Thursday, 4 November 2004

Questions (140)

Jim O'Keeffe


137 Mr. J. O’Keeffe asked the Minister for Communications, Marine and Natural Resources his policy on the development of biofuel; if grants or supports are available to encourage its production on a pilot or other basis; if licences are necessary for such production and refining; and if so, from whom. [27728/04]

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Written answers (Question to Minister for Communications, Marine and Natural Resources)

I am committed to the development of an integrated strategy to increase market penetration of biofuels in Ireland. To this end, an interdepartmental group has been set up by my Department comprising officials from my Department, Sustainable Energy Ireland, and the Departments of Environment, Heritage and Local Government, Transport, Agriculture and Food and Finance. The group is considering policy options for the development of a biofuels sector in Ireland and to increase the penetration of biofuels in the transport fuel market.

In March 2004, my Department secured an amendment to the Finance Act 1999, which provides for the introduction of a scheme for excise tax relief for biofuels. The purpose of the scheme is to allow qualified and conditional relief from excise of biofuel used in approved pilot projects for the production of biofuel or the testing of the technical viability of biofuel for use as a motor fuel. My Department is finalising details of the scheme with the Department of Finance. The European Commission has confirmed that the scheme would represent a state aid and consequently its approval is required. The EU energy tax directive 2003 envisages such tax relief and the Commission has approved schemes for excise relief of biofuel in other EU member states. Formal application for Commission approval will be made shortly by the Department of Finance and, assuming approval is granted, the necessary commencement order will then be signed.

Sustainable Energy Ireland is also funding a number of biomass projects and studies through its renewable energy research development and demonstration programme. Under the programme, Sustainable Energy Ireland offers capital grant aid for biofuels market demonstration projects in the pure plant oil, biodiesel and bioethanol categories. The Department of Communications, Marine and Natural Resources has no role in the issuing of licences for the production or refining of biofuels, which is a matter for the Revenue Commissioners. Biofuel is a "mineral oil", as defined in mineral oil tax law, and is, therefore, an excisable product subject to the provisions of the law relating to mineral oil tax and to general excise law. In addition, bioethanol is subject to the provisions of alcohol product tax law. These are matters for the Revenue Commissioners. Further information and applications for authorisations and for licences may be made to the applicant's local Revenue office.