I welcome the Minister for Communications, Marine and Natural Resources, Deputy Dermot Ahern, and his departmental officials. We will hear a presentation, followed by a question and answer session. Before I ask Deputy Ahern to begin by introducing the officials, I draw attention to the fact that members of this committee have absolute privilege but the same privilege does not apply to witnesses appearing before the committee. It is generally accepted that witnesses will have qualified privilege but the committee cannot guarantee any level of privilege to witnesses appearing before it. Members are also reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.
Energy Policy: Presentation
I also have absolute privilege. You referred to witnesses, Chairman, and I am a witness. I thank the committee for asking me here, and I welcome the examination by the committee of this issue. I introduce Mr. Martin Brennan, the assistant secretary in the energy unit, Mr. David Glynn, who is involved in liberalisation, Mr. David Hanley, who is involved in energy planning and co-ordination, Mr. Martin Finucane, who is involved in sustainable energy, Mr. Eanna Ó Conghaile, who works on electricity, corporate and North-South energy, and Ms Miriam Finnegan, who works on gas policy. I have the full gamut of people in my Department with me, and there are others in the public gallery. I thank them for coming also.
I have circulated my speech, and because it is such a broad area I have tried to keep it as short as I can. However, I touch upon all of the issues in this area. Normally I would just make an opening statement but it is important that I touch on all of the issues. This morning's dialogue is particularly timely. As is the case in other countries, energy policy is governed by three core objectives: ensuring the development of an efficient and properly-regulated electricity market to support our economic competitiveness, which provides customers with a choice of energy sources and supports economic growth; ensuring security of energy supply; and ensuring that energy supply and use are environmentally sustainable.
The primary challenge from a policy-making perspective is to reconcile the conflicts which can arise between these three core objectives. The Government, in line with its commitment to the Lisbon Agenda, believes that competitiveness must be central to policy decisions in the energy sector. In this context we have established a process whereby decisions on wider energy issues, including changes resulting from environmental obligations, are debated on a whole Government basis, prior to formal decision by Cabinet.
I turn now to some recent developments in the energy sector. In regard to the structural changes in the CER that I announced recently, I intend to appoint two new members to the Commission for Energy Regulation. There are a number of reasons I am doing this. It is almost five years since the establishment of the commission and the transition to full market liberalisation is now approaching completion. It is timely, therefore, to review the structure of the commission. In addition, in view of the increasingly onerous nature of the commission's work now that it deals with all of the commercial aspects of the electricity and gas industries, it is clear that it needs to be strengthened. Provision for expanding the CER in this way was included in its founding legislation. This was already envisaged. Furthermore, in the case of the other sectoral regulators, the power for the Minister to give general policy directions is enshrined in their legislation and I propose to make a similar provision in the case of the CER which is independently responsible for both the gas and electricity sectors, including the setting of prices. It has recently announced its proposals for the market arrangements which will apply once full liberalisation has taken place. As Minister for energy, I am concerned that the recently announced introduction of emissions trading has the potential to create windfall gains for electricity generators at the expense of customers here and across Europe. This is a cause for concern for Government and I am in dialogue with the CER to find a solution to this issue. The CER has recommended a system to me whereby windfall gains can be recycled to minimise the cost to the consumer. The issue requires a very careful assessment and is ultimately a matter for Government.
The move towards a fully open electricity market has focused minds on the likely shape of the future electricity industry. I am aware that the ESB's presence in the market as a fully-integrated utility is seen by some stakeholders as an inhibitor to the development of a fully-liberalised electricity market. In any consideration of the future of the ESB, I oppose the privatisation of the transmission and distribution systems which are critical national assets and should remain in State ownership. I also oppose any privatisation which would result in a private monopoly or near-monopoly in the power generating sector. Some have suggested structural changes could be made in the continuing context of State ownership, or by privatising some of the components. While the regulatory approach is appropriate and necessary now to deal with the ESB's position in the market as we enter full liberalisation, I must consider what steps are necessary or desirable to address the concerns about dominance in the medium and longer term. I must predicate my decisions on a rigorous assessment of all the issues relevant to the ESB's dominance.
Similar concerns have been expressed about the lack of progress in fully establishing Eirgrid, which was set up in February 2001 as an independent State company to discharge the function of transmission system operator with ownership of the transmission system assets remaining with the ESB. In order for Eirgrid to be able to operate as the TSO, an infrastructure agreement was intended to govern the relationship between Eirgrid and the ESB. This agreement was to provide for the maintenance and development of the transmission system, connection to and use of the system by third parties, and payment for use of the system. The practical arrangements regarding the transfer of staff, rights, liabilities and contracts from the ESB to Eirgrid were to be agreed and set down in a transfer scheme. It is disappointing that three years after its formation, Eirgrid is not up and running as the TSO. The delay is a result of numerous problems and disputes. Meanwhile the ESB and ESBNG have been instructed to act independently and have maintained that independence.
I am opposed to reintegrating Eirgrid back into the ESB. This would send a negative signal to the market. The Eirgrid model once in place will be effective and beneficial to all players in the market. Last month I announced that we are pushing ahead with the development of two 500 MW electricity interconnectors between Ireland and Wales which can be used as a competitive tool as well as an alternative capacity source. An interconnector can provide a long-term net benefit to consumers, especially in terms of enhancing security of supply, developing competition and assisting the integration of Ireland into a wider European energy market. Enlarged and better-integrated systems arising from interconnection would result in technical benefits in terms of reserve sharing and operational flexibility and should assist in the accommodation of increased wind power. My preferred option is for the CER to promote and actively test the market for the development of the interconnectors independently by the private sector. If the market does not respond to this requirement, we will proceed using a tender competition hosted by the CER for regulated interconnectors. There will be no Exchequer funding involved. The Government decision has been communicated to the CER and we plan to begin construction by the end of 2006.
Work is continuing in my Department to develop the regulatory framework for the gas market to bring about a competitive, multi-operator natural gas sector in Ireland. I will be bringing forward a natural gas regulation Bill to replace all existing gas sector legislation, some of which dates back to the 19th century, with a single up-to-date, accessible Act suited to a fully-liberalised and competitive market. The Bill will take into account the revised EU gas directive of June this year. The Bill is expected to be enacted prior to full market opening of the natural gas sector scheduled for 2005.
My Department is responsible for the development and implementation of Ireland's strategic oil supply policy. We have particular responsibility for contingency planning and Ireland's international obligations to ensure an effective system of security of supply at times of physical oil supply disruptions. The National Oil Reserves Agency carries out this function. For pragmatic reasons, NORA was set up as a subsidiary of the Irish National Petroleum Corporation. Since the sale of the main assets and businesses of INPC it is necessary to put NORA on a sound legal and financial footing. In order to facilitate these developments I intend to bring forward draft legislation later this year which will provide for the setting up of NORA as a standalone body under the aegis of my Department.
Security of supply is a core objective of Ireland's energy policy. This is fuelled in part by Ireland's lack of substantial domestic energy resources and consequent high level of imports. Only 15% of the country's energy comes from indigenous sources. The primary focus for energy security is gas and its increasing role in electricity generation. Gas generation accounts for 36% of the fuel mix in Ireland whereas it constitutes 19% in the EU, on average. The other substantial difference applies to the use of nuclear power by some member states, approximately 33% for overall EU electricity generation. Liberalised markets will not by themselves value security of supply and may not ensure timely investment in future supply and infrastructure to ensure secure supplies, particularly to vulnerable consumers without other energy switching capabilities. Market liberalisation can lead to a short-term focus and in this competitive environment the market itself may not provide adequate insurance against low-probability events such as interruption of supply.
The national climate change strategy identified the closure of Moneypoint coal-fired power station and its replacement with modern gas-fired power generation as an option for making a significant contribution to reducing greenhouse gas emissions. However, the replacement of Moneypoint by gas-fired generation would make Ireland reliant on gas for 80% of its electricity generating capacity by 2010, a level which contrasts starkly with an estimated European average of 30% in the same timeframe. Such a step requires careful consideration. The ESB is considering what commercial decisions it should take on the future of Moneypoint. An investment decision is required by the middle of this year on upgrades associated with meeting current EPA licensing requirements and maintaining the plant in operation for the long term. If Moneypoint is not to be upgraded to comply with the new limits, it must close by 2011, and an alternative electricity generating plant, probably gas-fired, would have to be in place by that time. If the company is to justify major new investment in Moneypoint it must be in the context of benchmarked best practice in all respects.
My Department must form a view of how much fuel diversity is desirable and necessary for the future and has engaged DKM, the ESRI and the CER to conduct a study on the issue. The study, which should be completed by the end of next month, will inform policy decisions on Moneypoint in the near term, and the issue of fuel diversity in electricity generation in the long term. The Government is committed to realising the commercial potential of oil and gas resources offshore Ireland. In addition to providing increased security of supply, a reliable, secure indigenous source of gas also provides corporation tax revenues and encourages continued investment in oil and gas exploration with associated socio-economic benefits. This policy objective is pursued through a strategy of encouraging competent private sector companies to invest in the search for and production of oil and gas in Irish waters. The private sector is recognised as having the resources, expertise and practical experience essential for such a task.
The Government has taken a number of initiatives to enhance the comparative attractions of Ireland as a location for investment. Principal among these is the introduction of a complete statutory regime of petroleum taxation and the introduction of appropriate licensing terms. These recognise the risk/reward balance that reflects Ireland's circumstances - perceived prospectivity, harsh physical environment and limited infrastructure - and acknowledge the realities of competition for internationally mobile exploration/production investment.
In terms of bringing indigenous gas to market, a gas pipeline between the Corrib landing point and the ring main at Craughwell, County Galway, was scheduled to be built under a commercial agreement between the Corrib partners and BGE. As the committee members will be aware, An Bord Pleanála upheld an appeal against the granting of planning permission for the proposed onshore development of the gas terminal. A revised planning application was submitted to Mayo County Council in December last year. While a decision was expected last month, this has been deferred as the council is seeking further information. Assuming that Corrib goes ahead, this will have the additional benefit of making gas available for supply to towns along the corridor between Galway and north Mayo. Obviously, if it does not go ahead, that proposal would be in some jeopardy.
I turn now to the issue of sustainability and the use of renewable energy sources. Bearing in mind what I have already said about our reliance on imported fuels and the fossil-fuel intensive nature of our fuel mix, I believe that we need to mainstream renewables. We need to place increasing importance on promoting and integrating renewables into the mainstream of energy sources. We also need to emphasise and stress the need to maximise the efficiency of our energy supply and use. I am personally committed to developing the full potential for renewable and sustainable energy. Renewable energy has a valuable role to play as an environmentally friendly fuel with no carbon emissions. It also assists in enhancing security of supply, and in fuel import substitution.
However, renewable technologies, other than large hydro plants, cannot as yet compete with fossil fuel technologies and therefore can only be exploited with the assistance of financial or regulatory support measures. Under the alternative energy requirement of AER programmes, support is provided in the form of a competitive bid process based on cost per kilowatt-hour in various renewable energy technologies. Winning bidders are awarded up to 15-year off-take contracts with the ESB. The extra costs involved are recovered from all electricity consumers by way of public service obligation, the PSO levy. We have a target to increase electricity from renewable energy sources to over 13% of total electricity consumption by 2010. I am committed to achieving that target and my Department will continue to provide appropriate support measures for renewable energy technologies. The combined targets set in AER V and AER VI added to existing renewables stock should see the contribution rise to 12%, very near our 13% target. Additional support should ensure we surpass our 2010 target.
I will return to the associated figures but I believe it is important to emphasise that the current moratorium on new connections for wind farms does not impact on binding connection offers already in place. These offers amount to approximately 600 MW.
The conclusion of AER VI presented a timely opportunity to review current targets and support mechanisms for renewable energy. In December last I issued a consultation paper which examined support mechanisms and renewable energy policies in Ireland as well as in other European countries. The closing date for receipt of submissions was the end of last month, and we are waiting for responses from a number of parties who requested some leeway. Once we have had a chance to assess the responses to the consultation paper, I will be announcing a new renewable support policy later this year.
In the most recent linked rounds of support - AER V and AER VI - it is proposed to offer support contracts for a total of 720 MW of renewable based electricity generating plant with a latest build date of end-2006. Renewable energy capacity of this magnitude requires in the region of €750 million of private sector investment. Clearly, the investment climate must be right if the private sector is to deliver on investment of this magnitude. Delivery of this capacity will result in a reduction of approximately 2.25 million tonnes of carbon dioxide per annum, and reduce Ireland's dependency on imported fossil fuels by more than 5.5 million barrels of oil every year. This will improve Ireland's national trade balance to the tune of €150 million per annum by redirecting money previously spent on energy imports back into the local Irish economy.
Ireland has a huge wind energy resource both onshore and offshore. In the absence of an economic means of storing the energy, its contribution to a continuous electricity supply is limited by the random and variable availability of wind. In effect, wind generation must be backed up by other power stations, currently fossil fuel based, in order to ensure that there is sufficient generating capacity. In this sense, wind cannot be regarded as a substitute for thermal plant. In this context I am aware that National Grid in the past week has raised issues around the economics of wind energy which must be examined. Indeed I note in today's paper that an association of engineers in the UK has also questioned the economics of wind energy, in the way National Grid has done, noting that wind energy in itself will be much more expensive than the current fossil fuel generated energy.
Wind is the most proven and the cheapest of the renewable energy technologies at the present time. Recent AER programmes have been very successful in attracting new wind powered capacity. This has given rise to constraints, such as those signalled by Eirgrid and the CER, which arise both in terms of connection to the grid and capacity acceptance. My Department is currently engaged with the CER, SEI and Eirgrid on the most effective mechanism to connect clusters of wind energy projects to the grid. A joint working group has been established to develop a new grid code for wind that will address some of the technical difficulties in connecting wind to the grid that have recently been identified by the network operator and CER. Eirgrid is also working with the industry and turbine manufacturers to develop system performance models to test wind-farms' practical performance behaviour during times of any difficulty on the network.
The recent problems with grid connections for wind generators indicate clearly the requirement for improved co-ordination in the renewable sector and because of this I have already announced my intention to establish a permanent renewables development group to share expertise and knowledge for the development of the renewable sector.
In addition to AER there are existing programmes and new initiatives to stimulate development and deployment of renewable and sustainable technologies. Section 486B of the Finance Act offers tax relief for corporate investors in renewable energy products. The business expansion scheme, BES, which at my request was extended in the Finance Bill, allows individual taxpayers to set off qualifying investments against personal tax where the investment is in renewable energy projects. This scheme is particularly used by small scale projects. Provision is also being made this year, again at my request, for excise duty relief for pilot biofuel projects. SEI has already identified a number of potential projects which would benefit from the excise relief and assist the development of the biofuels industry here.
In December last, I established a biomass strategy group to examine ways to further develop the biomass industry in Ireland. The renewables consultation process will, where relevant, form part of the input into this group. I have established a new CHP policy group which met for the first time yesterday. While much information is already available on CHP in Ireland, a number of factors are influencing its development including the effect of emissions trading, potential effect of carbon tax, electricity prices, the new CHP directive which harmonises efficiency measurement values, and the liberalisation of the electricity market. I have asked the new policy group to take all of these factors into consideration, together with existing information on CHP, and report to me within six months with focused and practical policy recommendations for the further development of CHP in Ireland.
Sustainable Energy Ireland continues to run a series of research and development programmes aimed at developing and supporting the renewable and sustainable energy sectors. It also operates an information and advice programme for companies and individuals who wish to use or develop renewable energy projects. I look forward to a detailed briefing with the committee on the various developments in the sustainable and renewable sectors and in particular welcome the committee's focus in the coming months on Sustainable Energy Ireland, wind energy, biomass and biofuels
I now turn to energy policy from an all-island perspective. While the energy sector is not among the 12 areas of co-operation specified in the Good Friday Agreement, informal cross-Border co-operation in the energy sector predates it. For some time there has been a high level of political commitment in both jurisdictions to the development of competition in the energy sectors and in the interest of delivering improved services and economic benefit to consumers. It is recognised that competition on an all-Ireland basis is likely to increase the choices available to consumers and to support continued economic growth North and South.
Senior officials from my Department, the Commission for Energy Regulation, the Northern Ireland Department of Enterprise, Trade and Investment and the Northern Ireland Authority for Energy Regulation meet monthly. Work to date has centred on technical discussions and studies by regulators, electricity suppliers and transmission system operators on identifying harmonisation opportunities and constraints to be overcome. In December 2003, the Minister, Mr. Pearson, and I agreed priority actions for the first half of this year. In particular, we invited regulators and transmission system operators to report on our work programme aimed at achieving joint transmission planning in the electricity sector. The regulators were also asked to consider the harmonisation of gas transmission and tariff structures. We will be holding an energy forum meeting for industry representatives and stakeholders next Friday in Drogheda to broaden the discussion on advancing the all-island opportunities in the energy sector. The Minister, Mr. Pearson, will be at that, along with his officials from the North.
I thank the members for bearing with me. It was important that I touch on all the subjects, something I could only do with a written speech.
I thank the Minister for his presentation. Before we move to questions, I have a brief question for the Minister. On a previous occasion here, in conformity with the Kyoto Protocol, great enthusiasm was expressed regarding wind energy, and projections were made regarding that area. In my area and many others around the country, much of the discussion revolved around the locations for such wind energy projects. We had a debate about the hen harrier population and so on. That matter was resolved. I have seen many people embrace the concept of wind energy, and a fair number of planning applications have been successful. To what degree has that now been put on the back burner because of the reservations expressed recently by the national grid on the economics and viability of wind energy? To what degree has this interfered with the target which the Minister has set for 2007 regarding the Kyoto Protocol? Does he still believe that wind energy is credible in the long term? Many people who have been granted planning permission are now concerned about whether they will ever be connected to the national grid.
The Government and I are absolutely committed to renewable energy and wind in particular. To a certain extent, we are victims of our own success, especially with the AER VI contract situation. As the Chairman said, there has been great interest in this. If we are to sanction what is currently allowable, we will reach a situation where we will have 12%, with the target for Kyoto being 13%. We will more or less reach our target if we can put on the grid exactly what is on offer. At present, 191 MW are on the grid. The valid connection offers issued, which it is possible to put on the grid currently, would be 580 MW. That is a total of 771 MW, which would reach 12% of our limit. We are currently on target.
The moratorium was put in place by the Commission for Energy Regulation independently of my Department and I, though that is its function. It was based on advice from the national grid on difficulties connected with the fact that, if one puts a great amount of wind energy on the grid, as now indicated by the success of the AER VI programme, there must be caution. Anyone who stands in a wind turbine will see that it fluctuates dramatically. Even though the turbine is turning at the same pace, there is an incredible fluctuation in the power taken from it. All the experts said that they could not have such instability in the system. In a perverse fashion, the more wind one puts on, the more that dictates that one requires standby power generated by fossil fuels. That obviously creates more difficulties, and more investment is required.
We must, therefore, manage it in such a way that whatever comes forward can be accommodated on the grid, taking into account all the technical constraints. That is why I have applied to set up a group involving all the players so that everyone can fully understand the difficulties and how to get over them, and particularly so that the private companies who have international expertise in the area can share some of the new technology that they have which, to a certain extent, may allay the fears of the grid operators. Those issues are not easy and, while Government policy may be - as everyone would like - to see more renewable energy available, there are difficulties.
Ultimately, there is a cost factor which has been identified by the British engineers today. Anyone who looks at their electricity bills can see that the cost of renewable energy is significantly higher. I accept that one can insert other permutations regarding the calculations, and we all agree that wind and other renewable energy is preferable to fossil fuel. The question is how to facilitate that aim within the physical and technical constraints of our systems.
I thank the Minister for a necessarily broad presentation across a range of areas. I would like to broaden the discussion slightly further to cover the complex and difficult long-term issues with which we must deal in this sector. Plant that we commission now will probably still be in existence in 30 years, and there are great issues regarding security of supply and where we look for our energy sources. I would be interested to know whether the Department has a long-term view on the issue of future supply. Does it have a policy, and is it working within a framework? For example, when does it believe that oil and gas production levels will peak and then start declining? That will probably have an effect on costs and supply. What is the Department's view on the long-term availability of oil and gas to the Irish market in particular? Are we looking at a horizon of 30, 40 or 50 years? I know that the oil companies themselves are working within such a timeframe regarding how long it will last. I would be interested to know the Department's long-term view. Has it conducted or examined international research on when we will start having declining fuel supplies internationally, something that will affect us?
On a related theme, the Minister is referring to 2010, which is now quite close, regarding the percentage of renewable sources that we would have in power generation. Does the Department have a view on what the percentage will be in 2020 or 2050 and how we might start achieving such targets? I apologise for the number of questions, but the Minister will appreciate that it is a very large area.
Given the Minister's comments, it seems that he is now re-opening the possibility, or raising the expectation, that the ESB generating business will be sold. I had understood from his previous statements that this had been talked down, but now it seems that while he is opposed to privatisation that would result in a private monopoly, he is not opposed to the sale of the company, if it could be done in a way that would not mean it would all go into private hands. Consideration should be given to the experience of Eircom, where, in a very short period, a vital piece of national infrastructure initially sold by the State was sold on two years later to venture capitalists and is now being sold on again, having been sucked dry by those venture capitalists at a huge consequence to the economic development of the State.
We are not concerned here with the role of venture capitalists.
I take the Minister's point. Will he outline the mechanism that could be put in place to ensure that the type of market activity that has occurred in the telecommunications infrastructure would not apply in the privatisation of the power generation industry?
The Minister's point on the failure to achieve separation of Eirgrid from the ESB is valid, and I question whether that is colouring its comments in terms of the levels of renewables to be taken on. If it is so linked with an older power grid and older power generation station operators perhaps that is colouring its views on how much wind can be take on the grid. There was an unseemly High Court case involving two agencies of the State squabbling over who had ownership of the assets. Is it not time for the Minister to intervene and, if necessary, to definitively separate the two companies, rather than waiting, as has been the case in the past three years, for the companies to work out an arrangement?
It has been stated that the State will not give funding towards the interconnector and that its funding will have to come from the private sector. If the private sector finds that in the immediate term this is not financially viable, will the Minister, taking account of the benefits in terms of renewal energy, seek funding from the Minister for Finance? Will he state whether that is the position of the Department of Finance or his own Department? Has the Department of Finance ruled out the financing of the interconnector? If the market does not run with it, will the Department do so instead?
The AER V and VI schemes will allow the State to achieve its 12% to 13% targets. Will the Minister clarify how many megawatts of windpower have been generated following the construction under the AER V scheme? Many believe that the bidding under the AER system has been so competitive that those awarded the contract will not be able to take up the contract offer. How quickly would the Department react to that scenario, especially where wind energy is not being provided? There is a serious concern in the industry that the market mechanism being devised by the regulator is complicated, cumbersome and unlikely to work.
I have concerns about the emissions trading system set up by the Government. A comprehensive subsidy has been provided to power generation companies to continue to use outdated plant. I am concerned that less efficient plants will be retained to avail of the carbon quota. Will the Minister explain the purpose of the "use it or lose it" clause? Could it lead to a situation where it makes financial and operating sense to keep the least efficient plant open in terms of carbon emissions and electricity generation?
Recent comments on the security of supply are unfair. The ESB has committed itself to spending €4 billion between now and 2007 to ensure we have a state of the art transmission network and do not have the type of situation experienced in the United States, Italy and other countries. It was anticipated that there might be difficulty with the level of demand during the peak demand periods. However, the peak demand to date has been lower than expected at 4,320 MW. The current dispatchable capacity is 5,549 MW. Even allowing for outages, 4,450 MW of plant is available for dispatch. We have not had the difficulty that other countries have experienced and it is not anticipated because of a number of measure being taken by the CER, the ESB and by others.
In response to the Deputy's question on the Department's long-term view, an energy policy is being finalised. This is a significant document that will take the long-term view. It will provide for a review every five to ten years.
Has there not been a long-term view to date?
We have had other energy policies, but I want a policy document that will set targets and indicate where we want to go over the next period.
The policy decisions we have worked on to date are not based on the expected oil supplies in 2030.
The policies we have been working on would have taken account of that. Since the early 1970s, there have been doom and gloom scenarios about running out of oil, but that has not happened. There are new technologies. For example, the fuel cell technology is being actively worked at in the United States and there is significant interest at European Union level by the current Commissioner. Ultimately, the new technologies will help. We are a member of the IEA, which deals with the whole issue of the long term availability of oil.
I have stated clearly on many occasions that as Minister I would not oversee the situation where we would, in effect, privatise the ESB electricity wires. Whatever happens after that is a matter for the Government, but no decisions have been taken and no moves have been made in that respect.
Would the Minister agree that the power generation company is seeking to be privatised and that he is not ruling out that?
No I am not. I am saying that there is nothing on the agenda in that respect.
The management has it on the agenda.
I do not know if it has. It has not said it to me.
Is there any immediate plan to sell the generation company?
No, there is not. The Deputy's point on Eirgrid——
The Minister should definitively separate them.
It is easier said than done. I would love to just state that they are separated. Unfortunately there have been significant issues for the past two years since I became Minister, and even before that. I hope they will be resolved soon and at least in one aspect which has delayed everything. It is not a simple matter because significant human resource issues are involved in the transfer of staff from one company to the other. The two in effect operate independently.
The Government is decentralising most civil servants, some to Cavan and others to Clonakilty. It can not be that difficult to separate Eirgrid and the ESB.
I had better not say anything.
The Minister should feel free to say what he thinks.
I will say it privately to the Deputy afterwards. As Minister, I do not get involved in personnel issues and there are significant issues involved in the transfer of staff from one company to the other. These issues have caused some difficulty. This is because the conditions in the ESB are probably some of the best in the country.
The matter is not related to finance. There is significant private sector interest in this project and this can be built without recourse to the Exchequer. The company that takes it on would have to take a risk and it would be on the basis of a rate of return in a private or regulated capacity. Since the announcement, there has been significant interest in the project according to anecdotal evidence.
Wind development on the system will double this year alone from 166 MW in January 2004 to more than 300 MW by December 2004. In excess of 170 MW is under construction and additional capacity is still subject to State aid clearance. Given that there was such a demand and success in AER VI, I asked the Commission for an additional 140 MW. We still await official Commission clearance even though we have received a favourable indication. I always claimed that, after AER VI, the slate need to be wiped clean, and the renewable consultation document examines international best practice.
There is favourable opinion on the Department's consultation document which examines targets from 2010 to 2020. We are looking at the issue of renewable development in three phases. First, there is the current development on wind. The second phase is biomass and combined heat and power, CHP. There are policy development groups including industry players which will report back some time this year. The third phase is a research and development programme for other types of technology. A sum of €4 million has been spent on technologies other than wind technology this year, such as biomass, CHP, solar power and wave energy.
How many megawatts of power have been turned on from AER V projects?
I do not have the exact figure. It is not quite zero because part of AER V has been rolled into AER VI.
Is it true that none of the projects originally granted under AER V is providing power?
The Department can get that information for the Deputy.
None of them has been completed. However, that does not necessarily mean that they are going to be developed. That is not quite the same question.
They would be developed because there are better conditions under AER VI.
It is hard to believe that thermal electricity generation is cheaper than wind energy when the raw material is free. Is that because of the cost of storage? If there are difficulties in wind energy storage, I would have thought that the same difficulties would apply to storage of electricity generated by fossil fuels. The Minister also stated that 15% of energy supplied in this country comes from indigenous sources. Is there any breakdown in this statistic as to the different sources?
I am glad the Minister has clarified the situation on the amount of money the ESB is spending on its transmission system because there were reports about Eircom at the weekend that claimed its infrastructure has had little investment in the recent past and is collapsing. Therefore I am glad to hear that this is not happening with our electricity infrastructure. The current situation with fixed line telephones is that a customer can call different companies, these companies do the work, yet a different company bills the customer. Will the same situation occur with electricity when there are competitors in the market? That is to say, will it be only a matter of a customer asking to switch from one company to the other without having to have alterations carried out to the customer's home to do that?
Since 19 February last, 56% of the electricity market, representing 13,600 customers, has been opened to competition. These customers can choose other operators and are mainly large consumers. Eventually that will be fully opened and the Department estimates this will happen by February 2005 in advance of the EU timetable of 2007. The problem is that the ESB has 80% of the market and companies like Viridian and Synergy have about 14% of the installed capacity. The balance is made up by wind and other types of energy. It is the case that other competitors can access the grid. That is the idea of the Eirgrid model - to separate it from the ESB. In regard to wind energy, the problem is that one cannot store electricity, although fuel cell technology may solve this. The high cost of wind energy arises from the need to keep fossil energy on warm standby. A plant cannot just be shut off. When the wind stops, the existing fossil fuel generation must be running and, therefore, the overall cost goes up.
The committee should not take me up wrongly. I am not saying we should not use wind energy or renewable energy because it is more costly but that it must be accepted by consumers that if we want more renewable energy, it will be more costly to them, the end users. However, in a more global sense, it would reduce our dependency on imported fuels and might help our national trade balance and our compliance with Kyoto commitments etc. It is a question of balance in this context.
Deputy Eamon Ryan raised the question of the "use it or lose it" clause in regard to emissions. Emissions trading is the responsibility of the Department of the Environment, Heritage and Local Government and, if the committee wishes to discuss the entire issue, it should do so with that Department. The "use it or lose it" clause was inserted because it would be ridiculous if somebody who had a free allocation closed his or her business and was then able to realise the substantial windfall from the tradable permit he or she would possess.
The current phase is one of learning by doing. We have sought EU approval in this regard and must see how it pans out. The Government has considered what other countries are doing in this respect but not every country is the same. For instance, the Deputy will appreciate that one of the big gaps in our pie chart for energy is the fact that we are not nuclear. Some 33% of electricity generation in the EU is nuclear. Because we are implacably opposed as a nation to nuclear energy, we are more reliant on other forms. As the Deputy knows, nuclear energy does not have implications for emissions trading or for the Kyoto Protocol.
The Government is regularly hailing nuclear energy as a salvation. I regret-——
I do not know how the Deputy could take that from what I said.
I do so because every time the Minister discusses the reason we are so bad at developing renewable energy, he mentions that the Taoiseach and various Ministers have pointed to other countries having nuclear energy. It is a magic bullet solution.
I said that this country is implacably against nuclear energy. The Deputy is twisting my words. However, it is a fact.
In regard to emissions trading, the "use it or lose it" clause means that very high polluting plants will stay open which might otherwise have shut down, which would have been good for our climate change policy.
It is not a subsidy.
I disagree with the Department's view in terms of the level of renewable electricity we could produce, but we will come back to that. The Minister mentioned that we are looking at possible ways of trying to get back the windfall gain we have effectively given to the ESB, Viridian and other carbon polluting companies. It is a huge windfall because the companies will be able to sell their electricity at the marginal price to attract any new entrant. On that basis, that marginal price will have to include the cost of a carbon trading permit. Any company operating existing arrangements will get a free quota - the Government gave a full quota to these companies - and will effectively get a massive windfall profit, estimated at €600 million for the ESB and about €50 million for Viridian.
The Minister mentioned that he might consider ways of trying to win back the windfall profit which the Government has given to these companies, at a cost to the Irish consumer. What measures is he considering?
It was not the Government that gave the windfall gains, it was built into the directive.
The Government gave the Irish traded sector its full allocation and everything it sought.
Some 95% was given free. The measures we may take in regard to the windfall have not been decided. It is only as a result of the emissions trading, and the national plan which will go in at the end of this month, that this issue has now been crystallised. Decisions will be made in due course. The CER has suggested that this could be recycled into electricity power generation to reduce prices generally, which will also be considered.
How would that recycling happen?
In a number of ways, but I will not go into that issue because there has been no significant discussion of it at Government level. It has not arisen because the national plan has not even been accepted by the EU.
Is the national plan finalised in the context of the level at which cap figures for emissions are set?
I do not have specific responsibility for that. The Minister, Deputy Cullen, is the relevant Minister.
However, the Minister, Deputy Dermot Ahern, is the Minister responsible for energy and this has a huge effect on the energy sector.
There is a deadline at the end of March and our plan has already gone in. It is being considered by the Commission and discussions will take place with the Department of the Environment, Heritage and Local Government in this respect.
Is the Department of Communications, Marine and Natural Resources happy with it?
The Department had a significant input in regard to the technical details of the plan and the Government approved it.
I apologise for not being present for the beginning of the Minister's speech but there are a number of areas I wish to cover as this is the first opportunity to consider the direction of energy policy. The Minister referred to the ESB and was strong in saying what he does not intend to do in regard to the privatisation of transmission and distribution systems.
Deputy Kelly took the Chair.
However, the Minister did not say what he intends to do in this area. I assume he would not be so strong in saying he does not intend to privatise the transmission and distribution systems if he did not have an intention of privatising some other parts of the ESB. What are the Minister's policy intentions in regard to the handling of the ESB between now and the end of his term? Such handling must be careful but must also be undertaken with a view to promoting further competition and further liberalising the market, as the Minister said. The Minister mentioned what he will not do as opposed to what he will do. Will he provide more detail? Does he plan to privatise ESB PowerGen?
In regard to Eirgrid, it is a bizarre scenario in some ways that the Electricity Supply Board is putting such huge amounts of money into upgrading the grid when it supposedly has no input into the management or control of the grid. It has ownership of it, which has been shown to be the case in court. How does the Minister intend to tackle the need to separate further Eirgrid and the ESB when the ESB is confirming its ownership by investing significant sums of money in the upgrading of the grid infrastructure, which is necessary anyway?
I welcome the Minister's comments on his determination not to sell the grid off or privatise its ownership in the future. Does that rationale hold for the gas infrastructure and Bord Gáis? Does the Minister have views on the future handling or potential privatisation of Bord Gáis? The Minister mentioned that he wants to increase competition in the gas sector and further liberalise that market, but he has not gone to the same lengths as he has done on the electricity sector to point out that he wants to hold on to the infrastructure. In the event that the Minister considers privatising Bord Gáis in future, will he ensure that the State retains ownership of the gas pipelines and the assets?
Has the Minister considered in his overall energy policy a rationalisation of State-managed assets or the potential for improving their efficiency? Other countries have considered the combined management of gas and electricity infrastructure by one state body, rather than having two separate state bodies, because gas and electricity infrastructure are so intertwined and will perhaps become even more so in future when we bring more gas ashore. I would be interested in the Minister's comments on that.
I echo some of Deputy Ryan's concerns about whether the State should pay for the interconnector to ensure that it is a State asset. The Minister says that he is strong on the State retaining ownership and control of its electricity grid. Is the interconnector not an extension of that electricity grid to link us up to the UK markets more fully and, we hope, eventually link us up to a European electricity grid? If the rationale is to keep, for obvious reasons, State ownership and control of the infrastructure on the island, surely the piece of infrastructure that connects our grid to the British grid should also remain in State control and ownership rather than being in private hands. If it was in private hands, that could potentially create a situation in which a private operator could have significant influence on whether energy comes to and goes from Ireland, whether that is renewable energy going to Britain from Ireland or fossil fuel energy coming to Ireland.
One matter that I am surprised has not been mentioned is distributed energy and micro-combined heat and power, micro CHP. The UK is placing huge emphasis on that. We should prepare the marketplace to facilitate distributed energy, particularly in parts of the country to which it is expensive to supply energy at the moment. I would be interested to hear the Minister's view on that, particularly on micro CHP and the possibility of small-scale renewable energy, for example, small wind turbines on farms providing the power for dairy units. Can we facilitate that and are we directing the Commission for Energy Regulation to ensure that we are preparing the marketplace for such development?
I was surprised to hear the Minister comment that wind energy is way more expensive than fossil fuel power. Perhaps he will give us the figures, such as an average figure that has been applied under alternative energy requirement VI and with which contracts to produce power have been won under that requirement. The cost is certainly well below 5 cent per kilowatt hour. Perhaps the Minister will also give us the average cost at which the ESB produces power at the moment. If he does so, I think that it will be confirmed on the record that many wind projects produce power for less than the ESB's or Viridian Energy Supply Limited's cost of power production. However, I accept that upgrading the grid is an added cost that needs to be taken into account.
Perhaps the Minister will put some figures on the cost to the consumer of producing power through peat. We have been told that the cost of producing energy through wood biomass and other potential biofuels is too expensive at the moment to consider on a large scale. I would be astonished if, with all the advice the Minster has available to him, he could not put some figure on the extra cost of producing power through peat. I ask him to outline whether he has plans to replace peat as a fuel source over a phased period of time and, if so, how he intends to do that. Will he confirm whether it is technically the case that he could replace peat with wood biomass over a phased period? I understand that Bord na Móna has carried out some trials on that. Does the Minister plan to encourage further exploration of that idea?
On biofuels and biomass generally, is the Minister taking note of what is happening in other European countries? For example, Germany has an EU agreement to remove excise duty entirely on certain biofuels to promote new industries. That has been phenomenally successful. Are we planning similar strategies here?
Is it the case that some applicants who have been successful in getting contracts under AER VI are having difficulty getting connection agreements because of the moratorium that exists at present? If companies have contracts under AER VI, do they have an automatic right to grid connection with EirGrid or are they too subject to the moratorium? It would be farcical if we expected companies to build wind farms under AER VI but those companies could not be sure of getting a grid connection. In January, there certainly were some companies that still could not get grid connections but had AER VI contracts. I ask the Minister to clarify that situation.
Does the Minister have a comment on a long-term strategy to move towards a hydrogen economy, in which we would not have the same problems with grid management, grid connections or interconnector costs? I understand certain countries - Iceland is a very good example - are moving very quickly towards a hydrogen fuel cell based economy in which power can be transported much more easily through large batteries. As an island nation which will have some difficulty linking up with the British and European electricity grids, should we be considering this option in a more serious way? I note the Minister often comments that Opposition spokespersons did not know what FRIACO was until he introduced it, which was not the case. I suspect that in five years' time or perhaps less we will be talking about a hydrogen economy. I mention it at this stage to demonstrate that Opposition spokespersons are pushing the concept and ensure the Minister does not, in his usual fashion, claim full credit for this idea also.
What would the Minister like to do?
I would like to answer the question.
There are other speakers. Some of the questions are similar.
I accept that they are repetitive.
Will we take the other speakers or does the Minister want to speak now?
Yes, if they could be less repetitive.
To deal with the ESB position, I am not sure why some Opposition members are fixated on privatisation. I am not.
Is the Minister saying he is not going to privatise the grid?
We heard the Deputy uninterrupted for an hour or two. Let the Minister speak uninterrupted just as everybody else here did.
I am not fixated on privatisation. I stated my position clearly. It pertains to gas also. I am not implying, if this is what the Deputy is suggesting, that I am in favour of privatising Powergen. There is nothing on the agenda in that respect.
Regarding Eirgrid, it is so long since the Deputy made his point that I cannot remember what it was.
I asked how the Minister intended to ensure Eirgrid was seen to be totally separate from the ESB, particularly when the ESB as a parent company is putting in so much funding.
That is how the whole project was set up.
The Minister needs to change this.
I will not. I will not return to a position where it would be reversed back into the ESB. I have said this already.
That is not what I am saying. I am saying there is a need to separate the two.
If we can get over the HR issues, it will happen and lead to a position - previous speakers referred to the situation in the telecom market - where we will be able to independently manage the wires in that respect.
Senator Finucane took the Chair.
Deputy Coveney suggests that Bord Gáis and the ESB could be managed by one company. I would not like that because Bord Gáis was examining the possibility of getting into electricity power generation. If they were joined together, another possible competitor would be eliminated.
I am talking about the management of assets as opposed to the power generation side.
The ESB and Bord Gáis are not the same. The pipes are the asset in Bord Gáis. In the ESB the assets are the wires and Powergen.
Regarding the ownership of the interconnector, it is the case that but for the Troubles over the past 30 years we might have more interconnection, particularly with the North. We are constrained in that interconnection and it is a source of great regret that we do not have more capacity on it. We would have if people had not kept blowing it up. The proposal for the interconnector is, as far as we are concerned, the way to get it built. If the State was to build it, it would be a huge drain on the Exchequer. Given that there is substantial private sector interest, constructing it on a PPP basis is the way to go. We will wait to see whether the market responds to the proposal of the Commission for Energy Regulation in this respect. I want to ensure we have a robust and efficient interconnection with the rest of Europe. I met the Dutch Minister yesterday and heard how Holland and other mainland European countries were interconnected in both gas and electricity. We have to envy them in that respect but it is far easier to do so on connected land.
Are interconnectors privately owned in other European countries or are they owned by the State?
I believe ownership is mixed. Interconnectors criss-cross all over the place. In recent times more have been privately owned.
They can have a downside, as in Italy.
They can if one is over-reliant on them. We would never be over-reliant on them. They would ensure we had a competitive edge regarding prices. It is the case that the European Union has a target of at least 10% interconnection which we are hoping to drive. There is a strong possibility that this proposal will be able to avail of substantial funding from the Union in relation to any proposal for interconnection but that has yet to be decided.
There are nearly 100 CHP projects around the country. The whole issue of micro-CHP is very much on our agenda regarding some of the renewable energy projects being funded. The ICI would be involved in promoting them. A fuel cell hydrogen system is very much part of the future. However, it will take longer than the Deputy suggests. The United States believes it is a silver bullet. We are looking to it and the huge investment it is making in this respect. It is hoped it will lead to a reduction in the requirement for fossil fuel. However, if hydrogen is made from fossil fuel, it may not necessarily be as environmentally friendly as we would wish.
The Deputy mentioned Bord na Móna peat. Peat would be somewhat dearer for the production of electricity than gas or coal.
Or wind.
I do not think wind generation, about which I made a point earlier, can be included in the comparison. One cannot just say: this is the cost of fossil fuel and that is the cost of wind generation. Because of the need for standby generation facilities, there is a substantial extra cost. In Bord na Móna there is a PSO in relation to peat. It has been a desire of this country for many years to use peat in the generation of electricity. That will continue to be the position so long as we have that resource. It sustains substantial employment in particular areas.
What about biofuels?
That goes back to the point I made about taxation. We succeeded in getting the Department of Finance to allow relief on excise duty for some biofuel projects. We will have to wait and see how they develop but there is significant interest in the matter.
Are pilot projects developing as a result?
Yes.
Where are they taking place?
There is a substantial project in Wexford, and others in the midlands and Cork.
I welcome the Minister and his officials. As always, it is a pleasure to have him here. I compliment him on the endless energy he brings to his brief. He is committed and dedicated. Under his management, our resources are in capable hands.
Does the Deputy have a question?
I do not have any questions but a request. I understand the Minister and his officials are the top people at the job. I particularly welcome the Minister's comments that he proposes to develop the regulatory framework for the gas market to bring about a competitive multi-operator national gas sector. Longford is the place to be. Everybody is coming to it. I, therefore, ask the Minister to give priority to ensuring natural gas is supplied to Longford town and county as soon as possible. It would only have to be taken the short distance from Westmeath to Athlone. That the officials are nodding is welcome. A nod is as good as a wink to a blind horse.
Does the Minister wish to respond to those tributes?
I am not sure if they will lead to success in bringing a gas supply to Longford. I am aware the pipeline is located not too far from it. Ultimately, it will be a commercial decision for Bord Gáis. I recall a time many years ago when, as a relatively young Deputy, I was delighted to inform the world that there would be a gas supply to my constituency. I learned a lesson that I should read the small print or go behind the press release to see what would happen. I could not believe it when I heard in 1989 gas would be supplied to the major industrial users only. Now, virtually the entire area is connected to the gas network. It is amazing how commercial demand, particularly from residential users, has changed the conservatism of the company. I would like to think that as many towns and villages as possible will be able to access the network but cannot be specific about Longford. The pipeline to the west opens up huge possibilities. There are other players in the market in opposition to Bord Gáis. Competition in the distribution sector is no harm. I referred to the Mayo-Galway pipeline which is dependent on supplies coming ashore from the Corrib gas field and also supplies to the north west. The more pipes we have the better.
Whatwill be included in the gas regulation Bill that the Minister intends to bring before the House? On the issue of the supply of natural gas, there are more counties without than with a supply. In this context, what is being proposed? If planning permission is not granted for the Corrib gas field, what will be the consequences? Perhaps the Minister will expand on the issue of the interconnector between Ireland and Wales.
It is a consolidation Bill which will also implement the EU gas directive. It will deal with the issues of gas safety and consumer protection, including the regulation of installers which has been an issue for some time. The Deputy raised the matter of——
What is the position on the supply of natural gas across the country?
That is primarily an issue for Bord Gáis which makes commercial decisions like the other companies in opposition to it.
If planning permission is not granted——
We are only 15% reliant on indigenous energy supplies. The more we can produce the better. If we can get supplies from the Corrib gas field on shore, it will reduce our level of dependency on imports, reduce prices and, if successful, lead to the export of supplies. For the west it will lead to an opening of the distribution network. We will have to wait and see.
Perhaps the Minister will expand on the issue of the inconnector between Ireland and Wales?
In what sense?
With regard to timescale.
I would like to think it would start towards the end of 2006. When we are having a 500 MW station built, we might as well be hung for a sheep as a lamb and build two because it would be more cost effective. It will be a significant project and one of the largest but the interconnector will not pass through Wexford.
As I am conscious of what is happening in the Dáil, I will be brief. I welcome the Minister and thank him for a comprehensive overview of what is happening in the energy sector. I also thank his colleague, Deputy Kelly, for chairing the meeting so effectively for a short time.
On the last point about energy supplies security, the Minister mentioned the hopes for the Corrib gas field but if that is the case, why is he so circumspect about allowing Moneypoint to become a gas-fuelled station? Is it likely that the percentages he gave regarding the position in 2010 will not hold if the Corrib gas field and related discoveries deliver?
I warmly welcome the Minister's comments on the ESB. I am aware he made a statement about a year ago that there was no intention to privatise the national grid but, in the last few days before the Eircom IPO, it is a timely reminder that he was a member of the Cabinet which approved the ongoing shambles in regard to the national communications grid. At least, he has learned from that experience in that we are not repeating that serious error. In fact, looking at the continuing shambles in broadband one would think there was a good case for buying back Eircom lock, stock and barrel and making a handy profit, given what has happened over the past three or four years.
I could say the same about a few of the Deputy's colleagues. They would give even more hand-outs.
My party stands for the national interest.
The Deputy finally came off the fence this week. He had a sore posterior sitting on it.
No. The Minister was a member of the Cabinet.
I will come back to the Deputy on that point.
However, I welcome what he said about EirGrid. In many countries he would be Minister for Energy only. There is a good deal of legislation in place. In virtually every area we have to come forward with a major Bill for various regimes. Is it time to look at the oil exploration regime?
I note there is a vote. I cannot come back because I have another appointment at noon.
I thought the Minister would have been paired.
That is fine but I have another appointment at noon. I was told I would be here from 10 a.m. until noon.
Therefore, the Minister will stay.
If I am paired, that is fine but I have a noon deadline. I am sorry.
Some of us will have to leave. I have three or four questions for the Minister, the most urgent of which concerns the grid code for wind energy, about which we are still talking. When will these matters be resolved because it came as a surprise to us in the Opposition to learn a few months ago that we had such problems in the area of wind generation. What is the timeframe?
On the wind energy grid code, a report was due in July but we have now asked that a final report be issued to the CER by the end of April. We are trying to fast-track it, although I accept there are difficulties.
On the Corrib gas field-Moneypoint issue, I am not being circumspect in regard to Moneypoint. We have to wait and see what decisions will be made by the ESB. The Government will then make a decision.
The Corrib gas field will not be huge in the scale of things but there is potential. Most are speculative. If it happens, there may well be knock-on effects.
There is much hogwash about the favourable terms offered for all of our oil and gas exploration operations. One Deputy seems to have a thing about it. No company has benefited from the royalties on the so-called favourable returns. In that respect we have been spectacularly unsuccessful in attracting foreign investment.
I have to leave because I am acting Whip.
Is there any PSO factor in delivering gas supplies throughout the country because as we all know, if the matter is left to Bord Gáis, there will not be any gas supply north of a line from Dublin to Galway or east of Dundalk because it will not be commercially viable? We are into the capacity before demand argument. I accept it will be more likely if supplies are brought ashore from the Corrib gas field but if not, is there a plan B?
There is no PSO because gas is an optional source of energy. Electricity is not. That is the reality.
That is a shame.
Where do we start and stop?
We are the poor relation in the north-west.
On a plan B, the Corrib gas field project is a private commercial operation. I have not seen any plans.
Therefore, it is the ESB for the foreseeable future in the north-west.
We have been very successful in attracting two substantial players, Veridian and Synergen, into the market, and there are further possibilities. I am getting a message, Chairman, that I may not be paired for the vote. I do not think I am.
I have finished my questioning.
Should I go?
I am not paired officially either.
Perhaps the Minister will give us his views on the Corrib gas field. The Government has spoken about fast-tracking the planning system to prioritise issues of national importance, of which the Corrib gas field is one. We have a significant gas resource off our coastline and the State has not managed to facilitate the bringing ashore of supplies. This is extraordinary. Does the Minister have any views on the matter? I realise we need to go through the long drawn out planning process involving An Bord Pleanála. The Minister for the Environment, Heritage and Local Government, Deputy Cullen, has looked at the possibility of making things happen, particularly on the waste management side, yet in bringing gas supplies ashore, there appears to be a non-interventionist approach on the part of the Government. The sooner we can get supplies ashore the better.
Some Deputies were very critical of the Taoiseach, the Minister for the Environment, Heritage and Local Government, Deputy Cullen, and me for meeting executives of the promoting company but we only met them to tell them they had to comply with all of the conditions attached to planning permission and that there was an independent statutory process. There are people who are looking at this very carefully. It is a commercial venture. From a strategic national point of view, we would like to see supplies being brought ashore but whoever brings them ashore will have to comply with all of the conditions attached. That is one of the reasons the Government decided to move rapidly on a new critical infrastructure Bill. However, there are issues to be addressed, including the transmission of electricity. We need to have the infrastructure put in place in a planned way to allow development to take place in due time. We would like to see the Corrib gas field issue resolved from a strategic point of view but we cannot force the issue because every company must go through the procedures.
As regards emissions trading, there is concern that the trading market mechanism for electricity being proposed will make it difficult for anyone to predict the distribution or dispatch of power and that as a result it will be almost impossible to get financial backing for new power generation systems. There is disquiet in the industry that the new power generation systems will not be built because the mechanism being proposed is so complicated and unattractive.
I am sorry but I must leave. I do not usually miss votes in the House.
I thank the Minister and his officials. We have had an interesting question and answer session. The members of the joint committee are probably aware that a colleague, Micheál O'Driscoll, will retire tomorrow after 30 years service in the Department. I understand he was highly respected within the industry because of his technical expertise. On behalf of the Chairman, Deputy O'Flynn, and other members of the committee, I wish him well in the future and thank him for his great contribution to the marine sector over a long period.
Mr. Martin Brennan
Thank you, Chairman. I assure you that your remarks will be conveyed to him.