofuels which is essential to a pilot project designed either to produce biofuel or test the technical viability of biofuel for use as motor fuel.

A scheme under the Act has been agreed between my Department and the Department of Finance and received state aids clearance from the Commission in March 2005. Under the scheme, mineral oil tax relief may be granted for pilot projects producing up to 6 million litres of pure plant oil, 1 million litres of biodiesel and 1 million litres of bioethanol.

The scheme was publicly advertised as a competitive call for proposals on 20 April 2005 and the closing date for receipt of applications was 13 May 2005. The proposals are currently being assessed by my Department and Sustainable Energy Ireland. It is therefore anticipated that my Department will be in a position to make recommendations to the Department of Finance shortly. The scheme is an initial measure designed to stimulate market development. Sustainable Energy Ireland, SEI, was established under the Sustainable Energy Act 2002, to promote and assist in the sustainable production, supply and use of energy, in support of Government policy. A number of SEI research, development and demonstration programmes are currently in operation across all sectors of the economy addressing these strategic objectives.

SEI is also funding a number of biomass projects and studies through its renewable energy research development and demonstration programme. Under the programme, Sustainable Energy Ireland offers capital grant aid for biofuels market demonstration projects in the pure plant oil, biodiesel and bioethanol categories. Funding of €250,000 has already been awarded by SEI to one company which is demonstrating the feasibility of producing and selling vegetable oil locally as a transport fuel. It is intended that further grant aid will be available under the programme for biofuel demonstration projects.

It is anticipated that these initial measures will lead to market penetration of biofuels of 0.13% within two years. Further measures to increase market penetration over a longer timeframe are currently being considered.

A liquid biofuels strategy study was published by SEI in December 2004. This report provides comprehensive details on the potential for the development of a biofuels market in Ireland and options to stimulate the market, and these are currently being considered in detail by my Department with a view to further developing the biofuels market in Ireland.