Dáil Éireann díospóireacht -
Wednesday, 27 Sep 2006

Vol. 624 No. 1

National Oil Reserves Agency Bill 2006: Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Mr. F. McGrath

I wish to share time with Deputy Trevor Sargent.

I welcome the opportunity to speak on the National Oil Reserves Agency Bill 2006. It is an important issue and an important debate because we need well thought out legislation in this area.

When we address important issues such as oil and gas, particularly our natural resources, we must have a comprehensive debate and listen to all views in the House. In recent days there have been massive increases in gas prices, particularly for families, the elderly and working people. Many people are upset about the 23% increase in gas prices, which will be a major issue in the coming weeks. I support these people on these issues. It was announced that workers would receive a 10% increase in pay over 27 months through national pay agreements and within 24 hours gas and other energy costs went through the roof. That is a disgrace and it is not acceptable in this day and age.

We need to have well thought out strategies regarding this legislation. We should not be afraid to look to other countries for advice on this legislation and the entire issue of energy, oil and gas. When considering the broader issue of oil and gas we should accept that these resources around our shores belong to the people of Ireland, not oil companies. There should be sensible policies regarding licences in these cases.

The main provision of the Bill is to establish a National Oil Reserves Agency, NORA, as a stand alone, non-commercial State body under the aegis of the Minister for Communications, Marine and Natural Resources with responsibility for the maintenance of strategic supplies of oil, in line with the State's oil stock holding obligations to the EU and the International Energy Agency. The Bill provides for the transfer of the Irish National Petroleum Corporation shareholding in NORA to the Minister for Communications, Marine and Natural Resources. The Bill also provides for the continued operation of the agency as a private limited company under the Companies Act. It will provide for a variable levy on disposals of petroleum products to be imposed on oil companies and consumers. Such a levy has operated since 1995 under EU regulations.

The Bill also makes provision for the furnishing of regular returns to the Minister regarding oil purchases, sales, consumption, imports and exports by oil companies, oil consumers and NORA. The Bill provides for the monitoring of compliance by oil companies and consumers with its provisions. The legislation also revokes the European Communities (Minimum Stocks of Petroleum Oils) Regulations 1995.

These are the main provisions in the legislation and they are very important in dealing with this issue. It is important in considering this Bill that we wake up to the future and examine alternative energy sources.

I strongly welcome some of the radical proposals that have been put forward concerning wind and sea as sources of power, as well as other sensible alternatives. On an island such as Ireland, great potential exists to invest in renewable energy, particularly wind farms, and people must accept that this is a clean, positive and constructive form of energy. I do not accept the criticisms from those who complain about the locations of wind farms because wind energy is a very sensible option that should be developed further. I acknowledge that we have made a start and that objectives have been put in place, but we must do far more in the future. Wind can be a major source of energy and we have a climate that is ideally suited to its use. This is the sensible way forward.

We must also be radical with regard to oil and gas. We need a national vision to deal with these resources. I do not accept the power that many oil companies seem to have, whether it be in Ireland, Nigeria or Latin America. I urge people, when they are examining natural resources such as oil and gas, to consider the sensible ideas coming from countries in South America. They are dealing very constructively with their oil resources and distributing it to the poorer sections of their communities. I am referring, in particular, to Venezuela, which has shown a clear vision and is using its wealth for its people. The government there is building houses in the ghettoes, providing people with health care and has even offered low-cost oil to poor people in the United States of America. That is the kind of international co-operation that we should be examining in this debate. It is also the kind of sensible vision which bodes well for the future.

The Corrib gas field in County Mayo is an important issue in this debate. Deputies are aware that there is a major dispute going on in that area. I make no apology for supporting the people who want our gas resources in the control of the Irish people and who also want proper safety measures put in place. I commend people like the Rossport five for their efforts. Perhaps it is not trendy, politically correct nor fashionable to say that at present, but they have sent out a very strong message. They are not just concerned about safety issues but also about the way our natural resources are distributed. Offers of an additional payment of €10,000 have been made to land owners on the route of the pipeline in recent days. My colleague, Deputy Cowley, has been very strong in his position and I commend and support him on the issue.

Many people in the national media, some of those in Government and the oil companies are running negative campaigns against the protesting families in Mayo. The reality, according to a recent opinion poll, is that 61% of people in the local community support them 100%, despite the massive pressure being exerted. The message from the protestors is that they want complete safety for the local people and a clear, well-thought out policy on our natural resources and how they are used. In the context of the recent large increases in the price of oil and gas, we must wake up to the reality that, with Corrib, we are sitting on a goldmine. That goldmine should be used for the benefit of the consumers and citizens of this country.

Section 8 of the legislation sets out the principal functions and powers of the national oil reserves agency. In the explanatory memorandum, the agency's primary functions are defined as "the maintenance of strategic oil reserves to meet Ireland's obligations to the EU and the IEA, the collection of a levy on petroleum products, the provision of advice to the Minister on any matter relating to its functions and representation of the state at meetings of international bodies". The memorandum further explains that section 10 "is a standard feature which provides that the authorized share capital of NORA will be decided by the Minister for Finance after consulting with the Minister".

Section 14 is relevant to the debate we had in the House earlier. It provides for a board of six directors who, with the exception of the chief executive, will be appointed by the Minister. According to the explanatory memorandum "Directors appointed by the Minister are required under subsection (2) to have experience and competence in one of the following areas: oil or oil related industries, chemical or chemical related industries, finance, economics, legal matters and energy production and supply industries.” In the context of the recent row, I would question the competence of some of the people who were appointed by the Taoiseach to State boards.

I welcome the opportunity to contribute to this debate. It is important that we accept and acknowledge that the natural energy resources of oil and gas of this country belong to the people. There should be no surrender on this issue. Oil and gas are national resources which should be managed and owned by the people on the island of Ireland, North and South. I commend the cross-Border initiatives aimed at linking both parts of the island in a one-island economy.

Mr. Sargent

Gabhaim buíochas leis an Teachta McGrath as a chuid ama a roinnt.

The National Oil Reserves Agency Bill is technical in nature and falls far short of what is needed if this country is to face up to the major challenges in the area of energy. Thanks to the Government, Ireland, per capita, is the seventh most oil dependent country in the world. In the period 1989 to 2001, we doubled our oil use. Oil accounts for 60% of our energy imports, while the EU average is 43%. We are very exposed in terms of energy in this country. We are now importing 9 million tonnes of oil and that figure is increasing by an average of 3% per year. By 2008, we will be importing approximately 12 million tonnes of oil. This is an unsustainable situation and no amount of oil reserves will deal with it. However, the Government has yet to face up to this fact.

We are continuing to build to a very low standard when it comes to energy insulation. Oil-fired central heating is essentially heating the atmosphere in many houses because they are so badly insulated. We rank 23rd out of 24 countries in the OECD in terms of poor energy efficiency.

It is in this context that I wish to offer a few useful suggestions to the Government regarding oil. The debate regarding oil does not relate to simply burning it. Oil is a product that can be turned into many useful things. Over 4,000 products are listed as being derivatives of oil, including aspirin, DVDs, perfume, contact lenses and so forth. To use oil only in the context of burning is to waste a valuable resource. The University of Limerick has carried out extensive research into biomass and developing many of the by-products of oil from cellulose. The Government must pay close attention to the researchers who are proposing that much of our energy needs as well as the raw material needs for the pharmaceutical industry could be met by more indigenous production than is currently the case.

Ireland is in very serious jeopardy in terms of amber alerts and blackouts. In 2005 there were 57 amber alerts in this country. There has been much focus on the Corrib gasfield in recent times. The way people have been treated in that area is a terrible indictment of the Government and the manner in which it has favoured the corporate interests of a few over the welfare of the wider community. However, the Corrib gasfield will not solve our energy problems. During the next 15 to 20 years between 50% and 70% of our gas may come from the Corrib field but we will still be obliged to pay for it at the same price as gas from Siberia and other places. The gas will be sold privately and we will be obliged to buy it on the open market and will not be able to argue about the price. It is not a solution and the gas in the field will be badly needed in future when it becomes even more critical that we have some locally available energy source in order to build our renewable energy technologies and get on the road to being far more self-reliant.

Oil, however, is a slippery subject. It is the focus of much public relations activity and spin to the effect that there is no problem, that the price is going down and that people should not become too concerned about it because everything will be fine. We know this is not true and the Government needs to be very careful in distinguishing between the spin in the interest of the market and geopolitical, geological and environmental realities based on science. This is exactly what needs to be made known in a very coherent and straightforward way.

The geopolitical realities are always present. The Iraq war was a clear demonstration of how spin can overtake reality. Secretary Rumsfeld says the Iraq war has nothing to do with oil, yet, before the invasion of Iraq and 18 months before the events of 11 September 2001, the oilfields in Iraq were studied by the White House energy task force. Halliburton obtained a contract to carry out repairs and the first thing that was protected during the invasion was the Iraqi oil ministry. There is very clear evidence that it is a resource war. My perception is that the Government has decided that it is far too difficult to change the habits of its short lifetime and that it will, therefore, tag itself onto the coat-tails of the victor in whatever resource war takes place. This is not only illogical, it is also unethical.

This State is not using its natural resources and I ask that the Government reconsider the potential in Ireland for moving away from oil as a critical part of our lives and economy. It is not only the case that oil will not be available in the future but also that if we continue to burn the stuff, we will be accelerating a very serious inequality in that 20% of the world's population are burning 60% of the energy resources. If we continue to burn it, China and India will want to do so. Countries much larger than Ireland will tip the balance in respect of climate change. If the Minister has not seen "An Inconvenient Truth", the film Al Gore, the former Vice President of the United States, was involved in making, it is very important that he do so. I ask that watching it be on his and his colleagues' agenda.

Ireland is the fifth largest emitter of greenhouses gases per capita. The earth is warmer now than it has been during the past 11,000 years. We are fast approaching what is called the feedback effect, in which methane will be released from the permafrost in the Arctic, Antarctic, tundra areas of Siberia, Norway and other such places when it melts. The release of methane will be similar to that at the onslaught of the last Ice Age. This could possibly happen within a decade. What will the Minister of State say to his children and the citizens of the country if this is not taken seriously? Other countries are showing us what to do — it is not a matter of reinventing the wheel. Sweden has clearly stated that it will move beyond oil, oil reserves and what we are talking about in this Bill by 2020. The authorities in Iceland are talking about a hydrogen economy. This will not be easy but they see the need for it because they do not see any other option. This Government, rather than trying to build more capacity to store somebody else’s oil, should recognise that the days of oil are fast coming to an end.

We need to put in place a strategy. The Government promised that it would publish an energy policy in July. However, July and August came and went. September is nearly gone and it is talking about publishing the policy, perhaps on Sunday. Does this sound like an urgent approach to a critical issue, bearing in mind that people face the danger of blackouts this winter? I ask that the Minister take this matter more seriously than any other facing this country. Every hospital, school, commuter and householder who needs to heat his or her home depends on the Minister doing so. There is no issue more critical to this country than that of taking the energy crisis seriously. It will not be taken seriously just by building more capacity for oil.

Mr. Haughey

I wish to share time with Deputy Fiona O'Malley.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Mr. Haughey

The central concern of this Bill is to ensure the future security of Ireland's oil supply. Contained in it are actions and precautions that are necessary to take at this time due to Ireland's over-reliance on imported fossil fuels. I hope such precautions will be negated in the future by the maturing of our current energy policies.

Ireland now consumes at least 50% more oil per capita than the EU average, which is simply not sustainable. This Government is working very hard to address this over-reliance and Departments are working closely together in developing a cohesive and joined-up strategy to take a new direction involving the full exploitation of our natural resources. Not only is this necessary, given that oil is a finite resource to which we have no direct access, but the benefits of a lasting and workable renewable energy policy are extensive, economically and environmentally.

Geographically, Ireland holds a unique position in Europe. It means that we are blessed with one of the largest wind resources in Europe and one of the highest wave energy levels in the world. Our coastline has the potential to provide approximately twice as much electricity as we currently use. Despite this impressive potential, approximately 95% of the energy consumed by this country is fossil-fuel based and we are debating legislation concerning the security of supply of this fuel, which is costly in terms of our pockets and the environment.

Current global circumstances have once again highlighted worldwide energy consumption and the precariousness of the oil market. Our neighbours in Britain have been considering their future energy supply and during the summer their Government revealed that this would include the construction of further nuclear stations. Around the same time, in July, I secured legislative assurance, in the form of an amendment to the Planning and Development (Strategic Infrastructure) Bill, that power from nuclear sources can never be considered as an option in Ireland. This amendment ensured a nuclear-free Ireland and our colleagues in the North support this aim.

Sadly, however, Ireland's proximity to Britain and the British Government's stated preference for nuclear energy mean we are not free of the nuclear threat. The implications for Ireland of a UK nuclear programme could be pretty horrific. It has been estimated that should an accident occur at the Wylfa nuclear power plant on Anglesey, more than 2 million Irish people could face compulsory resettlement. This is an unimaginable scenario, but its possibility must be recognised and faced. Radiation does not respect international borders. We need to maintain our pressure on the relevant bodies and continue to pursue every avenue open to us to ensure our safety against overseas nuclear threats.

In the meantime, we can continue our progress towards renewable energy sources and set an example. We have obligations under the Kyoto Protocol and this is relevant to today's proceedings, as previous speakers have outlined.

The transport sector is the largest consumer of energy in the country. In addition, it is growing at the fastest rate. We absolutely must halt and reverse this trend if we are to have any success under the Kyoto Protocol.

There is a solution in biofuels, which have neither the economic nor environmental drawbacks of oil, and I am pleased to be able to say action is well under way in terms of their adoption. In budget 2006, the Minister for Finance made €200 million available for the development of the biofuel market. This was an extremely productive contribution to what we are trying to achieve in this respect. A market needs to be nurtured to encourage the use of biofuels and this is a healthy start. I look forward to further measures being incorporated in the forthcoming budget.

In May 2006, Dublin Bus became the first public transport company to incorporate the use of biofuels into its operations. That came about in the wake of a review by Dublin Bus of the viability of their use in view of rising fuel costs. Last year, fuel cost 40% more than in 2004. Trying to absorb such rises when a suitable cheaper alternative is available is bad business. A pilot scheme is ongoing involving the use of biofuels for a fleet of tour buses. Those run on such fuel proudly carry a badge to confirm it. I look forward to the report on the pilot scheme being published and very much hope it results in extension of the use of biofuels to the full Dublin Bus fleet. A successful pilot scheme and subsequent extension of the project by a high profile company such as Dublin Bus would boost the credibility of biofuels as a workable and reliable resource.

That is just one initiative being undertaken regarding use of renewable energy resources. The Government has sponsored plenty more, including the greener homes scheme, which is worth €27 million in grants to individual householders who install renewable technologies, including wood-pellet stoves and boilers, solar panels and geothermal heat pumps. This week, the Minister for Communications, Marine and Natural Resources, Deputy Noel Dempsey, who is present, will unveil the Power of One campaign, highlighting what individuals across the country can do to reduce wasteful energy consumption. People are becoming ever more aware of the effects of a change in their own energy habits, and collectively their efforts will make a difference.

Those are the challenges that face us regarding energy consumption, but it is clear to everyone that the solutions are readily available to us, and I am confident the Government is developing and pursuing the best possible policies for the country. I am happy to support the Bill in view of the current situation, but I firmly believe the renewable energy crusade must be sustained and effectively implemented to ensure this Bill is a short-term contingency.

I am conscious that Deputy Fiona O'Malley will speak after me in this debate, and I congratulate the committee on which she sits on the Oireachtas energy report published earlier this year. It provoked a very useful debate. The Deputy has different views on nuclear power from me, and that was a topic of discussion at the press launch and in subsequent media debate. However, debate is what we need. Action must be taken, and I am confident the Government is pursuing appropriate policies. I wish it well in its endeavours.

Mr. Durkan

We detect an undercurrent.

Ms F. O’Malley

I am very pleased at this opportunity to speak on the Bill. Energy is certainly an issue close to my heart, since it relates very closely to the environment.

I will pick up where Deputy Haughey finished. I am not sure that we take different attitudes to nuclear power, but the benefit of the report produced by the committee is that it shows the need for a debate on the issue.

Mr. Durkan

We did not all agree with that.

Ms F. O’Malley

It is certainly among the resources that provide clean energy and has allowed other countries across the world to deal with their Kyoto obligations on CO2. As my other colleague, Deputy Ryan, indicated, the science and economics rather than anything else must tell us that nuclear is not for this country. As we all know, we have international commitments under the Kyoto Protocol.

Mr. Durkan

Are we for or against?

Ms F. O’Malley

Given our growth and how dramatically the country has progressed since the 1990s, dealing with our CO2 obligations is an enormous challenge. I see the Bill before us and know that the Green Paper on energy is to be launched on Sunday. The work the Minister did yesterday shows that the hot topic of this week is certainly energy awareness. I took his advice after reading his ten-point plan this morning, cycling to work and using public transport when I had to return to the constituency for something else this afternoon. It brings home the need for us all to become self-sufficient and the part that each individual can play in energy efficiency.

That is why I feel the question of the nation's fuel security is something vitally important that is addressed in this Bill. I am sure it will be a major element of the forthcoming Green Paper, which I look forward to reading. The Bill before us deals with the country's strategic oil reserves and how our EU and other obligations are to be delivered.

There is something for which we must plan carefully. As we all know, we have fallen short regarding our commitments, so we need a strategic plan to arrive at them. We must think about where capacity is needed, and that reminds me of the Progressive Democrats plan to move Dublin Port to Bremore. It underlines that requirement, not least because we have already reached capacity at Dublin Port.

Given the limit and the Seveso Directive, dealing with a certain type of hazard in an urban context puts constraints on development. That is the reality of Dublin Port and a reason for us to plan ahead effectively for the country and consider where we might build storage capacity. The only real option is to move Dublin Port out of the city centre and to a green-field site. Some might ask about the rest of the country, but the capacity and energy are needed on the east coast, which is why they must be delivered here.

We must also remember in sorting out storage and getting our reserves in order that we have limited refining capacity. We must be sure the stores are for petroleum products rather than crude oil. What the market requires must be matched by what we store. We all remember the fuel shortages of the 1970s, and we must plan ahead so they are not a feature of Ireland in 2010.

We must also be very cognisant of the Corrib gas field. Where we have indigenous energy supplies, we must exploit them. I do not like to provoke situations, but I was most discouraged to see that hostilities and tempers were running quite high again on bringing gas supplies to shore and marketing them. We must be realistic; we operate in a real world where prices are rising. Each of us campaigning on the doorstep will hear, as I have recently, that people are concerned about energy for the first time, given the increases.

It is not a panacea to deliver our own indigenous sources through the Corrib gas field, for example, but it certainly decreases our dependency on imported fossil fuels, and it is imperative that we extract that gas. I know the Minister has gone to great lengths and shown tremendous patience in dealing with it. The history of the matter is well documented, but we really must get the gas delivered, not only for the country at large but for the people of the western seaboard. We must be realistic and recognise that Shell does not have endless resources, and at some point it may walk away. We must be cognisant of that and try to deliver the opportunity to exploit our indigenous gas reserves in as a clear a way as possible.

The entire question of energy centres on efficiency. That is why I welcome the initiatives presented yesterday by the Minister. More are to be introduced in the area of transport tomorrow. That is where we stand to gain a great deal. In terms of generation, it costs much less to save a kilojoule of energy than it does to generate it. That must be to the fore in our policies. In geographic terms, Ireland is well located in respect of the development of renewable energies, particularly wind, wave and tidal power.

Given the initiatives in last year's budget as regards the fourth level of education, I should love to see Ireland become the research and development capital of the world for renewable energies. That certainly is my ambition for the country. I hope it is an ambition the Minister shares. However, we need to deliver it and ensure that we create the circumstances whereby that is done. One thing I have learned in politics is that one can deliver if one believes strongly enough in something. That is why we need to have those ambitious plans for the country. Ireland, which is situated on the periphery of Europe and at the end of any pipeline, is extremely exposed. We need to be imaginative and develop our own initiatives. There have been plenty of them so far and we need to galvanise these energies. In particular, I welcome the publication of the Green Paper at the end of the week. I also welcome the introduction of this Bill and look forward to dealing with what I see as the most exciting challenge in politics at present, namely, dealing with our energy security and ensuring safe energy for the future.

Mr. Morgan

It is appropriate that this Bill is being debated at a time when the multinationals that control all our oil and gas reserves are attempting to impose an unwanted terminal on the people of north Mayo. It is also worth recalling that the Government sought to use two inadequate reports on the safety of the Corrib pipeline to justify that project proceeding against the wishes — as was proven again this week in the TG4 poll — of most of the people in the area affected. It is also relevant as regards any debate on the overall terms of energy supplies, as briefly became the focus of debate following publication of the Forfás report last April on the future availability of oil. In that context, the possibility of nuclear energy fulfilling demand was suggested, but that has been overwhelmingly rejected by virtually the entire spectrum of political opinion across the country. That is hardly surprising in light of the enormous ongoing concerns of people regarding Sellafield.

The Forfás report refers briefly to the possibility of replacing some of our dependence on fossil fuels with alternative sources, most notably wind and wave power. There is also reference to biofuels. This is something that needs far more attention and a much more proactive policy on behalf of the State, given the importance of alternative energy and the natural advantages enjoyed by this country as regards its production. Certainly, wind power appears to be an area that has enormous potential. One report I have seen suggests that the current proportion of electricity supplied from this source could be increased to 25% of demand, with no increase in cost to the consumer. The installation of turbines would obviously require a substantial increase in the amount of land involved, but this is estimated to be at most no more than 0.5%. Given the number of suitable sites available and not currently in agricultural use, that ought not to present a major problem.

A number of wind projects are currently in operation, but some concern has been raised with regard to the awarding of contracts. It appears that one company with significant political influence has been particularly favoured. It is important, therefore, that the sector is properly regulated and that the State takes a proactive role in research and development. In practical terms, the ESB should establish wind farms. It will, of course be ideologically argued that the State should have no role in such an area. Such an argument overlooks the reason utilities were developed in the first instance under public control. It was for the simple reason that private enterprise was either uninterested, incapable or solely concerned with niche profits. There is also the fact that the country's energy needs ought to be under public control for strategic reasons. The same argument can be applied to the area of biofuels. There is enormous potential in Ireland for the production of energy crops, especially in the era of the single farm payment. That does not appear to be a problem and the relevant Departments are coming to recognise that through the various grant schemes available. This is a welcome development.

There are also issues surrounding the use of set aside land that the Minister for Agriculture and Food might usefully press at Commission level. Not only should we be capable of meeting the EU target set for the proportion of vehicle fuel supplied from biofuels, but we could lay the basis for a much more ambitious sector that benefits both farmers and those involved in processing. Unless steps are taken to encourage a strong Irish processing sector, we will in the future be just as dependent on biofuel imports as we are in the area of fossil fuels.

My party and others have put the case for the use of the former sugar factories at Carlow and Mallow in the processing of ethanol from sugar beet. This would not only provide an alternative outlet for sugar beet produced by the 3,700 growers abandoned by Greencore, it would also generate jobs. Unfortunately, the Government washed its hands of any responsibility in this matter, despite its retention of a so-called golden share in the company. It would appear the only golden shares in Greencore are those that are in the portfolio of the property developers who took over what was once a thriving business in order to strip the assets and make a huge killing through the building of overpriced apartments.

I urge the Minister as part of the review of the energy sector to encourage indigenous renewable energy sources and, of course, to review the current terms and conditions governing the control of our oil and gas reserves.

Mr. Connolly

I also welcome the opportunity to contribute to the debate on this Bill, which gathers together and updates the existing strands of legislation as regards our oil reserves. Growing oil costs and political instability in the Middle East make it increasingly urgent that alternative sources of energy must be explored. Every time there is a war in the Middle East, oil prices soar. That has become a regular feature. Seldom do we see oil prices falling when peace follows.

Oil prices have recently gone through the $80 a barrel barrier before stabilising somewhat. Apparently there is no peak is in sight. It is a very unsettling time. Crude oil costs have rocketed by 60% in the past year alone, creating a knock-on effect of increased domestic gas, electricity and central heating costs. Two days ago I spoke to a lorry driver who delivers various goods throughout the country. He said that he could fill his tank last year with €300. This year it costs him €400 to do so. He said we should be raising the issue, particularly for the domestic market, of allowing hauliers to use green diesel. His argument is that they are probably using green diesel already, which has been washed to become white diesel, and that very little revenue would be lost. That is a matter I intend to revisit, namely, that we should allow domestic hauliers some leeway. I am sure, however, there might be difficulties at EU level if green diesel were to be used in different countries. It is something we should look at, though, and it possibly could have beneficial effects in terms of reducing the costs of goods and services.

Escalating oil costs have triggered gas and electricity price rises of between 45% and 25% respectively, which totally belies the rate of inflation. Everyone one meets talks about the rising ESB and gas bills. These are ordinary domestic issues which are hitting people in their pockets. They must be controlled in some way or other. The cost of a tank of home heating oil now approaches €1,000, which amounts to an increase of €400 on last year's price.

The ordinary individual has been hard in the pocket in respect of living expenses. Fuel price increases will also percolate down to the cost of bus, train and air fares, which cannot be immune from rising energy costs. These price increases will eventually hit the consumer. A person who walks into a shop to buy a loaf of bread will pay the increased price in getting that loaf of bread into the shop in the first instance.

Ireland remains particularly vulnerable to these spiralling oil costs, with imported fossil fuels accounting for almost 90% of our energy needs. Every second year, the International Energy Agency publishes an outlook that forecasts the development of the world's energy consumption over the next 20 to 30 years. The last World Energy Outlook in 2004 forecast a strong increase of energy and oil consumption with a growth rate of about 1.6% per annum. We could revisit these figures on a weekly basis because of increasing demand in China and India and the pressure that will put on our reserves. It is scary when one thinks of the increasing population and demand in those countries. They want the same kind of lifestyle as that we enjoy, which involves the use of fossil fuels.

The IEA has published an additional outlook for 2005, covering the period up to 2030. The reason for this unexpected extra publication was probably the unprecedented rise of oil prices during the past year, which caused much public concern. The recent increases in oil prices had not been forecast. The publication depicts the most probable development of energy markets until 2030, as seen by the IEA. Two additional scenarios are considered, one of which is a low investment scenario where investment in upstream activities is much lower than expected. It also covers an alternative scenario if policy measures are introduced to cut energy demand. These scenarios include renewable energy.

Solar, wind and geothermal energy will increase their contribution in the reference scenario until 2030 to provide 2% of primary energy supply. People in the building industry should be considering alternative sources to heat homes, such as solar energy. The grant which has been made available for solar panels is very welcome, as is the grant for geothermal heat, although that will cost a lot to operate. These ideas should be part of housing schemes. We should not leave things up to individuals and councils should encourage developers building housing estates. These concepts should be taken on board and made a part of our lives. Countries further north than Ireland make much greater use of solar energy. It is criminal not to be making full use of such energy. Solar panels could be a prerequisite for every new house so that dependency on oil and gas could be reduced.

Middle East and north African countries still hold very considerable reserves, but further growth will depend on new discoveries. If these discoveries fail to materialise, world oil production could peak before 2030. This aspect of the report is a wild guess because nobody knows exactly how much oil lies beneath the surface or what type of demand will exist in ten years' time.

Now is an opportune time for the Government to invest in renewable energy sources. There should be support for more research into alternatives such as hydrogen, solar and wind energy and biofuels, to reduce our dependency on fossil fuel imports. Recent excise tax relief measures for eight biofuel projects throughout the country are to be welcomed. It is a step in the right direction. The development of a sustainable, long-term biofuels processing industry in Ireland assumes greater urgency by the day. This is also consistent with our Kyoto Protocol obligations and our responsibilities under the 2003 EU biofuels directive. This requires a 2% minimum biofuel component in our fuel complement by the end of this year. Our current 0.06% biofuels target falls considerably short of this. Biofuels are renewable transport fuels, which result in significantly less CO2 emissions than their fossil fuel equivalents. Biofuels are available in three forms, namely: pure plant oil from the rape seed crop; biodiesel, which is consists of rape seed oil, recovered vegetable oil, tallow and diesel blend in a 5% mix; and bioethanol, which is sugar beet or wheat blended with petrol in a 5% mix for standard petrol engines, or up to 85% mix for use in flexible fuel engines.

Biofuel has not got off to a great start because it reduces performance in cars. It also leads to a decrease in the number of miles achieved per gallon. However, we should think of it as the beginning of an era of biofuel in cars. It has not got the right press at the moment, because it takes much energy to develop the biofuel.

Minister for Communications, Marine and Natural Resources (Mr. N. Dempsey)

I am grateful for this opportunity to conclude the Second Stage discussion of the provisions of the National Oil Reserves Agency Bill. The Bill is one of a range of measures being pursued by the Government in order to develop the energy agenda. It provides NORA with the freedom to operate as a stand-alone agency, while at the same time reinforcing appropriate public policy and corporate governance standards. The Bill is primarily technical in nature, but it represents a significant milestone in providing Ireland with the best structure in ensuring robust security of national strategic oil stocks.

I thank the Minister of State, Deputy Michael Ahern, for taking the debate at the beginning of Second Stage. A number of the issues raised by Deputies in their contributions during this stage of the Bill are addressed in the explanatory memorandum and will be examined in detail on Committee Stage.

Deputy Durkan spoke of the need for planning on energy matters. I fully agree with him and this Bill represents one such example of better planning. It aims to place NORA on a solid financial footing through statutory borrowings and funding through the application of the variable levy.

Deputy Boyle commented on the importance of an oil stockholding agency. I am in agreement with him on this point and reiterate that the primary objectives of the Bill are concerned with ensuring the robustness of our national strategic stock holdings, ensuring that NORA has a sound financial footing, as well as enhancing appropriate corporate governance structures for the agency.

I agree with Deputy Cowley that energy policy requires strong emphasis on renewable energy. The Government is going in that direction and that will be even more apparent following the publication of the Green Paper next Sunday.

I thank Members from all sides for their very constructive input on Second Stage. I look forward to early consideration of the Bill on Committee Stage. I ask the members of the select committee to table any amendments as quickly as possible to allow them to be given full consideration by my officials and me. I will try to ensure that the Government's amendments are submitted as early as possible to allow full consideration of them.

Question put and agreed to.