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Seanad Éireann debate -
Thursday, 3 Jun 2010

Vol. 203 No. 4

Energy (Biofuel Obligation and Miscellaneous Provisions) Bill 2010 [Seanad Bill amended by the Dáil]: Report and Final Stages

The Minister, Deputy Eamon Ryan, is welcome to the House. This is a Seanad Bill which has been amended by the Dáil. In accordance with Standing Order 113, it is deemed to have passed its First, Second and Third Stages in the Seanad and is placed on the Order Paper for Report Stage. On the question, "That the Bill be received for final consideration," the Minister may explain the purpose of the amendments made by the Dáil. This is looked upon as the report of the Dáil amendments to the Seanad. For the convenience of Senators, I have arranged for the printing and circulation to them of the amendments. The Minister will deal separately with the subject matter of each related group of amendments. I have also circulated the proposed groupings. A Senator may contribute once on each grouping. I remind Senators that the only matters that may be discussed are the amendments made by the Dáil.

Question proposed: "That the Bill be received for final consideration."

The amendment in group 1 is inserted for further clarification purposes and I propose that it be accepted. It is largely technical in nature.

If I am correct, this has to do with the commencement date of 1 July. This is extremely important because I have been advised that the Bill will not carry the same weight in supporting the bio-fuel industry, particularly in the Wexford-Waterford area, if the commencement date is not fixed clearly as 1 July. I have just received the amendments and I am assuming that is the case. Will the Minister indicate whether I am right in assuming it relates to the commencement date of 1 July? If I am and as I have only one opportunity to speak, I emphasise the urgency attached to having that date included in the legislation. Otherwise, it will fail in a significant measure in terms of what was considered to be its main impact, particularly as the amendments were suggested first here in this House.

I am happy to confirm the Senator's view that the amendment allows for commencement of the Bill on 1 July.

It will commence on that date.

I thank the Minister.

The point was well made by Senator Norris and does not merit repeating, but I express my happiness that the Bill will commence on that date. Speed is of the essence in this regard, as the industry has been telling us from the word go.

I endorse what the Senators have said. I received confirmation that this would be the case and that the Bill would be applicable from that date. I am aware that Green Energy Ireland based in New Ross, one of the very few bioenergy producing companies, is doing quite well and that it is necessary for it to be able to continue and remain competitive. Regarding excise duty, anything that can be done to promote the industry and future investment in this sector should be looked upon as favourably as possible.

We now move to group 2, miscellaneous drafting amendments, amendments Nos. 2 to 4, inclusive, 8, 9, 12, 13, 26 and 27.

The amendments in group 2 are largely drafting amendments and technical in nature. They are inserted for clarification purposes and I hope they will be accepted on that basis.

I welcome the amendments. With the developments in information technology, it is important that information on the specifics of bio-fuel production is made readily available and easily accessed. That is important for clarity purposes and to ensure a level of transparency. On that basis, I welcome the amendments and accept them as progressive.

I appreciate the Senator's support. I agree with him on the points he made on information technology and its importance in every aspect of life.

We move to group 3, specified amount and percentage rate, the subject matter of amendments Nos. 5 to 7, inclusive, and 14 to 25, inclusive.

Amendment No. 5 is inserted for further clarity purposes regarding the value of each bio-fuel certificate to each litre of bio-fuel to ensure compliance with the obligation. Amendments Nos. 6 and 7 are made for further clarity purposes as a follow-up on amendment No. 5. The subsequent amendments Nos. 14 to 25, inclusive, are consequential technical amendments arising from the insertion of amendment No. 5. These amendments are brought forward on the basis of contacts with the industry which raised a question on the extant draft being open to interpretation. The amendments are designed to remove that doubt and I propose that they be accepted on that basis.

I refer to amendments Nos. 5 and 6 which state each obligated party must ensure a specified amount of its road transport fuel is made up of bio-fuel. This amount will be calculated in litres and, according to amendment No. 6, will not exceed 4.166% of a fossil fuel element in the final blend. The problem with this amendment is an issue might arise with domestic producers struggling to meet market demand. That is a real concern. If the figure of 4% was to be decreased or even increased at any stage, the impact it would have on domestic production would be severe, to say the least. It must be ensured, therefore, that domestic producers will be able to cater for any changes, in particular increases. To date, 70% of the bio-fuel supplied has been imported. As I said in the debates on Second and Committee Stages, we must ensure we move from imported to domestically produced bio-fuels or raw materials. Therefore, Ireland's capacity to engage in domestic production must be assessed thoroughly. We must not make it disadvantageous for Irish farmers to enter the bio-fuel production market. The production of bio-fuel crops will be a lifeline for many of our cash-strapped farmers. It is a positive step in terms of the benefits for our farmers and we must strive to ensure it will remain a positive experience for them. We want to encourage domestic production and get the farming community on board. We want to see the bio-fuels used in Ireland produced here. That is the reason I believe strongly that the capacity of domestic producers to meet market increases must be assessed and conditions put in place to make it as beneficial as possible for farmers to produce bio-fuels to be used here. It is important to note in the case of tariff rates that some level of regard needs to be given to what other countries are doing, in particular European countries such as Spain, Germany and Portugal, and beyond, such as Brazil.

It would be prudent and good practice to consider what other member states are doing before a concrete decision is made on the percentage of bio-fuels coming from domestic production in this country. This is necessary for the protection of the very people who will be producing the bio-fuel crops, namely farmers. If we are truly committed to encouraging the domestic production of bio-fuels in Ireland, we must ensure Irish farmers do not feel that they are taking an unnecessary risk before a concrete decision is made on the percentage of bio-fuel coming from domestic production in this country. This is necessary for the protection of farmers who will produce the bio-fuel crops and to whom a high level of protection needs to be given.

I apologise to Senator Norris, who has indicated he wishes to speak, and to Senators Walsh and O'Reilly. I must suspend the House as the Minister is required for a vote and there are no pairs available from the Opposition. Is it agreed to suspend while the Minister votes and to resume immediately thereafter? Agreed.

Sitting suspended at 12.30 p.m. and resumed at 12.45 p.m.

I call Senator Walsh on the third group of amendments.

Following on what Senator O'Reilly said, all we were doing on the various Stages of this Bill was echoing the sentiments of the Minister that the percentage levels should be set commensurate with encouraging investment in this bio-energy area. We must shift towards more domestically produced and manufactured products rather than imported products. We are concerned in particular about products from outside the EU being imported which would disadvantage the domestic market. There could be issues to do with sustainable energy with regard to Brazil. I endorse the points made. If there are to be future changes in the rates, it would be imperative such changes would continue to promote an increase in production. One of the biggest challenges this State will face will be to reduce the level of unemployment. It is unfortunate that a recession which has been triggered by a financial collapse creates a longer period before a return to growth and the generation of employment. This should be the focus of all our attention.

While I understand the prudent caution of Senator O'Reilly, I am fairly confident in the young but very dynamic bio-fuels industry that has been established particularly in the region of County Wexford. It is important we understand that this is within the European context and it is a requirement under European directives among other things. That makes this very important legislation because it introduces for the first time a bio-fuel obligation within the Irish regime, under the terms of which there will be an initial bio-fuel penetration rate of 4.166% and this is to be increased over the years in line with targets set by the European Union. The intention is that by 2020, we will have a 10% penetration of the market, in other words, that 10% of the constituents of diesel, for example, will have to be bio-fuel. As a result of the passage of this Bill, which I expect today, from 1 July 2010, all petrol and diesel on sale in the country will have to include at least 4.166% and that is the important figure mentioned by the Minister. The implication of this provision is serious. It means that 220 million litres of fossil fuel will be substituted with bio-fuels and this will increase to 500 million litres by 2020. This is to be welcomed, despite the caution expressed prudently by Senator O'Reilly. It is good for our environment. We have agreed to reduce carbon emissions as part of our international environmental commitments and I know both the Minister and the Green Party are passionate on this issue. An important step towards reaching the goals will be to increase the use of sustainable and renewable energies which include bio-fuels. It means we will be taking a considerable amount of fossil fuels out of vehicle engines and this has certain positive benefits in terms of the lifespan of the engines and provides for greater lubricity.

Our reliance on importation will be lessened. When these amendments were first mooted in the House we spoke at length about the situation regarding Brazil, for example. The lessening of our dependence is a significant factor in terms both of the economy and of the environment.

A number of speakers mentioned the plant at New Ross. We should pay tribute to the people involved in this project. It also involves the wider community because this company, Green Biofuels, based in New Ross, employs 22 people and this number will be expanded. The figures mentioned in the House were 1,000 jobs and I hope this will happen, particularly in the Waterford-Wexford area where there has been a significant number of industrial closedowns. Also involved is the Wexford farmers' co-operative involving the interests of 4,000 farmers in that area. Waste materials will be used to manufacture this renewable diesel substitute. I have been reliably informed — I believe and hope this information is accurate — this company will be able to produce more than 34 million litres of bio-fuel annually. It is a useful absorption of a number of waste products such as oils of various kinds, including cooking oil and this makes it a second generation bio-fuel. When it is produced, this is equal to minimum savings of 90,000 tonnes of CO2 annually. It was suggested in a previous briefing that this manufacturing technique is so modern and sophisticated that they can capture that release of gas as another by-product. Therefore, the savings of 90,000 tonnes of CO2 mean that we will not have to import this kind of gas in such quantities. It is the equivalent of taking 25,000 cars off the road, which is a significant contribution. It is a high-tech, indigenous growth industry that reduces carbon emissions and is environmentally positive. In addition, it has a series of advantages over the conventional mineral diesel fuels. For example, it is a clean-burning alternative to mineral diesel fuel and is produced from renewable sources. It is non-toxic and biodegradable. Unlike the stuff that is currently pouring into the Gulf of Mexico, it will disappear relatively quickly and easily. It dissolves in water faster than sugar.

I mentioned its impact on engine parts, which is another aspect we need to examine. I have a very old car and am delighted with it. I deprecate the idea of disposability and built-in or planned obsolescence so that things degrade by design. Nowadays, television sets and washing machines last for about three or four years because the parts are designed to wear out. The new system means that items such as motor cars can be kept for longer. It is using an alternative fuel and requires no engine modification. Unlike some other alternative measures pertaining to electricity, which are also useful, one does not have to produce new cars or modify old ones. It can be used in existing vehicles. It does not affect engine performance and has greater lubricity than fossil diesel, so it prolongs engine life. Taking into account Senator O'Reilly's prudent hesitations, I am confident about this proposal. Now that we are on the cusp of passing this legislation, perhaps the Minister could indicate whether he feels confident that the indigenous industry will be able to satisfy the market and supply this new and exciting material to industry in the required quantities.

To answer the Senator's point, I am confident we can do so. On Senator O'Reilly's point, this should and will be reviewed as we see the practical experience. There are provisions within the legislation for us to continue to adjust via a statutory instrument and with the proper review process where necessary. We are on a path towards increasing our level of transport fuels from renewable sources to 10% by 2020. We are starting at a level which we think is the right pitch to make it easier for people to establish and get going. I would like to see domestic production being supported in particular. Subject to the experience, we can continue to adjust and review so that it will allow for further expansion and greater employment as well as a reduction in emissions and imports. The level at which we are starting is the right one. It can and will be reviewed, but by statutory means that will take into account domestic production and international experience.

Group 4 concerns material used to produce bio-fuel. This is the subject matter of amendments Nos. 10 and 11.

This addition is made to clarify the bio-fuel produced from non-food cellulosic material. Cellulosic material or algae can also be considered eligible for certification under the obligation. These bio-fuels are classified as second generation bio-fuels and, as such, do not compete with food crops of land or resources. Given that we have dealt with drafting questions, we can now insert these into the Bill. Reflecting their importance, these fuels will receive double certificates under the scheme and I therefore propose that these amendments be accepted.

As I understand it, this will include additional materials and not those originally contemplated such as fuel oils. I very much welcome that. With the indulgence of the House, I would like to tell the Minister a story.

Not only is there an end to it, more importantly there is a point to it which relates directly to these amendments. Last week, I flew down to Cork and was driven to the Sacred Heart school in Clonakilty. I saw a number of exciting transition year projects there, but one of them relates directly to this. I felt extraordinary hope in the young people of Ireland when I met a group of young women in their mid-teens. They had isolated a problem concerning the growth of sea lettuce, which is a form of seaweed. In small quantities it is attractive enough in the water. As a result of the excessively rich nutrients from farmland slurry, there is a huge bloom of this form of seaweed around the Cork coast. It lodges on the shoreline and when it becomes heated in the sunshine, it creates an unpleasant odour. These young women isolated the problem, examined it, collected some of the material involved, processed it and compressed it into briquettes. They found that these briquettes burned for twice as long as peat briquettes while giving the same fuel and heat equivalents. I thought that research was stunning and brilliant. Those young people examined a problem and turned it into an advantage.

I am mentioning this example because one of the materials involved is classified as algae and seaweed. Can the Minister indicate if that is correct?

Good. I now come back to my old pals who have been briefing me — Green Biofuels. They are exploring ways to produce bio-fuel from algae and seaweed. They are following the lead of the transition year students in the Sacred Heart school in Clonakilty. They are involved in a research and development project into the use of algae and seaweed oils as raw materials for bio-fuel production. This will be considered as a third generation bio-fuel and they expect it to become commercially available in the next three to five years. They are also involved in research with a number of other institutions and, in addition, have secured funding for the Marie Curie industry-academia partnerships and pathways funding centre.

I welcome the fact that the Bill is being expanded to include algae and seaweeds. I will read the Minister's reply in the Official Report because I have to attend the meeting of the Joint Committee on Foreign Affairs which is dealing with the Irish-registered ship, the Rachel Corrie, that is approaching the coast of Palestine.

I welcome amendments Nos. 10 and 11. I am happy that algae and seaweed are to be included in the Bill's provisions. I welcome this expansion of the list of products, including the use of second generation bio-fuel products. There is a compelling case for continuous scientific research and development in this area to expand the list of products in production as well as improving the potential for job creation. It is a welcome addition.

I welcome the support of both Senators. I agree with them that this is an area in which we must innovate, take risks, experiment and use scientific research to develop new, alternative, home-grown fuels.

Group 5 concerns consultation on regulations with the Minister for Agriculture, Fisheries and Food. This is the subject matter of amendments Nos. 28 to 31, inclusive.

Amendment No. 28 is included to ensure the Minister for Agriculture, Fisheries and Food is also included in the list of those to be consulted when regulations are being made under the Bill in regard to bio-fuel standards, as per a suggestion made in this House. Amendments Nos. 29 to 31, inclusive, are consequential technical amendments arising from the insertion of amendment No. 28. I propose that these amendments be accepted.

Group 6 concerns the amendment of the Fuels (Control of Supplies) Act 1982. This is the subject matter of amendments Nos. 32 to 34, inclusive.

This amendment updates the penalties for an offence under section 7 of the Fuels (Control of Supplies) Act 1982. The Fuels (Control of Supplies) Acts 1971 and 1982 empower the Minister for Communications, Energy and Natural Resources, in the event of a fuel emergency and on foot of an order made by the Government, to make orders or directions in relation to the control of the acquisition, supply, distribution or marketing of fuels in the State.

Section 7 of the Fuels (Control of Supplies) Act 1982 provides for the appointment of authorised officers in a fuels emergency to inspect premises and obtain information relating to the control of the acquisition, supply, distribution and marketing of fuels. Section 7(3) of that Act provides:

Any person who—

(a) obstructs or impedes an authorised officer in the exercise of any of the powers conferred on him by this section,

(b) refuses to produce any record or document which an authorised officer lawfully requires him to produce,

(c) produces or causes to be produced or knowingly allows to be produced, to an authorised officer any record or document which is false in any material respect knowing it to be false, or

(d) wilfully fails or refuses to comply with any lawful requirement of an authorised officer under subsection (1)(b) of this section.

shall be guilty of an offence, and shall be liable on summary conviction to a fine not exceeding £500 or, at the discretion of the Court, to imprisonment for a term not exceeding twelve months or to both such fine and such imprisonment.

Given the important role to be played by an authorised officer during the course of a fuels emergency, it is proposed that the penalties provided for under section 7(3) of the 1982 Act will be updated. Amendment No. 32 increases the fine on summary conviction from €634 to €5,000. It also introduces a penalty for conviction on indictment of €20,000, or imprisonment for a term not exceeding two years, or both. It also provides for the lifting of the veil of incorporation in respect of an offence under section 7 of the 1982 Act.

Amendments Nos. 33 and 34 have been inserted for the purposes of verification. I propose that they be accepted.

I welcome these amendments. Obviously, the inspectorate and the regulations are necessary. When regulations are broken and proper inspections are not complied with, there needs to be a punitive dimension. This proposal is reasonable and necessary if this legislation is to be implemented. I do not think it merits further discussion.

While I do not object to this proposal, I would like to raise a red flag for the future consideration of the Minister. It is proposed to lift the corporate veil if an offence takes place "with the consent or connivance of" a manager or secretary within the corporate structure. The corporation would be the main offender, but individuals could also be liable. We should be very careful in this regard. People need to have the protection of limited liability if they are to be able to function effectively with a certain element of risk taking. I know what we are trying to get at here. I do not want to labour the point. Regulatory authorities in a range of sectors failed us miserably but were not held to account. In my opinion, they will probably not be held to account. We seem to be applying a different set of criteria to those in the private sector. I hope we can debate this matter at a future stage. Perhaps we can have statements on it. I can see the other side of the coin as well. I accept that people have to act responsibly within companies. Perhaps there should be some exposure. I am just raising it as a matter of concern.

There has to be control.

I understand the concerns raised by Senator Walsh. We have to get our corporate governance right, more than anything else at the present time. I will heed the Senator's comments and try to ensure a proper balance is struck in the implementation of this Bill.

Question put and agreed to.
Question proposed: "That the Bill do now pass."

I would like to make some closing comments. I thank Senators. I would like to refer back to the second last group of amendments, in which we provided for consultation with the Minister for Agriculture, Fisheries and Food. I am reminded of the debate I had with a member of this House, possibly Senator Bradford, when the debate on this Bill commenced approximately two months ago. The legislation has had a very good passage and has benefitted from significant debate in the Seanad and Dáil. I thank Senators for their contributions and my officials for the work they have done. I am sure they will be pleased to see this Bill passed. I look forward to seeing it implemented. I hope it will have real benefits for farmers, industry and the public.

I thank the Minister and his officials. We have had a good debate on this Bill. The Minister has been a real champion in this area. Many of the initiatives he has taken will have significant economic benefits in the future. I compliment him and his officials, who have been very helpful.

I am happy this Bill is being passed. I thank the Minister for his sincerity in responding to our suggestions and engaging in thorough discussions on the amendments we have proposed. We continue to be concerned that every conceivable effort will need to be made in the implementation of this Bill. If we are to give a lifeline to our farmers, encourage domestic processing and create jobs, we will have to use various carrot and stick methods, including regulations and grants, to encourage indigenous production of raw materials for bio-fuels. That was the essential thrust of the amendments we proposed and the comments we made. We support the principle and the purpose of this Bill. I congratulate the Minister on the way he has handled it. It is good that it was initiated in this House. We are very happy about that. I join Senator Walsh in paying tribute to the Minister's officials for their work in this regard. I thank the Minister. I hope we can initiate more legislation of this nature in the Seanad. I am heartened by the Minister's comment that this House is very serious about teasing out legislation and doing a genuine job. We welcome any opportunity to do so.

Question put and agreed to.
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