Pat Carey (Dublin North West, Fianna Fail)
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Question 567: To ask the Minister for Communications, Marine and Natural Resources the incentives which are available from his Department or from agencies associated with it, to encourage research into the production of biofuels; and if he will make a statement on the matter. [25173/05]

Noel Dempsey (Meath, Fianna Fail)
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I am committed to the development and promotion of a biofuels market in Ireland's transport fuel sector, and to the development of alternative fuels which can contribute to emissions reductions and security of supply.

In 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 designed either to produce biofuel or test the technical viability of biofuel for use as motor fuel.

A scheme under the Act was subsequently agreed between my Department and the Department of Finance and received State aids clearance from the EU Commission in March 2005. Under the scheme, mineral oil tax relief may be granted for pilot projects producing up to six million litres of pure plant oil, one million litres of biodiesel and one million litres of bioethanol.

A total of 34 applications was received under the call for proposals by the closing date. Applications were received under all three categories of biofuel. A total of eight successful projects were selected — four pure plant oil projects, three biodiesel projects and one bioethanol project. 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. Under SEI's renewable energy research, development and demonstration, RERD&D, programme, capital grant aid is available for biofuels market demonstration projects in the pure plant oil, biodiesel and bioethanol categories. Funding of almost €250,000 has already been awarded to one biofuel developer to support engine modifications of up to 100 vehicles and provide plant and monitoring equipment.

In addition to the existing demonstration project, SEI has provided grant aid of €40,000 to Teagasc, for a study to establish oil quality testing procedures for pure plant oil. This study will be critical to building market confidence. SEI also provided funding for the publication of a resource study on recovered vegetable oil and animal fats and study on quality assurance for rapeseed oil as a vehicle fuel.

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 comprises representatives from my Department, the Departments of the Environment, Heritage and Local Government, Finance, Transport, Agriculture and Food and SEI.

As part of its work, the group commissioned the publication of a report, Liquid Biofuels Strategy Study for Ireland, which was published by SEI in December 2004. The report examines the full range of options and potential supports for liquid biofuels development in Ireland, including bioethanol and biodiesel.

The number of applications in the pilot scheme clearly indicates the strong interest there is in developing a biofuels industry in Ireland. Officials in my Department are working with other Departments, industry and other stakeholders to ensure the further development of the industry in Ireland.