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Joint Committee on Transport and Communications debate -
Thursday, 21 Mar 2013

Scrutiny of EU Legislative Proposals

I remind members to turn off their mobile phones when attending meetings. We have received apologies from Deputies Terence Flanagan and Ann Phelan.

No. 1 is a meeting with officials from the Departments of Transport, Tourism and Sport and Communications, Energy and Natural Resources. The purpose of this part of today's meeting is to hear from officials from the Department of Transport, Tourism and Sport and the Department of Communications, Energy and Natural Resources on COM (2013) 18, a draft EU directive relating to the deployment of alternative fuels infrastructure.

On behalf of the committee, I welcome Ms Laura Behan and Ms Denise Keoghan of the Department of Transport, Tourism and Sport and Mr. John Rice of the Department of Communications, Energy and Natural Resources. I wish to draw their attention to the fact that, by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if witnesses are directed by the committee to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. I also wish to advise that any submission or opening statement submitted to the committee will be published on the committee's website after this meeting. I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable. I invite Ms Behan to make her opening statement.

Ms Laura Behan

I thank the Chairman. Together with my colleague from the Department of Communications, Energy and Natural Resources, we hope to be able to address for the committee the issues and concerns that arise for Ireland in considering this legislative proposal.

This proposed directive on the deployment of alternative fuels infrastructure was published at the end of January. To provide some background to the development of this proposal, the European Commission's March 2011 White Paper, the Roadmap to a Single European Transport Area, called for a reduction in the dependence that transport places on oil supply and set targets for reductions in greenhouse gas emissions of 60% by 2050. In the White Paper, the Commission announced it would develop "a sustainable alternative fuels strategy, including the appropriate infrastructure" and provide "guidelines and standards for refuelling infrastructures".

Concerned by the slow attainment of alternative fuels infrastructure across the EU, the Commission considers that, along with the lack of common technical standards, this represents a major obstacle to the market introduction of alternative fuels. It has, therefore, developed a proposal for a directive which aims to deliver a build-up of alternative fuels infrastructure conforming to common technical standards so as to facilitate a quicker transition to cleaner transport.

The proposal contains mandatory requirements for the extent and coverage of alternative fuels infrastructure for transport and also common technical standards for their construction and interoperability. The main alternative fuel options that could replace oil as the primary fuel source for both road and maritime transport are identified as electricity, hydrogen, bio-fuels and natural gas in the forms of compressed natural gas, CNG, liquefied natural gas, LNG, or gas-to-liquid, GTL, and liquefied petroleum gas, LPG.

The draft directive would require member states to adopt and publish national policy frameworks for the market development of electric, hydrogen, bio-fuels and natural gas refuelling infrastructure. Member states would be required to co-operate with one another, either through consultations or joint policy frameworks, to ensure measures would be coherent and co-ordinated.

To assess fully the implications of these proposals for both transport and energy infrastructure investment, consultations within our two Departments and with key stakeholders have commenced or more will be undertaken shortly. However, based on our initial assessment of the proposals, the Irish Government position could be summarised as follows. In matters such as common standards, action at an EU level will be required to ensure market harmonisation and acceptance of refuelling equipment by users across the EU and, therefore, the technical common standards should be supported. It is also the case that strong action will be necessary if Ireland and the EU are to achieve overall greenhouse gas emissions reduction targets. This proposal will set minimum requirements for alternative fuels infrastructure across the EU and it is likely that EU-wide targets such as this would give increased reassurance to car manufacturers and investors in making the long-term investment required to speed up the shift to lower emission vehicles.

Mindful of the need to ensure measures are proportionate and cost-effective, however, the role of national policymakers in setting targets within individual member states needs to be considered further.

While the targets for CNG refuelling points and electric vehicle charge points do not appear at this stage to be overly onerous, careful consideration is required as to how these targets could be met and how and by whom they would be financed. Additionally, there are no LNG facilities in Ireland and practical implications, including the associated high costs of the proposed obligation, require further analysis. Consideration will also be required as to whether there should be flexibility in the directive for member states to amend targets to reflect technological and market developments that may take place over the period concerned.
Discussions on this file have commenced under strong Commission impetus, although they remain at a very early stage. Only one meeting of the working party on intermodal questions and networks was devoted to it prior to the transport Ministers exchange of initial views on the proposal last week at Council. Although very preliminary and caveated by transport Ministers, given the very recent publication of the proposals and the essential consultations between transport and energy Ministries on national implications, the tone of contributions was generally very supportive of developing the market for alternative fuels in the EU with a great deal of caution expressed, however, regarding the imposition of binding national targets for refuelling infrastructure networks.

I thank Ms Behan for her opening statement.

Is it true that no bus operator in the State uses alternative fuels?

Ms Laura Behan

I believe a gas-fuelled bus was operated by Dublin Bus on a pilot basis for a few years, but I do not believe it worked out technically. It was not initially built as a gas-fuelled vehicle and was converted, and there were some technical difficulties.

The engine was not designed for that kind of fuel.

Ms Laura Behan

It proved difficult as a result.

Apart from that, no other bus operator is using alternative fuels.

Ms Laura Behan

Not to my knowledge.

Mr. John Rice

There is a 6% bio-fuel obligation in place at the moment so all road transport has an element of alternative fuels in it. However, to my knowledge none is running exclusively on alternatives.

The fuel used has a bio-fuel component to it.

Mr. John Rice


No bus operator is using 100%. I was on holidays in Oporto in Portugal a few years ago and every bus had a sign stating that the bus was using alternative energy.

Ms Laura Behan

The technology is quite widespread in Europe. In a number of EU member states many of the public transport operators have buses that are gas fuelled.

Is the Deputy happy with the response?

Is it a policy to try to persuade bus operators to switch? Does it mean the engines have to be designed? Does it mean getting a new bus fleet?

Ms Laura Behan

It would require the purchase of new vehicles. To our knowledge, the vehicles are not considerably more expensive - they may be 10% to 15% more expensive than conventionally fuelled vehicles. The refuelling infrastructure is the issue there because the installation of gas refuelling infrastructure is expensive. In terms of promotion of it as a policy in Ireland, we are trying to encourage fleets that might be able to be able to invest in a refuelling infrastructure. At the moment it would be a cheaper fuel so there would be benefits to fleets in taking it up, but the initial investment costs are quite high.

Is it technically possible to convert vehicles?

Ms Laura Behan

It is possible to-----

I notice Dublin Bus is buying new state-of-the-art Volvo buses. I would be surprised if they could not be converted to bio-fuels.

Ms Laura Behan

Bio-fuels certainly-----

They are coming from Sweden and I do not know what the situation in Sweden is, but they are Swedish-manufactured buses.

Ms Laura Behan

I imagine they could accept a higher proportion of bio-fuels in the fuel mix, certainly. I am sure the NTA in procuring those buses operated under the criteria set out in the public-procurement directives for the consideration of sustainability criteria in making the purchase. So they would be considered very sustainable buses in themselves.

I thank Ms Behan for her presentation. Unlike what I will be saying on the next paper, this island is of a size and nature where we should fairly easily be able to set up the infrastructure for alternative fuel sources. To what extent is the Department working on a cross-Border basis and dealing with the authorities in Stormont on the issue? I express a note of caution - some people might say I am paranoid-----

Not at all.

-----on the issue of hydraulic fracturing.

Is the Deputy reading George Orwell?

Deputy Colreavy has the floor and he is not paranoid.

The caution is not just for the Government, but also for the EU. When considering alternative fuel options - I note natural gas was mentioned - there is growing evidence that the emission rates from fracking for gas is much more severe than the emission rates for securing any other form of fuel. If this is part of a clean air policy, it should specifically exclude fracking for gas. It is like taking out a bad appendix and putting a worse one into the patient. I doubt if that would work.

Ms Laura Behan

I will address the cross-Border question first. ESB Networks is working very closely with its Northern Ireland counterpart on the electric vehicle-refuelling infrastructure. They have jointly applied to the EU for TEN-T funding for the fast-charging infrastructure. Standards and absolute interoperability apply across borders on electric-vehicle recharging. We are already in discussions with our counterparts in the UK on this directive and the application of the additional infrastructure network that will be required. For example, if the directive were to require a compressed-natural-gas refuelling point every 150 km, we would obviously co-ordinate with our Northern Ireland colleagues so that would also apply on a cross-Border basis to ensure that roads across the order would be encompassed in the same network.

I believe that fracking is beyond the scope of this directive. In terms of the use of gas in Ireland, I imagine that the gas that would be used would be gas that is fed into the natural grid, which currently is not in any way derived from fracking.

I thank the officials for the presentation. How realistic are the targets that have been set? We have experience of unrealistic targets where semi-State companies, primarily, represent a huge obstacle to change. In particular, I cite Bord na Móna in the use of renewables. It is not in its commercial interest to change or adapt in any way to use alternative sources of biomass, for instance, as a derivative for energy. Realistically unless somebody can sweep our semi-State companies objections and lack of co-operation out of the way, I cannot see these targets being met. My experience is - the Department of Communications, Energy and Natural Resources would back this up - while the Department will outline policies and put schemes in place, the semi-State companies will just not play ball. How will that mindset and culture in our semi-State companies, particularly Bord na Móna, change?

I thank Ms Behan for her presentation. She stated that all proposals for alternative energy would involve high costs. That seems to be a common theme regardless of what we are considering - wind, wave, ocean bed currents etc. As an island nation we have plenty of these resources, which will not increase in price like oil.

The ocean and the wind will always be there. Some parts of our country are more subject to wind than others.

Asking my next question might not be fair, but I will ask it anyway. I acknowledge the co-operation between Northern Ireland Electricity and the southern interconnectors and the benefit this brings to both sides of the political divide. On what alternative energies should our Government focus all of our resources? The year 2020 will come and go without us having reached our targets. How is that work going?

Ms Laura Behan

I will answer the first question on the optimistic nature of the targets. It is true. The Commission has set out targets in a directive on the basis of its impact assessment. It conducted an analysis of our plans for electric vehicles, EVs, and examined the levels of urbanisation and vehicle ownership. Some people consider the targets to be fairly steep, particularly in terms of the EV refuelling infrastructure. The target for compressed natural gas is less onerous at one per 150 km. Only time will tell whether the targets are overly optimistic in terms of take-up. There are seven years between now and 2020 and there may be a high take-up of electric vehicles in the intervening seven years.

Most member states have identified that setting targets now for unknown fleet numbers in 2020 is something that we may need to bear in mind when negotiating the directive. For example, a review clause may need to be inserted for three years down the line to determine whether the targets are feasible in light of developments in the intervening period. The nature of the targets will be a matter for negotiation. Listening to the transport Ministers around the table, we are not alone in believing that we may need to reconsider the targets to make them non-binding if infrastructure is not being developed quickly enough to meet the level of vehicles in the market or to insert a review mechanism to determine whether the targets are still appropriate a few years down the line.

I do not want to disagree with Ms Behan, but the Department is operating in a vacuum. It will devise an agreed target with the European Commission and put an incentive scheme in place. We are dependent on commercial semi-State companies to buy into the scheme. Recently, the Government put in place a refit scheme for biomass, but Bord na Móna did not want to opt into it because there was a more lucrative scheme, the public service obligation, PSO. This at a time when the Government is trying to achieve renewable energy targets. The intransigent block in the middle of the road was not involved in the negotiations between the State and the Commission. Unless commercial semi-State companies are involved at an earlier stage and made to pony up to their obligation to deliver on behalf of the shareholder, the Minister for Communications, Energy and Natural Resources, and follow the Government's policy statements, we will not be able to achieve anything.

Ms Laura Behan

I will let Mr. Rice add to my response if he wishes. From our initial consultations with ESB Networks and Bord Gáis Networks, they have been enthusiastically pursuing the rolling out of this infrastructure. I am not sure whether the roadblocks to which the Deputy referred will apply in this instance. The Commission has not stipulated how the targets should be achieved. It also sees a role for the private sector. The semi-State companies will not necessarily deliver on the infrastructure networks. We must work out how the Government will deliver on the targets and whether the semi-State companies will be the mechanism through which that will be done. We must bear in mind that the cost would be passed on to the consumers of gas and electricity. So far, I have not got the sense that the semi-State companies will pose an obstacle.

There was no sense of that before the last Government-designed scheme either.

Could a mechanism be put in place to encourage them instead of just using the stick?

Ms Laura Behan

That is probably more a matter for the regulator.

When the Government puts in place a financial incentive and sets out a renewable energy policy objective in the programme for Government, yet a commercial semi-State company does not play ball, I do not know what can be done.

Does Mr. Rice wish to comment?

Mr. John Rice

To somewhat repeat what Ms Behan has stated, ESB has made serious progress in implementing the roll-out of its public charging infrastructure and expects to have 1,000 points within the next year or so, half of the draft directive's target. I do not anticipate a problem. In fact, ESB is in the vanguard of EV infrastructure and the relevant smart technology, even in a European context. Recently, it was successful in a European competition to secure funding.

The directive is agnostic in terms of how member states should engage with the market to achieve targets. In an Irish context, careful consideration must be given to determining how to implement and fund these measures and who will be responsible for both aspects.

In the midst of the complexity, there is a certain simplicity. If one works on the basis that the Government and society should make it easier for people to do the right thing, then people should be able to travel more cheaply by using alternative fuels than they can by using oil. We are discussing putting in place infrastructure that makes it easy for people, companies and organisations to do the right thing.

If someone seeks planning permission for a filling station, do our planning regulations require an alternative fuel point? If not, why? This is a simple matter. If I seek planning permission for a house, the size of my door and the house's distance from the road will be specified, yet our planning permission for filling stations does not require them to be ready for the next decade of travel, never mind the next century. We need to get on top of these simple matters.

Although the next issue I wish to raise is not within the Department's brief, it must be handled by someone. I spoke with a number of people who have alternative energy sources. One had an anaerobic digestion system. When seeking a connection to the nation grid, the quote received effectively made the project unsustainable. It was €250,000, €500,000 or something like that. That is outrageous.

As we are considering high-profile interconnectors and major infrastructural products, we have taken our eyes from small projects that can be done. We must make it easier for people to do the right thing. The people coming up with realistic alternative energy sources should find it easier to get on the national grid. Is that within the brief of the witness?

Ms Laura Behan

It is not within my brief. We must be careful because gas and electricity are regulated sectors, and the cost of such products must ultimately be borne in the pricing to someone. It would be very difficult for us to comment on pricing, which is ultimately a matter for the regulator.

It is a different area.

With respect, somebody needs to examine the area.

That is another issue.

If there are impediments to doing the right thing, we should address them and somebody must be responsible.

That is for another day but we will bring it to the attention of the Department.

Ms Laura Behan

Senator Brennan had a question about the high costs of investment with alternative energies and it is undoubtedly true that there are high initial costs, particularly when infrastructure has not been in place before. It is also the case that they tend to be cheaper to operate in the longer term. It is a case of managing the issue of getting over the initial high investment costs to allow the likes of wind energy to be used through electric vehicles, which could recharge using wind energy at night. It is a good fit and that would be a cheap source of fuel for vehicles. Initial investment costs would need to be overcome and how those costs would be borne by the Irish taxpayer or consumer of energy must be worked out in the development of this directive.

Perhaps I am missing something. As far as I am concerned, wind is free, along with waves and ocean bed currents. We do not have to worry about a calm day, for example. The expense must come down if we are to speak about alternative energy from wave, wind and ocean bed currents. Perhaps the infrastructure is expensive but I am sure there is payback in that we would not have to import more fossil fuel, for example, and costs would be minimised.

Mr. John Rice

I fully agree that the objective of the support schemes and the move to renewable energy is to ensure cheaper, more secure energy supply for all users within the European Union. The current schemes which support renewable electricity, for example, are designed to encourage the development of wind bioenergy in the most cost-effective way. Fuel costs are low for wind or ocean technologies but significant capital investments are required and even connections to the grid must be paid for. The prices in the tariff supported under the refit schemes are designed not to overcompensate developers but rather give them a fair return, ensuring the price of electricity is not prohibitive to the consumer.

Will it ever come down?

I thank members and officials. We will deal with the issue further in private session. I appreciate the witnesses coming here to inform us.

Before we move on, is it possible for the Oireachtas Library and Research Service to do some research on the cost of connections to the national grids in other jurisdictions?

It may be overly burdened. It is doing some work on the post office system and bullying at the moment.

Sitting suspended at 10.35 a.m. and resumed at 10.38 a.m.

We are meeting officials from the Department of Transport, Tourism and Sport. The purpose of this part of the meeting is to hear from officials on EU legislative proposals relating to the fourth railway package, specifically COM (2013) 26, COM (2013) 27, COM (2013) 28, COM (2013) 29, COM (2013) 30 and COM (2013) 31. I welcome Mr. Fintan Towey, Ms Andrea Lennon and Mr. Peter Carney before the committee. We have read the privilege warning, as the witnesses know, and we can go straight to the presentation.

Mr. Fintan Towey

I welcome the opportunity to brief the committee on the proposals under the European Union's fourth railway package and further discussion on the potential impact of the proposals for the rail market in Ireland. The Chairman has already introduced my colleagues. To assist the committee, the Department has prepared a briefing note on the proposals and I understand this has been circulated to members.

The objective of EU railway policy over the last two decades has been to reverse the Europe-wide trend of rail passengers and rail freight traffic shifting from the railway to other transport modes. In particular, rail transport in Ireland faces major competition from the road-based transport modes, especially since the completion of the major inter-urban motorway network. For Europe's railways to gain, or even to retain, their share of the market, it must be ensured that railways can deliver a high quality, reliable and efficient service that is also environmentally friendly.

The European Commission 2011 White Paper sets out the objective for a single European railway area whereby administrative and technical barriers are removed allowing ease of access to railway markets. The proposals under the fourth railway package deal with greater market access, in particular, the amendment to EC Regulation 1370/2007 dealing with opening of domestic rail passenger markets and the competitive tendering of contracts for public service obligations, PSO. In principle, there is broad support from the European railway industry for further opening of domestic railway markets, with an understanding that there should be protections for existing PSO routes. However, these are politically sensitive issues for many member states.
The recast first railway package, which was adopted late last year, was an important step to reaffirming the structural foundations required for further railway market liberalisation. The Commission ambition is for complete unbundling of the railway infrastructure manager from any railway undertaking. Some of the larger member states view this as a step too far. This view was bolstered by a recent decision of the Advocate General to the European Court of Justice which found in favour of the holding structure model in Germany. The final decision of the court is awaited.
The Commission proposal under the fourth railway package, to amend Directive 2012/34/EU establishing the single European railway market, reflects recent events and allows for an alternative to complete institutional separation of the railway infrastructure manager and railway operator. However, the proposal also puts forward other new requirements for discussion concerning necessary safeguards under any alterative structure, which would ensure non-discrimination of access to the railway market. In Ireland, we are currently in the process of introducing reforms to ensure EU regulatory compliance in the context of the ending of our long-held derogation from certain aspects of the first railway package. This will see a reorganisation of our national rail company, an independent rail regulator and safeguards to ensure non-discriminatory access to the market. In Ireland's case, there is a fine balance to be maintained between ensuring that our railway is organised and positioned in such a way as to be open to the benefits that are envisaged under the single European railway area while, at the same time, to ensure changes reflect the small size and capability of the rail network in Ireland and do not create any undue burdens.
The previous EU railway packages have underpinned the improvement made over the past two decades across Europe in terms of railway safety and technical interoperability of railway systems. In particular, the use of common safety indicators allows us to better measure our safety performance against our European peers. In the areas of technical interoperability of railway subsystems, harmonisation of technical rules can lead to more cost effective and interchangeable components on the market, which can give rise to economic benefit, even for Ireland, despite the unique features of our infrastructure such as rail gauge.
The fourth railway package recognises that safety and interoperability form the cornerstone of an effective and reliable railway system. Proposals for amendments to the safety and interoperability directives under the fourth railway package seek to refine and build upon the regulatory framework established under the previous packages. During the Irish Presidency, progress will be made on these technical aspects of the European Commission's proposal. Further improvements in these areas will form the basis for overcoming other obstacles to achieving a fully integrated rail system in Europe. Towards this objective, the fourth railway package proposes a central role for the European Railway Agency in the areas of common safety certification and systems for the placing into service of vehicles and command and control systems. The future relationships and optimal distribution of responsibilities between ERA and the national safety authorities in member states is a matter for further discussion under this proposal.
Under previous European railway packages the introduction of standard training requirements across Europe has been of benefit to the railway workforce in terms of greater opportunity for employment mobility within Europe. While there are no specific proposals in the fourth railway package addressing workforce issues, in its official communiqué, the European Commission acknowledges the need for protections for workers in the context of further railway market reform under the proposals for market opening and the competitive tendering of PSO contracts.
Ireland has in the past argued that physical and geographic limitations prevent compliance with the EU railway model. Ireland does not have a rail connection with the mainland rail network of Europe. However, we share a rail network and our 1,600 mm. rail gauge with Northern Ireland, which differs from the standard rail gauge in Europe. Furthermore, the Irish rail network is small by comparative standards with a total length of 2,400 km. covering inter-urban and suburban commuter service. However, there are potential benefits to be gained through the regulation of common European standards, in particular with regard to railway safety, but also in the area of technical interoperability of railway systems across Europe. The proposals under the fourth railway package will build on the regulation of such standards. Furthermore, the ongoing development of transparent and non-discriminatory systems for access to the rail market envisaged under the fourth railway package is necessary to support future opening or access to the railway market, even in Ireland and potential benefits that this might bring. I thank the Chairman and members of the committee. My colleagues and I will be glad to deal with any questions.

I thank Mr. Towey for his detailed breakdown of what we are at. What are the consequences of this package for Irish Rail? Will tracks have to be taken up because they are not the standard European rail gauge? What will be the consequences for the employees? What will be the consequences for lines that are threatened with closure because they are not being used? Will there be an advantage for them and for the west and others parts of the country that Irish Rail is subsidising? We need clarification on those issues. Should the 2,000 people working for Irish Rail be worried if this package is implemented?

Mr. Fintan Towey

This package is building on the foundations that have been laid to develop a regulatory model that provides for the provision of rail services on a competitive basis and for the opening up of PSO contracts to tendering. The freight market was liberalised in Europe from 1 January 2007 and the international passenger market was liberalised with effect from 1 January 2010. Ireland had a derogation from the implementation of those requirements until now and, therefore, there are two separate things happening. On the one hand, the derogation Ireland has availed of has been brought to an end-----

Is that finished?

Mr. Fintan Towey

That is finished. Second, a new package of measures is on the table which will extend liberalisation across Europe. The immediate implications that arise from the ending of the derogation are that we have to apply the regulatory model for a competitive framework. The major element of that is we have to ensure we have full accounting separation of the functions within Irish Rail that are related, on the one hand, to the network and its maintenance and, on the other, to the provision of train services. That has been implemented by the railway company. There is a range of further measures but two are of particular significance. One is that we need to establish an independent regulatory body responsible for economic regulation of the railway market and the second is we also have to establish an independent function to ensure the charges for access to railway tracks and the procedures for allocation of capacity of the rail network are carried out on a basis that is fully independent and does not confer advantage on the incumbent operator. Those are the measures we are working on implementing-----

Will that be a new body?

Mr. Fintan Towey

That will be a new body. It will have a function independent of Irish Rail and the objective is to ensure there are fair conditions of competition.

The new proposals on the table are from the Commission. They have to go through the European legislative process before they ultimately become law and, obviously, they are subject to amendment during that process. The major elements of the proposals relating to Irish Rail are the prospect that the passenger market will be open to competition with effect from 1 January 2019 and public service contracts will have to be opened up to tender with effect from 1 January 2019.

This is not a case of these contracts being automatically taken away from the railway company. Rather, the existing railway company is entitled to participate in a competitive process. There are protections built in with regard to employees. These arise under the existing directive relating to the transfer of undertakings which provides that the rights of employees cannot be affected in the context of a merger or takeover. This existing provision applies in full.

The new regulatory framework does not impact on the capability of a member state to determine what services can be provided through the allocation of a subsidy in the general economic interest. It is not the case that this package would require that a subsidy be removed with regard to particular services or lines. It requires that where a subsidy is provided it must be provided through a competitive process rather than through the direct award process which obtains at present. I am not sure whether I have dealt with all of the questions.

What about the track?

Mr. Fintan Towey

Will the Chairman expand on that point?

I am referring to updating the track.

Ms Andrea Lennon

We have a different track gauge from the rest of Europe. Under the proposals there is no obligation on us to change our track gauge. We have always sought specific cases to be made for Ireland with regard to our different track gauge and we will continue to do so. With regard to the interoperability directive for technical harmonisation, we will continue to seek exemptions for our track gauge.

Essentially, protecting ourselves.

Ms Andrea Lennon

Yes. We will try our best to keep it. It makes more sense to do so than to lift the entire track.

I thank the witnesses for their presentation. The documentation we received before the meeting states with a view to achieving a modal shift of passengers to rail and better value for public money, the opening of the domestic market through the introduction of mandatory tendering of PSO contracts is sought. It is almost as if there is an unstated assumption that mandatory tendering will lead to a modal shift of passengers to rail. Has this been independently verified, validated or demonstrated anywhere?

If we had a submersible rail link between this Ireland and Britain and on to Europe the proposal would make much more sense. I can see how the proposal makes sense on the Continent, but I find it much more difficult to see how it makes equal sense for an island such as Ireland which does not have a submersible link to Britain.

There is to be non-discriminatory access to rolling stock, particularly where there is no well-functioning rolling stock leasing market. I assume the rolling stock here is owned by taxpayers. How will we ensure the taxpayer gets a return on this ownership?

Perhaps my next question has little or nothing to do with the discussion we are having, but it is interesting. Section 1.4 discusses a social dimension in terms of job quality and safeguards. We should probably examine this with regard to tendering for public service contracts in the wider arena.

Mr. Fintan Towey

I will deal with the first issue raised, which is modal shift. The thrust of the Commission's approach in proposing these reforms is that there is enormous scope to drive greater efficiency in the provision of rail services and this is the basis on which rail can regain market share and stem the decline to which it has been subject for quite a long period. With regard to tendering specifically, in the material the Commission states significant efficiencies are to be gained through mandatory tendering and gives examples in Germany, Sweden and the Netherlands in particular of savings in state expenditure on public service contracts of approximately 20% to 30%. In its background analysis and impact assessment, the Commission has presented evidence that mandatory tendering drives efficiencies in the railway business.

I take the point made by the Deputy on the potential benefits of these reforms being reduced somewhat by virtue of the fact that Ireland is an island which does not have a rail link to the Community rail network. It is clear the major benefits to be obtained from these reforms will arise on the European mainland where there is a very extensive network and there are major opportunities to develop new services. The potential benefits are somewhat reduced for an isolated small network. I do not believe this means there are no benefits to be gained. The background to our decision to bring our derogation to an end was that there are benefits to be gained from the application of the European model.

With regard to access to rolling stock, very high fixed costs are associated with the infrastructure of the railway business and with the rolling stock. Accessing the market is only possible where new entrants are able to readily access rolling stock. In markets with more developed competitive structures, such as the UK, leasing companies exist from which railway rolling stock can be obtained by new entrants and competitors. This issue must be addressed in other member states where such structures do not exist. With regard to ownership of the rolling stock in Ireland, some of it is owned by Irish Rail. Some of the rolling stock which has been procured using Exchequer funds in recent years has been subject to a condition that ownership can revert to the State, although I cannot put specific figures on the proportion of the rolling stock to which these provisions apply.

The Deputy's final point on safeguards was more a comment than a question.

I would like to ask some follow-up questions. What will happen from now on? With regard to the ownership of rolling stock, is there a possibility to lease rolling stock? Would it be permissible for the State to establish an agency to be responsible for leasing out the rolling stock?

Mr. Fintan Towey

With regard to the fourth railway package and what will happen from now on, the European legislative process means the Council and Parliament will separately examine the proposals and eventually come to an agreement through the co-decision procedure. The implementation timeframe for the market reform elements I mentioned earlier is 1 January 2019.

The first question is in what form will the proposals finally be agreed and when. It is difficult to state a timeframe. It is not unusual for the European legislative procedure on a major set of proposals to take two years or a timeframe of that order.

With regard to the question on rolling stock, the draft legislation says that it is a requirement for member states to ensure that there are non-discriminatory arrangements in place regarding access to rolling stock. That provision will require some action on our part and we must determine what arrangements should be put in place. We are different from the European mainland because we are an island so have a different rail gauge. It is not simply a case that we can take excess rolling stock from one country and move it to another. That option does not exist. If we are to have an efficient provision of services within the market then we need to ensure that appropriate arrangements are in place to make the best use of the stock of rolling stock.

To directly answer the Deputy's question, it would be permissible to set up a State agency that had ownership of the rolling stock. That is one option but options will have to be examined.

Will the country or Irish Rail incur a financial loss as a result of the provision? Were subsidies provided by Europe?

Mr. Fintan Towey

There is nothing in the package to give rise to a loss in terms of the subsidies payable.

Are there subsidies?

Mr. Fintan Towey


How much?

Mr. Fintan Towey

In the 2011 accounts the payment for public service contracts was €148 million. In 2013 the provision for subsidy is a lower amount. Without being held to a precise figure, it is of the order of €120 million. The current proposal does not affect the payment of the subsidy.

The proposal does not contain anything that would affect the subsidy.

Mr. Fintan Towey

From January 2019, if the proposals are adopted in the current form, the present arrangements for the direct award of the contract to Irish Rail would no longer be permissible and there would have to be a competitive tendering procedures.

It will be a totally different ball game after 2019.

Is it part of this work that the Irish Government must examine the connections between the public road transport system and rail network? Is that outside the scope of this work?

Mr. Fintan Towey

It is outside the scope of this specific work. In general terms, the issue of promoting better intermodal connections is an issue that is being examined in Europe generally. The Connecting Europe Facility is examining better transport connections generally. There are very few journeys that begin and end at a railway station. They begin and end somewhere else so an interconnection with the road network is vital for passengers and freight.

One of the reasons I asked the question is because I represent Sligo-North Leitrim. If one looks at a map of Ireland one can see that the whole of the north-west region is without a rail service, apart from the excellent service provided by the Sligo-Dublin line.

Mr. Fintan Towey

I am from County Mayo so I am conscious of the journey.

Mr. Towey is just happy that the west of Ireland is served. I thank the officials for providing information on all of the European legislative proposals and I suggest that we go into private session to consider our options. Is that agreed? Agreed.

Sitting suspended at 11.05 a.m. and resumed at 11.10 a.m.

We resume in public session to formally agree the 2013 decisions.

With regard to COM (2013) 18, the committee shall write to the Department of Transport, Tourism and Sport and the Department of Communications, Energy and Natural Resources to request them to take into consideration the committee's views and observations and to keep us updated on the proposals. Is that agreed? Agreed.

In respect of the fourth railway package, which is the subject of COM (2013) 26, COM (2013) 27, COM (2013) 28, COM (2013) 29, COM (2013) 30 and COM (2013) 31, I propose we write to the Department of Transport, Tourism and Sport and request it to take into consideration the committee's view and observations and keep us updated on the proposals. Is that agreed? Agreed.

As there is no other business, the joint committee will adjourn until 9.30 a.m. on Wednesday, 27 March when the GAA, the FAI and the IRFU will come before us.

The joint committee adjourned at 11.15 a.m. until 9.30 a.m. on Wednesday, 27 March 2013.