Written answers

Thursday, 8 March 2007

Department of Communications, Energy and Natural Resources

Biofuels Sector

5:00 pm

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Question 176: To ask the Minister for Communications, Marine and Natural Resources the volume of pure plant oil or ethanol expected to be produced here in 2007 which qualifies for maximum excise relief; the extent to which producers in excess of the number provided for have applied to participate; his plans to extend the scheme to meet the requirements of all producers and potential producers in 2007; and if he will make a statement on the matter. [9363/07]

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Question 179: To ask the Minister for Communications, Marine and Natural Resources the extent to which adequate biofuels are being produced here to facilitate a 2.5% or 5% blend with petrol or diesel. [9380/07]

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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Question 180: To ask the Minister for Communications, Marine and Natural Resources the volume of petrol, diesel or bio-fuel replacements currently in use; his intention for the development of the biofuel industry. [9382/07]

Photo of Noel DempseyNoel Dempsey (Meath, Fianna Fail)
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I propose to take Questions Nos. 176, 179 and 180 together.

The Government is firmly committed to the development of an Irish biofuels market and to the increased development of bio-energy generally in Ireland. A range of initiatives are in place to support the development of a biofuels sector in Ireland. The Minister for Finance has made it clear that any extension in the amount of relief which formed part of the Budget 2006 announcement is not envisaged at this stage citing non-fiscal measures that can be used to promote Biofuels. In this regard on 12th February I signalled my intention to introduce a Biofuels Obligation by 2009, which will require all fuel suppliers to ensure that biofuels represent a certain percentage of their annual fuel sales.

In announcing the obligation, I have also committed to achieving 5.75% market penetration of biofuels by 2009, in advance of the date proposed for such a target in the EU Biofuels Directive. I have also committed to achieving 10% market penetration of biofuels in Ireland by 2010.

The introduction of the Biofuels Obligation will build on the success of the two biofuels excise relief schemes which were rolled out in 2005 and 2006. The 2005 pilot scheme has resulted in eight projects being awarded excise relief for a two year period including four pure plant oil, three biodiesel or other biofuel and one bioethanol proposal.

Under the pilot scheme, which commenced in 2005, there has been 2.128m litres of biofuel produced to the end of December 2006. Overall under the pilot scheme excise relief to the value of €1.562m has been given to the end of 2006 under the pure plant oil, biodiesel and bioethanol categories.

The second Biofuels Mineral Oil Tax Relief Scheme, valued at over €200m, was launched in July last year and will enable us to reach the initial target of 2% market penetration of biofuels by 2008. There were sixteen successful projects under the second scheme including three pure plant oil, four biodiesel, four bioethanol and five in the captive fleets category.

In the three months since the results of the scheme were launched, over 300,000 litres of biofuels have been placed on the market. Blends of up to 5% ethanol and biofuels complying with the diesel standard EN590 are already being sold at regular petrol and diesel pumps, as a result of this scheme. This is in addition to the biofuels placed on the market under the pilot scheme. The scheme will enable us to reach the initial target of 2.2% market penetration of biofuels by 2008. When fully operational the relief is expected to support the use and production of some 163 million litres of biofuels each year. The scheme provides for production of 112m litres of biofuels in 2007, including 40m litres of bioethanol and 3m litres of pure plant oil. This is in addition to the pilot scheme, which provides for the production of 10.5m litres of bioethanol and pure plant oil in 2007.

The Biofuels Mineral Oil Tax Relief Schemes were rolled out as competitive calls for proposals. They involved an open and transparent process in which the scoring mechanism was published as part of the application form and accompanying documentation. The schemes were the subject of State Aids applications which were approved by DG Competition. Under State Aids Rules the process must be open and fair and subject to single market rules. 34 applications were received in respect of the 2005 pilot scheme and 102 applications were received under Scheme II.

On 4th March I published the Bioenergy Action Plan which sets out a series of cross-Governmental and inter-agency actions to support the deployment of bioenergy in Ireland. In formulating the plan, it was agreed that while excise relief is an effective short-term measure to stimulate the biofuels market, other policy initiatives, such as a renewables obligation, would be beneficial in the longer-term. The obligation will also give all market players the necessary long-term certainty to make appropriate investment decisions.

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