Phil Hogan (Carlow-Kilkenny, Fine Gael)
Link to this: Individually | In context

Question 250: To ask the Minister for Finance the initiatives he is undertaking to promote the use of biofuels and other renewable energy; and if he will make a statement on the matter. [13228/06]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

While the promotion of biofuels and other renewable energy is primarily a matter for my colleague, the Minister for Communications, Marine and Natural Resources, I am pleased to inform the Deputy that in the Finance Act 2006, which has recently completed its passage through the Dáil and Seanad, I provided for significant tax measures to promote biofuels in Ireland. The new large-scale scheme of excise relief for biofuels to be established — building on the current pilot scheme — will provide for excise relief on up to 163 million litres of biofuels per annum; cost over €200 million over five years, starting this year; when fully operational, result in CO2 savings of over 250,000 tonnes per annum; meet a target of 2% transport fuel market penetration by biofuels by 2008; help reduce our dependency on conventional fossil fuels; and stimulate activity in the agricultural sector. As a complementary measure, I have provided for a new 50% VRT relief to promote new flexible fuel vehicles — cars designed to operate on biofuels — for an initial period of two years, and also extended the existing VRT relief for hybrid cars by a further year to end 2007. These are major initiatives aimed at promoting biofuels in Ireland.

With respect to the excise relief scheme, as any such scheme is deemed a State aid by the European Commission, the necessary approval from the Commission is required. Preliminary discussions have already taken place between the Department of Finance, the Department of Communications, Marine and Natural Resources and the European Commission in this regard. Once approval has been granted, the Department of Communications, Marine and Natural Resources will advertise the scheme to potential beneficiaries and set out the procedures for applying for the excise relief. There are also available two tax incentives that relate to renewable energy generally as follows. Investments in companies engaged in renewable energy generation may qualify for the business expansion scheme tax relief. Individual investors holding a BES equity investment in such companies for a minimum period of five years can benefit from tax relief, at their marginal rate, in respect of investments of up to €31,750 per year. A qualifying company may raise equity capital up to a general maximum of €1 million in the lifetime of the company. Section 486B corporate tax relief applies to corporate equity investments in certain renewable energy generation projects which are eligible for tax relief in the form of a deduction from a company's profits for its investment in new ordinary shares in a qualifying company. To qualify for this relief, the energy project must be in the solar, wind, hydro or biomass technology categories, and must be approved by the Minister for Communications, Marine and Natural Resources. The relief is capped at the lesser of 50% of the relevant cost of the project or €9.525 million for a single project. Investment by a company or companies is capped at €12.7 million per annum. The shares must be retained for at least five years by the company, otherwise the relief may be withdrawn.