Denis Naughten (Longford-Roscommon, Fine Gael)
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Question 338: To ask the Minister for Communications, Marine and Natural Resources if Ireland is on schedule to meet the EU target of 2% substitution of conventional transport fuels with biofuels by December 2005; if he has set a separate target for Ireland; if so, if he will provide that target; and when such target will be attained. [22052/05]

Denis Naughten (Longford-Roscommon, Fine Gael)
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Question 339: To ask the Minister for Communications, Marine and Natural Resources the policy options and support measures which are being considered by the interdepartmental biofuels group for the development of a biofuels sector here; when the report of the interdepartmental biofuels group will be published; and if he will make a statement on the matter. [22061/05]

Noel Dempsey (Meath, Fianna Fail)
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I propose to take Questions Nos. 338 and 339 together.

The EC biofuels directive sets indicative targets of 2% market penetration for biofuels by end 2005. The targets in the directive are not mandatory. The directive required all member states to provide a report to the Commission last year and central to this report was the identification of a national target for market penetration of biofuels by end 2005. Many member states, including Ireland, indicated that they would not be in a position to meet the 2% target by the end of 2005. Ireland is starting from a very low current production base and the 2% target therefore represents a considerable challenge.

Ireland has reported a target for market penetration of biofuels by the end of 2005 of 0.06%, increasing to 0.13% in 2006. The 2005 and 2006 targets are based on the anticipated outcome of the pilot biofuels mineral oil tax relief scheme under the Finance Act, which received state aids clearance in March 2005. The scheme was 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 received are being assessed by my Department and Sustainable Energy Ireland, SEI, and it is expected that recommendations will be made to the Department of Finance shortly. While the pace of progress in reaching Ireland's identified target is as anticipated, it is too early to give a definitive position on levels of market penetration by the end of 2005.

An interdepartmental biofuels group was established in 2004 to consider policy options for the development of the biofuels market and to consider these options from the perspectives of the sectors or interest represented by each Department. It comprised representatives from my Department, the Departments of the Environment, Heritage and Local Government, Finance, Transport, and Agriculture and Food, and SEI. Close contact with these Departments continues, as part of the policy development process.

As part of its work, the group commissioned a "Liquid Biofuels Strategy Study for Ireland", which was published by SEI in December 2004. The report, which is available on the SEI website, examines the full range of options and potential supports for liquid biofuels development in Ireland, including bioethanol and biodiesel. The report is being considered as part of the overall policy objective to increase market penetration of biofuels in Ireland. The report suggests that excise relief is the most effective short-term measure to stimulate the market, but that other policy initiatives, such as a renewables obligation, might be more beneficial in the longer-term.

The group is scheduled to meet again shortly, to consider terms of reference of a further study on biofuels policy implementation. This study will build on the findings of the "Liquid Biofuels Strategy Study for Ireland" and aims to examine in further detail the policy incentive options available to Government to stimulate increased deployment of liquid biofuels in the Irish transport fuel sector, and to provide a detailed path towards implementation of the most appropriate options.