Bernard Durkan (Kildare North, Fine Gael)
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Question 300: To ask the Minister for Communications, Marine and Natural Resources the steps he will take to ensure continuity and security of oil and gas supplies given the high dependency of the Irish economy on such imports; the policy of fuel producers to increase their prices in line with international fuel costs and the potential negative implications for the economy; if he will take action to dramatically encourage and co-ordinate the production of alternative clean energy on a scale equal to that of other European countries; his proposals to review energy or mineral exploration policy with the objective of maximising the benefit to the Irish economy; and if he will make a statement on the matter. [28345/05]

Noel Dempsey (Meath, Fianna Fail)
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As a member of the International Energy Agency, Ireland is obliged to maintain oil stocks equivalent to 90 days of net imports. The oil industry here is fully privatised, liberalised and deregulated. The industry sources its supplies on a commercial basis from overseas suppliers. Oil prices in Ireland are not controlled and as Minister I have no function with regard to oil prices, which are a matter for the market.

As regards ensuring the continuity and security of natural gas supplies, the Commission for Energy Regulation, CER, has responsibility for monitoring the security of natural gas supplies on an ongoing basis. The commission publishes annually a rolling seven-year gas capacity statement. This provides a forecast of capacity, flows and customer demand to assess the adequacy of the Irish gas transmission system.

The gas capacity statement also considers whether projected supplies of gas from indigenous sources, imports and storage are sufficient to meet forecast demand. A key finding of the 2005 gas capacity statement is that even under unusually cold weather conditions, the Irish gas transmission system will cope with forecast demand.

As regards the production of clean energy, in 2004, my Department secured an amendment to the Finance Act 1999, which provides for the introduction of a scheme for mineral oil tax relief for biofuels. A scheme under the Act was launched in April 2005 and eight projects were subsequently awarded excise relief valued at €6 million over a two-year period to 2007. It is anticipated that this will result in 16 million litres of biofuels being placed on the Irish transport market during that period. The scheme is an initial measure designed to stimulate market development.

The number of applications in the pilot scheme clearly indicates the strong interest there is in developing a biofuels industry in Ireland. I have had contact with the Minister for Finance about the possible scope for scaling up fiscal support for biofuels. Further measures to increase market penetration over a longer timeframe are also being considered in consultation with all of the relevant Departments.

Under Sustainable Energy Ireland's, SEI, renewable energy research, development and demonstration programme, capital grant aid is also 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 support engine modifications of up to 100 vehicles and provide plant and monitoring equipment.

An interdepartmental biofuels group was established in 2004 to consider policy options for the development of the biofuels market. It comprises representatives from my Department, as well as the Dsepartment of the Environment, Heritage and Local Government, Finance, Transport and Agriculture and Food, and SEI. As part of its work, the group commissioned a report entitled A 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.

SEI has supported a number of biomass facilities to date. SEI's house of tomorrow programme has committed over €7.5 million in funding to 39 projects and a total of 1,818 housing units. The scheme encourages housing developers to incorporate design and technology packages for high standard energy and CO2 performance. The range of technologies included in these packages included wood pellet boilers that have been installed in 93 homes.

In so far as the regime in respect of oil, gas and other mineral exploration is concerned, as part of the commitments in the programme for Government, I intend to bring forward proposals for a new minerals development Bill to consolidate and update legislation, enacted between 1940 and 1999, regulating the non-petroleum minerals sector. Work is under way on this in my Department.

I also intend to bring forward Bills to update the legislation governing petroleum exploration and development, namely the Petroleum and Other Minerals Development Act 1960, and the Continental Shelf Act 1968. This work is also under way.

The terms governing petroleum exploration and development are kept under constant review by my Department. These terms are attractive by international standards and are designed to encourage offshore exploration. I have no immediate plans to reform the terms at this time.

Exploration and development of minerals is undertaken by private enterprise and regulated under the Minerals Development Acts 1940 to 1999. All extraction of minerals under the Acts is subject to payment of royalties to the State. While it is my intention to consolidate and update those Acts in a new minerals development Bill currently in preparation, I do not propose to change that policy.