Pádraic McCormack (Galway West, Fine Gael)
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Question 130: 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. [3566/07]

Bernard Durkan (Kildare North, Fine Gael)
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Question 132: To ask the Minister for Agriculture and Food her plans for the future development of the bio-energy sector with particular reference to the variety of bio-energy crops currently planted and required; her proposals for expansion; the degree to which it is intended to incentivise such crop production; the plans in respect of crop rotation and management; the extent to which sustainability and viability in commercial terms can be improved in the future; and if she will make a statement on the matter. [3684/07]

Mary Coughlan (Donegal South West, Fianna Fail)
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I propose to take Questions Nos. 130 and 132 together.

I am participating in a Ministerial Taskforce on Bioenergy, chaired by the Minister for Communications, Marine and Natural Resources, Noel Dempsey, TD to develop a strategy on Ireland's bioenergy resources to 2020. The Government has already announced a number of initiatives both on the supply and demand side to develop the biofuels sector and a National Bioenergy Action Plan will be published shortly.

Developing an indigenous biofuel industry from native raw materials depends on a number of factors including the availability and suitability of land for the various crops, taking account of rotation restrictions and current area in tillage. Other factors such as geographical location and small farm size will probably limit the potential area that could be devoted to growing energy crops. The main possibilities for growing energy crops in Ireland are rape-seed, wheat (annual crops), and willow, miscanthus, reed canary grass (perennial crops).

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. At present, production of energy crops in Ireland is relatively undeveloped, with some 4,000 hectares of oilseed rape grown in 2006. Some trial plots for growing miscanthus and willow for biomass are also in place. Profitability for growers and others in the sector is marginal as energy crops compare unfavourably with conventional crop tillage. Farmers will only produce energy crops if returns are greater than those offered by more traditional uses. However, as yields increase through better varieties and techniques the profitability of growing energy crops should improve.

As announced in the Budget, I will be introducing an national payment of €80 per hectare in 2007 as an incentive for farmers to grow energy crops. The €80 payment will be paid as a top-up to the existing EU premium of €45 per hectare available under the EU Energy Crops Scheme and increases the overall payment to €125 per hectare. It is intended the €80 additional payment will apply for three years and will be subject to a maximum ceiling per producer over the three years. The current maximum area per producer is 37.5 hectares.

It is also intended to introduce a new Bioenergy Scheme for a limited period to encourage farmers to plant willow and miscanthus for use a renewable source of energy. The Scheme will provide establishment grants to farmers for up to 50% of the costs associated with establishing miscanthus and willow on set-aside land and on areas, which have been subject to an application for the EU premium of €45 per hectare. €8 million is being allocated to this Scheme over the period 2007-2009. The scheme details are being finalised and will be announced shortly.

Set-aside land can also 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.

On the demand side, the excise relief programme announced by Minister Noel Dempsey, TD, will help drive additional demand for production of energy crops for the manufacture of liquid biofuels. When fully operational in 2008, the scheme will deliver some 163 million litres of biofuels per year.

I 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.

Teagasc provides a range of advisory services to farmers to maximise profits at farm level and to exploit new opportunities in the marketplace, including agricultural production for non-food uses. Teagasc research programmes are aimed at developing more efficient production systems and improving crop yields.