Brian O'Shea (Waterford, Labour)
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Question 370: To ask the Minister for Communications, Marine and Natural Resources the proposals he has regarding promotion of ethanol production as a renewal and environmentally friendly fuel; and if he will make a statement on the matter. [32688/05]

Noel Dempsey (Meath, Fianna Fail)
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The Department of Communications, Marine and Natural Resources is responsible for the promotion and development of renewable energy including biofuels. I am committed to the development and promotion of a biofuels sector in Ireland's transport fuel market, which will contribute to emissions reductions and overall security of supply. In 2004, the 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, which was agreed between the Department and the Department of Finance, was launched in April 2005. Some 34 applications were received under the call for proposals by the closing date, of which two were in the bioethanol category. The proposals were evaluated by the Department and Sustainable Energy Ireland and recommendations were made to the Minister for Finance. Eight projects were awarded excise relief under the scheme including one bioethanol project. Excise relief of €6 million will be allowed for the projects over the two-year period to 2007. It is anticipated that the project will result in 16 million litres of biofuels replacing imports on the Irish transport market over that period. The scheme is an initial measure designed to stimulate market development.

Under Sustainable Energy Ireland's 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 been awarded to support modifications of the engines of up to 100 vehicles and to provide plant and monitoring equipment. An interdepartmental biofuels group was established in 2004 to consider policy options for the development of the biofuels market and to consider the options from the perspectives of the sectors or interests represented by each Department. It comprises representatives from the Departments of Communications, Marine and Natural Resources, the Environment, Heritage and Local Government, Finance, Transport and Agriculture and Food, as well as Sustainable Energy Ireland. As part of its work, the group commissioned a liquid biofuels strategy study for Ireland, which was published by Sustainable Energy Ireland 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 in developing a biofuels industry in Ireland. I have been in contact with the Minister for Finance about the possible scope for increasing fiscal support for biofuels bearing in mind competitiveness issues in the sector as a whole. Further measures to increase market penetration over a longer timeframe are also being considered in consultation with all the relevant Departments.