John O'Mahony (Mayo, Fine Gael)
Link to this: Individually | In context

Question 56: To ask the Tánaiste and Minister for Finance his views on whether subsidising biofuels represents a cost effective way of reducing greenhouse gas emissions. [29708/07]

Brian Cowen (Laois-Offaly, Fianna Fail)
Link to this: Individually | In context

I have stated previously that taxation can play a part in attaining environment objectives which includes promoting energy efficiency and reducing emissions. Using taxation as a mechanism to subsidise activity that yields overall benefits to the economy has been a tool used by successive administrations, often delivering very positive results.

In order to promote the development of biofuels in Ireland, I provided for an appropriate excise relief scheme in Finance Act 2006. Under the scheme, biofuels produced under approved projects are exempt from excise duty. This serves to reduce the additional costs associated with the production of biofuels and consequently allows them compete with conventional fossil fuels.

With regard to whether this approach represents a cost effective way of reducing emissions, I would point out that this relief is in place for a period of five years to assist in the development of a domestic biofuels industry. Long-term general excise reliefs are not anticipated. In this regard the Deputy might wish to note that there are additional non-fiscal measures that can be used to promote biofuels. To provide further market certainty and encourage projects of scale, the Government has signalled its intention to move to a Biofuels Obligation by 2009 which will require all fuel suppliers to ensure that biofuels represent a certain percentage of their annual sales. The 'obligation' will fall under the remit of the Department of Communications, Energy and Natural Resources.