Bernard Durkan (Kildare North, Fine Gael)
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Question 105: To ask the Tánaiste and Minister for Finance if he proposes to introduce further tax or other incentives to encourage the production of bio-fuels; and if he will make a statement on the matter. [8104/08]

Brian Cowen (Laois-Offaly, Fianna Fail)
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The Government is firmly committed to the development of biofuels generally in Ireland. While the promotion of biofuel is primarily a matter for my colleague, the Minister for Communications, Energy and Natural Resources, I am pleased to inform the Deputy that in Finance Act 2006 I provided for significant tax measures to promote biofuels in Ireland.

This scheme, which received the necessary EU State Aid approval, commenced in November 2006 and will:

provide for excise relief on up to 163 million litres of biofuels per annum;

cost over €200m over 5 years;

when fully operational, result in CO2 savings of over 250,000 tonnes per annum;

contribute towards meeting a target of 5.75% transport fuel market penetration by biofuels by 2009;

help reduce our dependency on conventional fossil fuels, and

stimulate activity in the agricultural sector.

The overall level of excise relief available for biofuels is regarded as a level which is sufficient to match Ireland's output potential in relation to renewable energy crops for motor fuels over the coming years. These fiscal incentives were designed to kick-start the domestic biofuels industry and evidence suggests that this is happening.

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.

In addition to the incentive provided in the Biofuels Excise Relief Schemes, in Budget 2007, I provided funding for a national top-up of the EU energy crop payment from €45 per hectare to €80 per hectare. This payment is operated by the Department of Agriculture and Food and provides farmers with a further incentive to grow energy crops.