Seán Sherlock (Cork East, Labour)
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Question 82: To ask the Minister for Finance if he will introduce an exemption on excise duty to make it viable for producers of energy crops for biofuel here to sell their product to the Irish market; and if he will make a statement on the matter. [19644/08]

Brian Lenihan Jnr (Dublin West, Fianna Fail)
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While the promotion of biofuel is primarily a matter for my colleague, the Minister for Communications, Energy and Natural Resources, the Deputy will be aware the Finance Act 2006 provided for significant tax measures to promote biofuels in Ireland.

Under the scheme, biofuel produced under projects approved by the Department of Communications, Energy and Natural Resources are exempt from excise duty. This serves to reduce the additional costs associated with the production of biofuels and consequently allows them to compete with conventional fossil fuels. This fiscal incentive was designed to kickstart the domestic biofuels industry. Long-term general excise reliefs are not anticipated.

In addition, as a complementary measure, the Finance Act 2008 provided for the VAT rate applicable on the supply of miscanthus rhizomes, seeds, bulbs, roots and similar goods used for the agricultural production of biofuels to be reduced from 21% to 13.5%.

Furthermore, Budget 2007 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, Fisheries and Food and provides farmers with a further incentive to grow energy crops.

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. I understand the Minister for Communications, Energy and Natural Resources will shortly be launching a public consultation on the proposed biofuels obligation.