I welcome the opportunity to speak on this Bill which is very important. Deputies have the chance to highlight the good work done by Bord Gáis in recent years. Most other speakers have welcomed the publication of the Bill which will provide for the increase in the statutory borrowing limit of Bord Gáis from €1.7 billion to €3 billion.
The introduction of this legislation is a tribute to Bord Gáis. The company is a great example of what can be achieved in the State sector. The commercial State body was founded in 1976, employs more than 770 staff and now has a pipeline network of over 10,000 kilometres. There are two main businesses, namely, networks and the energy supply. The gas distribution network includes two sub-sea interconnectors to Scotland, a spur line to the Isle of Man and two pipelines to Northern Ireland, in addition to a network of distribution lines throughout Ireland. Bord Gáis made a considerable profit last year but needs the money badly. Its profits before tax were €166 million.
As a Deputy from County Clare, I have seen at first hand the work that Bord Gáis and its contractors do. Much of the pipeline that was extended from the west to Galway and into County Clare across the Shannon came through my own parish. It came through my own land and I facilitated Bord Gáis in that. This was a huge project, as I am sure the Minister will acknowledge. It was carried out by an Italian contracting company and involved much work, particularly with regard to safety, which is most important. Bord Gáis is in the process of replacing its cast iron pipes, with approximately 94% of these now replaced by PVC pipes. Last year 177 kilometres were laid down throughout the country. It is necessary to have these pipes at a very high standard for reasons of safety.
I saw at first hand the intensive work done by the contractors and the way in which gas is distributed in a very safe manner in these pipelines. Inspections of gas lines regularly take place. I wish to mention the terrible accident that happened last year just a mile from my house. A helicopter that was inspecting the lines crashed and a Bord Gáis employee was killed. I paid tribute to him, a man from Dublin who gave a lot of time and work to the company. People in the parish were very saddened by that incident.
The company is also an energy supplier. Bord Gáis supplies most of the residential gas market in this country. This market was open for competition in July 2007. In 2001, the company entered the retail electricity market and now enjoys a growing market share. In 2006, it had 8% of the Irish electricity supply. It has 575,000 natural gas customers and will have more than 600,000 by the end of the year, an increase of 5%. Bord Gáis has been doing a good job in an efficient way, selling gas products. It held 37% of the total gas sales market in 2006. It is a very successful company and I commend it for its foresight and for the way in which it has adapted to the ever evolving needs of our changing environment.
I welcome the Minister, Deputy Ryan, to the House and I am delighted he has stayed to hear the debate. I also commend him for his first national energy efficiency action plan 2007-20. It is important we have the plan in place in order that, when our resources come on line, in particular the Corrib field, they are used as efficiently as possible. In that way we can become almost self-sufficient in gas.
Bord Gáis has invested and is committed to playing a very important role in delivering competitive energy to the Irish industry. Only recently it announced the purchase of a 30 MW wind farm development in the west. Deputy Connaughton spoke of this earlier. It has invested approximately €50 million and the development is expected to be in operation by 2011, supplying 10,000 homes. That shows the foresight of the company.
Earlier this year Bord Gáis announced a €1 billion investment in new business areas. The company is already building a 445 MW gas-fired power plant at Whitegate in County Cork which will cost approximately €400 million and it is pursuing other general power development opportunities, both conventional and renewable.
Most speakers mentioned climate change and the effects this will have on generations to come. I am delighted climate change is at the top of the agenda for Bord Gáis. There are fewer carbon emissions from natural gas than from any other fuel. It is cleaner than the alternative fossil fuels and contains less sulphur, an important factor for air quality. It is more environmentally friendly. Energy experts cite natural gas as an important energy bridge for the next decade in contributing to a decrease in Ireland's CO2 emissions.
On 14 November last Bord Gáis, in conjunction with EnviroManagement Services, sponsored a climate change conference in Cork entitled Partnership for Change. Attended by more than 300 environmentalists, climate change activists, NGOs and policy officers, the conference heard Dr. Rajendra K. Pachauri, chair of the United Nations Intergovernmental Panel on Climate Change, express hope and optimism for the future. In particular, Dr. Pachauri asked young people to harness the power of their generation for change and to meet the challenge presented by climate change.
This morning I consulted Bord Gáis's user friendly website and there is no doubt the company is responding to the climate change challenge, contributing to lowering CO2 emissions and limiting the effects of climate change. As I indicated, Bord Gáis supplies natural gas to more than 500,000 households and serves up to 1,700 small businesses. The company has extended the supply of gas into various towns and villages in the west and now supplies natural gas in 18 counties. In 2002, for example, 322 km of pipeline was laid to supply various towns and villages in County Clare. The pipeline in County Clare was routed from Limerick via parts of Mellick to Cratloe and Sixmilebridge, from where it was routed through parts of Bunrattyen route to Shannon town. Since then, it has been extended further to Clarecastle and Ennis as well as Killaloe in east Clare.
Those with access to natural gas are satisfied with the product, which is clean, efficient and controllable. Since the 1980s, an increasing number of people have been won over to natural gas because it remains the most cost effective fuel on the market. We should try to ensure it is made available to every town and village in the country. Unfortunately, in County Clare the gas pipeline which was extended from Limerick and Sixmilebridge does not serve everyone in Bunratty. People living on the Hill Road and Low Road areas of the town are crying out to have the natural gas pipeline extended but have been advised by Bord Gáis officials and local councillors that it would not be cost effective to do so, even though the pipeline is routed along the main Shannon to Sixmilebridge road, which is less than one quarter of a mile away. As someone who promotes natural gas and greener energy policies, I urge the Minister to examine this issue. The position is similar with regard to new sewerage schemes which will only be operational in the main parts of Bunratty and will not be extended further. The Minister should explore ways of extending the gas network to ensure our rural towns and villages reap the rewards and benefits of this valuable energy resource.
The development of natural gas infrastructure is essential in assisting County Clare to maintain its competitiveness. I urge Bord Gáis and the Government to examine whether gas pipelines could be extended to cluster areas around villages and towns. Price is the primary reason more and more customers are being won over to natural gas. Recently the Commission for Energy Regulation published the Bord Gáis submission document on natural gas pricing. The company has confirmed it will apply for a final average increase of 3.5% on natural gas bills for residential and small business customers in January 2009. While wholesale gas prices have fallen worldwide in recent weeks, they remain approximately 50% higher than they were at this time last year. The increase requested by Bord Gáis would add between €3.50 and €5.60 to an average household gas bill.
Last July, the Commission on Energy Regulation approved a 20% increase in the price of gas charged to households and small businesses. The increased rates came into effect last month, adding approximately €13 to the average domestic bill. The ESB, which supplies electricity to 1.7 million households, also expects an increase in the price of electricity to be approved. These price increases will have the greatest impact on low income families who spend 13% of disposal income on energy and do nothing to encourage consumers to switch to natural gas. Energy affordability is crucial for lower income families and industries throughout the country, many of which are experiencing serious strain as they try to ride out the current crisis.
Deputies are aware of the value of gas and oil resources. In 2006, for example, a conflict arose between Russia and Ukraine when the former threatened to withdraw oil supplies to the latter. In Russia and the south Caucasus region, where pipelines traverse different national territories, problems can arise when such threats are made. Russia's decision to seek from Ukraine a fourfold increase in the price of gas triggered a major political crisis, including in western European countries such as France, Italy, Austria and Slovenia, all of which are heavily dependent on Russian oil supplies. The potential crisis was eventually settled this year after a series of tit-for-tat actions by both sides. As a result, energy supplies to Europe are now much more secure.
Figures on worldwide energy consumption in 2006 show that we are heavily dependent on oil, which accounts for 36% of overall consumption. It is followed by coal, gas, nuclear energy and hydro-energy, which account, respectively, for 28%, 24%, 6% and 6% of global energy consumption. The share of natural gas in worldwide consumption has increased from 16% in the 1970s to 24% in 2006. With a decrease in the use of coal expected, gas consumption is anticipated to rise to approximately 30% of overall energy consumption.
I welcome Bord Gáis's commitment to contribute €2.4 million to enable the expansion of Sustainable Energy Ireland's warmer home scheme to more households, with half this amount to be expended this winter. The scheme aims to improve the efficiency and comfort conditions of homes occupied by lower income families. To qualify for the scheme applicants must be in receipt of a social welfare fuel allowance or disability allowance. Any scheme which helps lower income families to afford a warmer home is welcome.
The introduction of the gas smart meter is another way of controlling energy costs. The chief executive officer of Bord Gáis claims that the real advantages of smart card metering arise from customers being able to control energy consumption costs. Consumers can decide how much they want to spend on energy and pre-pay by purchasing a smart card. This is a welcome development.
While a proportion of Ireland's gas requirements come from the Kinsale Head field, where a storage agreement is in place with Marathon Oil, much of the gas consumed in Ireland is pumped via Scotland from the North Sea producers based in Norway. I understand gas from the United Kingdom accounts for approximately 90% of Irish gas consumption.
A recent problem in one of the pipes through which the gas flows has highlighted the importance of ensuring a constant supply is available. When the supply from the UK was curtailed, the price increased. Natural gas accounts for 25% of primary energy demand in Ireland, a share that is in line with both worldwide and European averages, at 24%. The economy is highly dependent on imported energy sources. We have all witnessed the effect of the hike in world oil prices on the economy in recent times. We have a high dependency on oil. Some 58% of Ireland's primary energy is oil, as compared to 36% worldwide and 41% in Europe.
In 1978 gas was first produced in Ireland at Kinsale, and while it continues to produce gas, the output of this field and its satellites will be exhausted in the near future. As I have indicated, some 93% of our gas is sourced from the UK. Further developments both in Shannon LNG across the Shannon estuary, in my constituency, at Ballylongford, County Kerry — Deputy Deenihan spoke of that today — and Corrib gas in County Mayo, are important sources for Ireland. It is estimated the Corrib gas field will produce 60% of Ireland's demand for gas on an annual basis and that is very significant. These projects should secure our demand for energy resources for the foreseeable future. The Shannon LNG company has entered an option to purchase agreement with Shannon Development as regards 281 acres of the 600-acre site between Tarbert and Ballylongford. This will become the site of a major liquefied natural gas import terminal. Some people have concerns in relation to the development of the project and I hope these matters will be resolved in the near future.
LNG is produced in locations where reserves of gas are discovered, but often too far from markets to economically transport the gas by pipeline. LNG export sources include Algeria, Egypt, Malaysia, Qatar and Trinidad, while LNG imports are planned from a number of other countries, namely, Norway, Russia and Venezuela. Industry sources believe our neighbours in the UK will be importing half their natural gas needs by 2011 from remote fields in Russia and Algeria. In 2007, 93% of the all-Ireland gas demand was sourced from Great Britain and in the short-term it will continue to play a very important role in complementing the Corrib gas field.
To chart the future Bord Gáis needs to be in a position to explore new growth areas and develop its gas network. To complete this journey it needs to be in a position to increase its statutory borrowing limits and I certainly support the Bill.