Michael Noonan (Limerick East, Fine Gael)
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Question 55: To ask the Minister for Agriculture and Food her plans for the development of the biofuel sector; and if she will make a statement on the matter. [40445/06]

John Perry (Sligo-Leitrim, Fine Gael)
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Question 58: To ask the Minister for Agriculture and Food the measures she will take to promote alternative renewable energy from agriculture; and if she will make a statement on the matter. [40492/06]

Pádraic McCormack (Galway West, Fine Gael)
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Question 61: To ask the Minister for Agriculture and Food the action she is taking to develop the biofuel sector; and if she will make a statement on the matter. [40454/06]

Mary Coughlan (Donegal South West, Fianna Fail)
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I propose to take Questions Nos. 55, 58 and 61 together.

I am currently participating in a high level Ministerial Taskforce on Bioenergy, which has been established by Government to prepare a plan to develop Ireland's bioenergy resources to 2020. The Ministerial Team is currently working on a National Bio-energy Action plan to establish targets to promote greater use of biomass and biofuels. The consideration of further initiatives to incentivise the development of Ireland's biofuel market is a key part of this Action Plan. The Plan will be finalised by the end of 2006 and support measures will be announced on budget day.

The production of Biofuels is one of the main elements in developing the renewable energy sector. In the Green Paper on energy "Towards a Sustainable Energy Future for Ireland" the Government made a firm commitment to develop an indigenous biofuels industry in Ireland and to achieve 5.75% biofuels penetration by 2010. The Green Paper also sets out a number of other areas where progress can be made in the transport, heat and electricity markets.

I believe the development of an indigenous biofuel sector presents a new opportunity for farmers and the rural economy. 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.

In this regard, I am confident the new excise relief programme announced by Minister Noel Dempsey, TD last week will help drive additional demand for production of energy crops for the manufacture of liquid biofuels. The response to this scheme was excellent with over 100 applications for excise relief from a broad range of companies. Sixteen projects have been offered excise relief including a number in the food and farm business sector. When fully operational in 2008, the scheme will deliver some 163 million litres of biofuels per year and will result in CO2 savings of over 250,000 tonnes per annum.

In addition, the Finance Act 2006 provided for a new 50% VRT relief to promote new flexible fuel vehicles designed to operate on biofuels for an initial period of 2 years, and also extended the existing VRT relief for hybrid cars by a further year to end 2007.

At present, the EU Energy Crops Scheme provides farmers with a premium of €45 per hectare for growing energy crops to produce biofuels and 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 permanent crops. The Proposal is currently being discussed in Brussels. Short Rotation Crops (SRC) such as willow and miscanthus also have the potential to contribute to Ireland's renewable energy strategy. My Department has received a number of Proposals to introduce establishment grants for miscanthus and willow and these are currently being considered.

We have also expanded the scope of the Research Stimulus Fund to provide for consideration of projects dealing with biofuels. Five of the projects selected under the 2005 and 2006 calls for proposals directly relate to biofuels and energy crops and were awarded 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.

Wood biomass has the potential to play a major role in Ireland's renewable energy strategy. Wood energy is renewable, carbon neutral, sustainable and can be produced locally. It can be used alone or co-fired with other fuels such as peat to generate electricity.

Currently, forest cover in Ireland amounts to approximately 710,000 hectares, or 10% of the land area. This timber resource has significant energy potential and in the coming years, will bring a large amount of solid wood biomass, in the form of woodchip, logs and wood pellets, to the marketplace for energy generation.

The Government is providing very attractive grants to farmers undertaking forestry. The Afforestation Grant and Premium Scheme and the Native Woodland Grant Scheme both provide up to 100% of the cost of establishing the forest, along with annual premiums of up to €500 per hectare per annum for 20 years. Support for the wood energy is also envisaged under the new Rural Development Programme (2007-2013).