Pádraic McCormack (Galway West, Fine Gael)
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Question 43: To ask the Minister for Agriculture and Food the steps she is taking to develop the biofuel sector; the discussions she has had with the Department of Communications, Marine and Natural Resources; and if she will make a statement on the matter. [18808/06]

John Perry (Sligo-Leitrim, Fine Gael)
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Question 45: To ask the Minister for Agriculture and Food the measures she intends to take to promote alternative renewable energy from agriculture; and if she will make a statement on the matter. [18800/06]

Paul Connaughton Snr (Galway East, Fine Gael)
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Question 83: To ask the Minister for Agriculture and Food the steps she is taking to develop an alternative energy sector based on agricultural land; and if she will make a statement on the matter. [18801/06]

Mary Coughlan (Donegal South West, Fianna Fail)
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I propose to take Questions Nos. 43, 45 and 83 together.

Overall responsibility for energy policy rests with the Minister for Communications, Marine and Natural Resources, who is leading a cross-Departmental, cross-agency approach in developing and implementing renewable energy policy. As Minister for Agriculture and Food, I have a special interest in the development of the renewable energy sector — and of biofuels in particular, given that agriculture is the source of most of the raw materials used to manufacture biofuels. My Department has accordingly been working closely with the Department of Communications, Marine and Natural Resources on the matter.

Biofuels is one element in the development of renewable energy. Agriculture and forestry has the potential to be the source of many feedstocks for biofuels. For example, oilseed rape, wheat and sugar beet can be used for the manufacture of liquid transport biofuels, while forestry by products and other farming and food by-products such as meat and bone meal and tallow, can be used for energy/heat generation. Tallow can also be used for biodiesel production. Other energy crops such as short rotation coppice and miscanthus can be used for heat and electricity generation.

Apart from the need to lessen dependence on fossil fuels for environmental and cost reasons, the development of biofuels, through the growing of energy crops, presents a new opportunity for rural communities and economies. The reform of the Common Agricultural Policy (CAP) which was agreed in 2003 gives farmers the freedom to exploit new farming opportunities, including agricultural production for non-food uses.

Support to farmers for the growing of energy crops may only be granted in accordance with EU regulations. Currently, such support is provided by way of the Energy Crops Scheme which was introduced under the reform of the CAP and which is administered by my Department. Under this scheme, energy crops may qualify for aid of €45 per hectare provided they are intended primarily for use in the production of biofuels and electric and thermal energy produced from biomass. In addition to this scheme, set aside land can be used for a variety of non-food uses including the growing of crops for energy purpose and will therefore qualify to activate set-aside entitlements under the Single Payment Scheme. The EU has agreed that sugar beet will be eligible for aid under the scheme and may also be grown as an energy crop on set aside land. The aid of €45 per hectare available under the Energy Crops Scheme has proven not to be sufficiently attractive in itself to stimulate the growing of such crops. For this reason at the February Council of Agriculture Ministers meeting I called for a review of the premium and I am pleased to say that the EU Commission has undertaken to review the operation of the scheme.

The production and utilisation of agricultural products for energy purposes can only be sustained in the longer term if biofuels generate a more favourable return than traditional market outlets. I am confident that the extension in the last Budget of excise relief of €205m which, when fully operational, will support the use and production of 163 million litres of biofuels annually, will help drive additional demand for the production of energy crops.

On the wider agricultural and energy policy agenda, biomass is of increasing importance and significance. Biomass energy in Ireland is mainly derived from wood products, which are converted into heat. I believe that the exploitation of the wood resource especially pulpwood, sawmill residues and harvestable forest residues offers enormous potential and could contribute significantly to our energy and heat requirements. Ireland has an excellent growing climate and an ongoing supply of raw material for wood fuel.

Wood residues are already being used to produce heat for sawmills across the country and the wood energy market is poised for growth with a number of commercial start-ups and a supply chain emerging. The €27m "Greener Homes" grant programme for the domestic sector announced by the Minister for Communications, Marine and Natural Resources recently will help drive demand for wood biomass. The grant aid for commercial scale biomass boilers to be announced in the coming weeks will stimulate demand even further. My Department is also actively promoting the use of wood biomass through grants to promote and develop sustainable forestry, including alternative timber uses and we are close to finalising a scheme of supports for the purchase of specialist wood biomass harvesting equipment. We are directly promoting the use of wood biomass by the installation of a wood heating system at the Department's offices at Johnstown Castle.

Short rotation coppice and miscanthus have considerable potential for heat/electricity generation. In Ireland, however, the production of short rotation coppice is relatively undeveloped. Thus costs of production, especially the substantial initial establishment costs, will be high due to lack of economies of scale. My Department is currently pursuing a proposal to reactivate establishment grants for short rotation coppice. I have received a number of proposals for the introduction of establishment grants for miscanthus and these are also being considered.

Meanwhile my Department in conjunction with Teagasc and COFORD has examined the potential of energy crops, wood biomass and farming and food by products. Last year, we began providing direct funding, on a competitive basis, to support priority research projects in relation to biofuels. This funding is channelled through the Department's Research Stimulus Fund Programme. Three of the projects selected under the 2005 call for proposals directly relate to biofuels and energy crops and received total grant assistance of some €0.9m. The funding available under the Programme has now been substantially increased and a further call for projects was recently advertised in the national press. This call also includes the non-food uses of agricultural land.

Apart from purpose grown energy crops and wood biomass, there are several by-products of the farming and food processing industries that can be recovered and used in various ways as biofuels. These are mainly animal by-products such as meat and bone meal, tallow, animal manures and food by-products. There are significant opportunities for the use of animal by-products as biofuels some of which are being considered actively. Commercial realities are driving these proposals. The disposal of by-products imposes a cost on industry and it makes economic sense to offset this cost by realising the potential of the by-products as an energy source. Tallow is used at present as a biofuel in thermal boilers in rendering plants and larger meat export plants to provide energy. A recent EU Regulation provides for the conversion of tallow to biodiesel. Some rendering plants are considering building biodiesel plants for this purpose using various combinations of tallow, recovered vegetable oil and rapeseed oil.

The importance of biofuels and bioenergy is recognised in the AGRI Vision 2015 ACTION Plan and I will continue to work closely with my colleague the Minister for Communications Marine and Natural Resources to ensure that agriculture contributes to the development of biofuels as part of a coherent energy policy.