James Breen (Clare, Independent)
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Question 417: To ask the Minister for Agriculture and Food the measures she is taking to encourage farmers to enter the biofuels production market; the incentives she will put in place; and if she will make a statement on the matter. [36080/06]

Mary Coughlan (Donegal South West, Fianna Fail)
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The production of Biofuels is one of the main elements in developing the renewable energy sector in Ireland. In the recently published Green Paper "Towards A Sustainable Energy Future for Ireland" the Government made a firm commitment that the development of an indigenous biofuels industry is a core component of Government policy to improve energy sustainability. My Department has been working with the Department of Communications, Marine and Natural Resources to develop biofuel policies and I am participating in a Ministerial Taskforce on Bioenergy to oversee preparation of a National Bioenergy Action Plan by end 2006. The Plan will establish a firm road map and set challenging targets to develop biofuels and biomass resources up to 2020.

On the demand side, I am confident that the recently announced Mineral Oil Tax Relief Scheme valued at €205m will help drive additional demand for the production of energy crops. When fully operational in 2008, it will deliver some 163 million litres of biofuels per year and should result in Ireland achieving 2% market penetration of biofuels.

On the supply side, support to farmers for growing energy crops may only be provided in accordance with EU Regulations. Under the Energy Crops Scheme, aid of €45 per hectare is available for energy crops 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. At the February Council of Agriculture Ministers meeting, I called for a review of the energy crop premium as it was not proving effective in Ireland and I subsequently raised the matter with the Agriculture Commissioner. The EU Commission has published a Report on implementation of the scheme and has made a Proposal, which would allow member states pay national aid up to 50% of the costs associated with establishing multi-annual crops. The Proposal is currently being discussed in Brussels.

My Department will continue to support the development of emerging biofuel technologies through the Department's Research Stimulus Fund Programme. Last year, we began providing direct funding worth €4.5 million, on a competitive basis, to support priority research projects in the bioenergy sector. Five of the projects selected under the 2005 and 2006 calls for proposals directly relate to biofuels and energy crops and received total grant assistance of some €1.5m. Projects supported under this Programme will complement the research work being done by Teagasc and others in this area.

I firmly believe that the development of an indigenous biofuel sector presents a new opportunity for farmers and rural communities. Biofuel development will help stimulate diversification of farm incomes, generate sustainable employment and contribute to the development of rural economies. I will continue to work closely with Ministerial colleagues to ensure that agriculture contributes to the development of biofuels as part of a coherent energy policy.