It is an honour and privilege for me to address this motion this evening and I commend the Senators who proposed it for affording me the opportunity to do so.
While debate in the Oireachtas since the formation of the Government of Renewal has focused primarily on overall policy issues — with the emphasis of late on its fiscal and economic policies — it is timely that the Legislature should now focus attention on the pillars on which overall Government policy is constructed. One such crucial pillar is in the energy area and, in particular, in the energy conservation and renewables sphere. While the two areas are inextricably interwoven, for the sake of clarity I propose to cover them separately. However, first let me set out Government policy objectives in these areas as enunciated in the policy agreement A Government of Renewal.
That policy agreement recognises the economic as well as the environmental case for energy conservation. It subscribes to the belief that progress must be made in this area through a combination of incentive and charges. To this end the following objectives are set: to contribute to the preparation of a pan-European taxation policy on carbon and fossil fuel inputs, commonly known as carbon tax; to implement a national energy conservation programme for local authority housing and the homes of those living on low incomes; the provision of advice and support for improved energy use in business, including an examination of extending the BES to those companies which would install energy saving technologies; the strengthening of the policy making function of the Department of Energy in order to oversee a coherent national energy policy guiding the activities of the State energy utilities — the ESB, BGE, Bord na Móna and INPC; the setting of targets for electricity generation from renewable sources and removing any remaining obstacles such as the lack of proper pricing and adequate incentives to their integration with the national grid. These overall objectives encapsulate a few objectives in this area and are, in essence, the major points of reference en route to policy ends.
The thesis underlying these objectives is fairly straightforward. The message is that energy efficiency and conservation matters to all of us. By using energy wisely we can reduce cost, improve the environment and create jobs in the country, all without sacrificing comfort. Energy wasted is money wasted is opportunity foregone.
Energy is an unavoidable requirement for activity in all sectors of the economy. In a country such as Ireland, where economic development is incomplete, there is an increasing demand for energy. It is therefore critical, from both an environmental and economic perspective, to ensure that such demand is moderated and efficiency maximised. This can be achieved by raising awareness of the importance of energy efficiency and by ensuring efficient and rational use. Ensuring that energy is consumed as efficiently as possible is one of the three primary objectives of Irish energy policy.
In Ireland, surveys in a number of sectors over the past number of years have confirmed the potential to save up to 20 per cent of current energy consumption and, at present, that 20 per cent final cost to the consumer is the unbelievable figure of £2,500 million per year. That is the saving that could be achieved according to the surveys which have been carried out on a 20 per cent reduction of present use, by the effective use of that energy. Government programmes in recent years have increased awareness, but it is recognised that an enhanced and concentrated effort in that regard is now needed. The promotion of energy conservation is therefore identified as a high priority for the Government.
There are, of course, many ways in which one can look at the cost of energy conservation. These varying views, such as the macroeconomics' view, the environmental view and the social view, place different demands on Government. It is a function of Government to adjudicate on the various competing and conflicting demands and to chart a balanced and reasoned policy response. That policy response must reduce energy consumption, improve the environment, enhance industrial competitiveness, contribute to employment, respond to EU policy, demonstrate benefits of energy conservation and increase the awareness of energy efficiency.
The Economic Infrastructure Operational Programme sets out clearly what we hope to achieve in the energy conservation and renewable areas up to the end of the century. I am happy to say that we have already begun to see results. The highlight of the energy conservation element of the programme is the establishment of an Irish Energy Centre. The driving force behind the establishment of the centre is the need to give a renewed impetus to the energy conservation area. Policy in this area has tended down the years to be reactive rather than proactive. That is not to denigrate the very valuable work done in the past, especially when most needed at times of energy crises.
Maintaining an energy conservation presence has now paid dividends on two fronts especially: a body of expertise has been built up and will be quick to deliver on the new programme initiatives and real resources have been allocated to the sector for the period of the Operational Programme 1994-99. A total of £36 million is being made available to the conservation and renewable area in a combination of EU and Exchequer funds over the operational programme period.
The purpose of the Irish Energy Centre is to devise and deliver energy conservation grant schemes on behalf of my Department, to deliver technical advice on energy conservation issues to all sectors of the economy, to raise energy awareness levels throughout the country through publicity, promotional and information campaigns and to co-ordinate the different aspects of the overall energy conservation programme.
The Irish Energy Centre is a novel departure in public service terms, with an independent public profile and linked to a National Energy Advisory Board. The centre is a joint initiative between my Department and Forbairt and will be funded primarily through a mixture of Exchequer and EU moneys. It will have a budget of £21 million approximately over the next five years.
In one of my first ministerial acts in this new area, I finalised the Memorandum of Understanding with Forbairt necessary to solidify the IEC's standing and to formally launch it. This is a unique accommodation between a semi-State agency and a line Department other than its parent Department. It is an arrangement which overcomes some of the inherent rigidities in the public policy system and it is a model which could be used elsewhere. It allows for a target driven relationship between my Department, Forbairt and the Irish Energy Centre. One of the targets is the realisation of energy savings of £50 million by 1999. My Department is in the process of agreeing a whole range of ambitious targets with regard to all the centre's activities. In addition, the centre is a State agency and I would encourage industry and the public to use it to the full.
The establishment of the Irish Energy Centre recognises that, in order to promote energy efficiency effectively, it is necessary to create a new culture with regard to energy consumption, to provide detailed advise and expert guidance with regard to best practice in individual centres, to encourage the development of companies offering energy audit facilities and advise and provide incentives to companies to invest in new systems and technology. A proper infrastructure is required to develop and co-ordinate activities within this programme and the centre, with its regional presence, responds to that need.
The Irish Energy Centre has already launched a number of measures, and others are at an advanced planning stage. Already there are two grant schemes in place, the energy audit grant scheme and the energy efficiency investment grant scheme. Under the audit scheme, grants of up to 40 per cent are available to energy users in the industrial, commercial and institutional sectors towards the cost of hiring consultants to conduct energy audits and to advise on the steps to be taken to improve energy efficiency. A total of £1.6 million is available for this scheme.
Under the energy efficiency investment scheme grant assistance will be provided to energy users in the business and institutional sectors for investment in energy efficient technologies. This scheme covers the implementation of the recommendations of energy audits and provides grant support for investment in targeted energy efficient technologies. A total of £3.6 million is available under this scheme.
The industrial sector is one of the most reactive to financial signals. The impact of expenditure in the sector is relatively easy to measure. The services sector is no less reactive. However, the services sector's costs are not a significant element of its overall expenditure. Nevertheless, this sector is an important user of energy and it is therefore important to encourage energy conservation. This measure addresses both sectors.
The provision of technical advice is an important element of the Irish Energy Centre's remit. This covers the provision of technical advice and support to industrial and commercial companies, including seminars on specific energy conservation, and an initial point of contact for advice on energy efficiency matters will be provided. In addition, the preparation and publication of a series of good practice guides on critical areas will be provided. Aspects, such as the efficient use of fuel, will be covered and action will be taken in specific subsectoral areas, including the agri-food and dairy industries. Each good practice guide will have the back up of workshops held on a regional basis. The provision of training for architects, surveyors, engineers and managers in energy analysis skills will also be provided, which meets the point made by Senator Henry.
As I have already indicated, the Irish Energy Centre will be organised on a regional basis. In this regard, the centre recently invited proposals for regionally based bodies, who would provide national services in the areas of renewable energies and professional training in energy conservation and efficiency. The Irish Energy Centre will place contracts of two to three years duration for the operation of two such offices. These offices will be located so as to give the Irish Energy Centre a real presence throughout the country. It is, therefore, a truly national initiative. These new offices will complement the existing outlets at Sligo and Cork.
The centre's promotional work will include initiatives such as the co-ordination of an annual national energy awareness week, market research on energy conservation attitudes and a series of education initiatives such as the current transition year display project and a cross-Border schools project. These educational projects seek to involve and interest schoolgoers in energy conservation issues. An interest forged at an early age tends to remain with children and, additionally, they also get their parents involved in these projects.
The cross-Border project is a joint initiative between the Irish Energy Centre and Co-operation North and one which my Department has been very pleased to support. As well as encouraging the study of energy related topics, the project helps to build understanding between the participating students, North and South, as the prizes involve an exchange programme. Further promotion through the sponsorship of the high profile television programme "Our House" will continue and also the use of appropriate media to increase the profile of energy conservation and efficiency.
Funding will also be provided for initiatives which will promote the energy conservation message. Actions to be carried out will include encouraging the establishment of audit and house certification companies, to which I will refer in more detail later: developing companies to help provide energy conservation measures for the elderly and low income groups, to which I will also return later; and examining the potential for using renewable energy sources.
The National Energy Advisory Board is another important element in the renewed vigour with which energy conservation and renewables issues are being tackled. The board is interposed between me, as Minister, and the centre's executive and is charged with the task of co-ordinating the implementation of Government policy in relation to energy efficiency, renewable energy and research across the various energy utilities.
The board's membership is drawn from the ESB, Bord na Móna, the Irish National Petroleum Corporation, Bord Gáis Éireann and the social partners. It provides a cross sectoral forum within which to examine the progress of programmes in these fields. It also avoids unnecessary overlap between the agencies. It has also a key role in identifying gaps in the overall strategy and proposing measures to fill these. It allows for more co-ordination in the energy conservation and efficiency efforts of the individual members of the board.
I will now deal with the area of renewable energy, for which I thank Members for homing in on in their contributions so far. Renewable energy offers undoubted benefits, both in terms of sustainable development and protection of the environment. Some renewable technologies are already economically competitive today; others could become so in five to ten years. This development process must be encouraged and supported.
It is of interest to note that only 2 per cent of Ireland's energy requirement is currently being provided by renewables and, in line with current overall EU trends, the biggest contributor to this share comes from biomass, particularly wood. However, other renewables such as hydropower, wind and solar energy are also represented. It is this increasing degree of diversification in recent years which is, perhaps, the most welcome trend.
The main initiative at the moment is the ongoing alternative energy requirement scheme being run by the ESB at the request of my Department. Under this scheme, independent contractors will develop up to 75 megawatts of new installed electricity generating capacity utilising alternative energy sources by 1997. The ESB will contract to purchase this electricity. The sources will include combined heat and power and renewable energy such as hydro, wind, landfill gas, biomass and waste, many of which have been referred to by Members.
The scheme known as the 75 megawatt alternative energy requirement comprises a combination of price support and grant aid, the eventual cost of which will be transparently identified and passed on to the consumer by the ESB. The price per kilowatt payable under the AER is set down in two tariffs for contracted electricity purchase — an average of 4p for renewable energy generators and 3p for combined heat and power generators using fossil fuels.
To date, the ESB has assessed the projects for technical merit and issued connection quotes to the successful applicants. These applicants then submitted business plans and grant applications before 3 January 1995 and the ESB assessed them for commercial viability. The ESB finalised a set of recommendations to my Department which were received in my office yesterday evening. The ESB report is currently being examined by my officials and a final decision on the precise contribution to be made by each technology will be made by me in the very near future.
Following the completion of the competitive process, it is intended to build on this scheme and the setting of further policy will be determined on the basis of conclusions drawn from the current scheme. I am very pleased by the healthy and enthusiastic response to the present scheme with applications far exceeding the available 75 megawatts. This is a factor which will be very much to the fore in my examination of the future options.
Regarding the domestic sector, the following initiatives are at present being pursued. My Department is currently in consultation with the Department of the Environment on the implementation of a national energy conservation strategy for local authority homes. Indeed, I am proud to recall from my time at the Department of the Environment that I was responsible for two major initiatives on local authority housing. I sanctioned the installation of full central heating systems in houses — the practice up until then had been to install back-boilers or ranges with no radiator outlets. Additionally, I sanctioned the replacement of external doors and windows with more durable hardwood or weather proof material. Both these initiatives increased the comfort levels in local authority homes and, of course, contributed to energy conservation.
As mentioned earlier, in a separate initiative the IEC and my Department are currently devising a strategy targeted at the homes of the elderly and those on low incomes. This will entail the extension of the energy action model, which will be known to many Senators. We plan to tap into the dynamism of the local area or community approach which is involved in energy action. In addition, the Irish Energy Centre is currently working on an energy conservation booklet for households.
My Department is also in consultation with the Department of the Environment regarding the amendment of the building regulations. This amendment arises from the need to strengthen the energy conservation elements of the regulations so as to provide for the energy ratings of buildings. Home energy rating is a priority for my Department and a pilot scheme has been running for the last two years. Rating involves a measure of the energy use of a home or building and it provides an index against which the relative energy efficiency of a house can be assessed. It is the equivalent of the miles per gallon usage of a car and would, in the same way, provide invaluable information to home owners and prospective tenants and purchasers. My Department is committed to the widespread adoption of home energy rating and is, at present, pursuing the matter vigorously with the Department of the Environment.
The IEC, as mentioned already, and of course the ESB through its demand side management initiatives, will deliver advice and support right across the business spectrum. A large part of the thinking behind our energy conservation programme was the growth of service and support companies in the independent sector and the creation of new jobs there. The programme will create the conditions for that growth to take place and these companies will complement the activities of the centre and the ESB.
The implementation of an energy policy has to have due regard for its potential effects on the environment. There is close co-operation and consultation between my Department and the Department of the Environment to ensure that energy considerations are integrated into environmental policy and environmental considerations are implemented into energy policy.
In essence, the primary objective is that a balanced approach is pursued and that any environmental measures which are adopted should not lead to the imposition of excessive energy costs on industry and other economic sectors with little or no environmental benefit. The recent establishment of a green network of Departments has given added impetus to the integration of environmental considerations into key sectoral policies and general decision making processes. This is a formal forum where representatives from key Departments meet on a regular basis to consider current environmental developments and how they might impinge on their spheres of responsibility.
It is also true to say that the increased emphasis being placed by the Government on energy conservation and efficiency and on the development of renewable energy sources will also be environmentally friendly and will contribute to the realisation of our targets for the stabilisation and limitation of greenhouse gas emissions and acid particulates.
We are in times of great change in the energy sector and, as has been said by a number of speakers and as I said at the outset, I welcome this debate and the contributions made on all sides on the House. I am taking careful note of contributions made and I look forward to fulfilling the invitation issued to me by Senator Cassidy to return in a year's time and to account for my stewardship as to how I have managed the brief.
