Written answers

Wednesday, 25 January 2006

Department of Communications, Energy and Natural Resources

Alternative Energy Projects

8:00 pm

Photo of Martin FerrisMartin Ferris (Kerry North, Sinn Fein)
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Question 143: To ask the Minister for Communications, Marine and Natural Resources his views on whether Ireland will be in a position to meet with EU targets on the proportion of vehicle fuels to be met by biofuels. [2193/06]

Photo of Ciarán CuffeCiarán Cuffe (Dún Laoghaire, Green Party)
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Question 228: To ask the Minister for Communications, Marine and Natural Resources the way in which he intends providing the €20 million in excise relief measures for biofuels as announced in budget 2006. [2186/06]

Photo of Noel DempseyNoel Dempsey (Meath, Fianna Fail)
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I propose to take Questions Nos. 143 and 228 together.

The EC biofuels directive sets indicative targets to member states of 2% market penetration for biofuels by end 2005. The targets in the directive are indicative and not mandatory. Noting that we are starting from a very low current production base, our objective is to meet the 2% target by 2008 through targeted fiscal measures designed to stimulate market development.

The Government introduced a scheme for mineral oil tax relief for biofuels under the Finance Act 2004, which was launched in April 2005. Eight projects have been awarded excise relief under the scheme including four pure plant oil, three biodiesel or other biofuel and one bioethanol proposal. It is estimated that the pilot scheme will result in 16 million litres of biofuels being placed on the Irish transport market by next year.

Building on the success of the pilot biofuels scheme, I have agreed with the Minister for Finance a further targeted package of excise relief valued at €205 million, which was announced in the budget. The new excise relief programme, which is subject to state aid approval, will be rolled out from this year to 2010 and will enable us to reach the initial target of 2% market penetration by biofuels by 2008. When fully operational the relief is expected to support the use and production of some 163 million litres of biofuels each year. I am also providing funding towards the capital cost of developing biofuels processing facilities, which will critically underpin the excise relief package.

Work is ongoing to put in place a clear policy framework for the development of the biofuels market taking into account the various perspectives of all relevant sectors including transport and agriculture.

The report of the interdepartmental biofuels group, Liquid Biofuels Strategy Study for Ireland, which advocated excise relief as the most effective short-term measure to stimulate the market was published in December 2004. A detailed report on further implementation of policy options for development of a biofuels market has been overseen by the group and will be published shortly.

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