I call on Deputy Bannon to resume the debate. He has two minutes remaining in the slot.
Energy (Biofuel Obligation and Miscellaneous Provisions) Bill 2010 [Seanad]:Second Stage (Resumed)
Question again proposed: "That the Bill be now read a Second Time."
I think the Minister of State with responsibility for children and youth affairs is looking after us this evening.
While we fully agree with the need to boost long-term competitiveness on the issue of wind energy, the location of wind farms is of great concern to the people of my constituency of Longford-Westmeath and the entire country. It is, however, necessary to give consideration to this issue from a planning point of view. When we consider the tourist implications of unsightly pylons and blades, it is extremely important that location is taken into account. We should not locate wind farms so that they may be a blight on the landscape. We should not locate them within a densely populated area, nor where they will cause noise pollution.
I would have liked the Minister for Communications, Energy and Natural Resources, Deputy Ryan, to be present on this issue. A disturbing statistic is that 80% of materials for wind farms are imported, I am told, from China. It would make good economic sense to develop a factory to manufacture those products in Ireland, and I would welcome its location in Longford-Westmeath which would give much needed employment to a constituency that has over 15,000 people unemployed. It is something that the Minister should look at. I have been criticising him and the Government in this House over the lack of employment opportunities in my constituency. This is something that should be kick-started in the midlands.
Over the years, planners have had extraordinary powers of personal discretion on granting or refusing permissions resulting in many inconsistencies, injustices and bad planning in all areas. We must protect the culture and heritage of rural areas for the local people. Without people in a rural community, such communities will wither and die.
The Government's national bio-fuels strategy has been a failure because proper planning did not go into the project. It does not surprise me coming from this Government. Having set a target of achieving a 4% bio-fuels rate by this year, it has in reality only reached less than a quarter of this figure. So much for planning and strategy by the Government.
The Deputy should conclude.
We in Fine Gael have an exciting policy document entitled NewERA based on the economy and rebuilding Ireland. Our policy document represents the imaginative type of new thinking Ireland needs at present. The document proposes the investment of €18.2 billion in energy and communications, including broadband and water infrastructure over a four year period, to boost long-term competitiveness and enhance energy security and eliminate the digital divide——
The Deputy should conclude now.
——creating over 105,000 new jobs, many of which I hope will be centred in my constituency——
Maybe the Deputy does not hear me.
——which has been overlooked by the Government in terms of infrastructural development and the roll out of new businesses.
Deputy Bannon is way over his time. He must stop now.
This Fine Gael NewERA policy document is an economic stimulus plan that will radically reshape the Irish economy for the challenges of the 21st century and beyond.
Deputy Bannon is way over his time.
He is not.
We are the only party in this House which can give hope to a lost generation and a real hope for the future of our country.
The Minister of State is not contributing.
Does the Minister of State wish to contribute on behalf of the Government?
He is concluding.
I am concluding. I presume there is Deputy Deenihan, if he wishes to speak.
Deputy Deenihan, I am very sorry about that. That is not what my screen was telling me.
That is all right.
As previous speakers have stated, this Bill will introduce a bio-fuel obligation in Ireland. Under the terms of the legislation, an initial bio-fuel penetration rate of 4% is being set, with this to be increased over time in line with EU targets and further commitments on climate change and energy security.
This legislation marks a significant step forward for Ireland. From the date of the introduction of the obligation, 1 July 2010, all petrol and diesel on sale in this country will include at least 4% bio-fuel. This means that within the first year of the operation of the obligation some 220 million litres of fossil fuels will be substituted with bio-fuels. This penetration is expected to increase to over 500 million litres by 2020, in line with EU regulations.
As the House will be aware, the bio-fuel obligation will be administered by the National Oil Reserves Agency on behalf of the State. Its introduction follows movement at European level, in particular the introduction and approval of the renewable energy directive by the EU Commission in 2008. This directive has set out mandatory targets for bio-fuel penetration in road transport fuels within the EU of 10% by 2020.
It is vital that the bio-fuel obligation comes into force, as planned, on 1 July 2010. Any delay in the implementation date of the bio-fuel obligation would have a severe and negative effect on Ireland's burgeoning bio-fuel sector, which is one of the areas identified for growth. I hope, therefore, this will experience a quick passage through Committee and Report Stages.
The bio-fuel obligation will help the market for biodiesel in Ireland to grow, and this will be good for the development of a strong, indigenous bio-fuels sector. It is worth mentioning here the development in County Wexford operated by GBI. The company met some of us some time ago. It is very impressive and its achievement should be recognised. The company has a state-of-the-art bio-diesel facility, employs 22 people and has the capacity to grow further as the market expands. This legislation is important for the company. It will not only present it with further opportunity but, I hope, also attract other investors in the market to which I will refer.
The introduction of this bio-fuel obligation is good for Ireland's environment. Like all European Union countries, Ireland has agreed to reduce carbon emissions as part of its international environmental commitments. An important step towards reaching our goals in this regard will be to increase the use of sustainable and renewable energies, including bio-fuels. This new obligation will take a considerable amount of fossil fuels out of our vehicle engines and replace them with green and renewable energy. The introduction of this bio-fuel obligation will lessen Ireland's dependence on the importation of fuels. Bio-fuels are being manufactured in Ireland and by producing these fuels at home we are helping to make Ireland more energy-independent. This is vital for our country which is currently dependent to a large extent on the importation of various forms of energy from overseas and is, therefore, at risk should the supply of these energy sources be compromised.
Investing in renewable energy sources such as the production of bio-fuels offers Ireland a considerable opportunity for growing an indigenous bio-fuel sector and for generating employment within this sector. Green Biofuels Ireland uses waste materials to manufacture a renewable diesel substitute which is then distributed through the forecourts to the consumer, thus reducing greenhouse gas emissions and improving Ireland's security of fuel supplies.
The market in Ireland is not attractive to operators. I support a biodiesel project operating successfully in Argentina. I have copies of the agreement between the company and the Government of Argentina. The difference between Argentina and Ireland is that the price is guaranteed in Argentina. As the price fluctuates, the farmer will receive a certain amount of profit for his product. Currently, the price in Argentina is $28 per tonne of biodiesel delivered and this is the price guaranteed to the grower, irrespective of fluctuation in price. Farmers know the price they will receive and the refinery knows the profit it can and must make. This system works very well. The project is being led by a former Munster rugby prop, Federico Pucciarello,who left Ireland a year ago. He would like to undertake the same project in Ireland but the figures do not add up. The Minister of State may not be aware that a group in Foynes also spent two years trying to set up a first-generation project but the figures did not add up. I welcome this project but we have a long way to go before we have a dynamic bio-fuel industry in this country, unless the Government is willing to intervene. This Bill provides a framework but we have a long way to go.
The Minister has promised to table an amendment on Committee Stage which will have significant implications for one company in particular, Endesa Ireland Limited. I have an interest in Endesa and so also should the Acting Chairman, Deputy Kathleen Lynch, as it has plants in both our constituencies. Endesa has plants in Tarbert and in Great Island. It purchased the plants at the top of the market price and paid €450 million. It is prepared to invest another €0.5 billion in converting both plants to gas. However, this Bill could penalise the company if the Minister goes ahead with his proposed amendment. Along with other Members, I have received a briefing from Endesa.
The Minister proposes to bring forward an amendment on Committee Stage to impose a levy on electricity generators in respect of windfall profits derived from the free allocation carbon allowances, EUAs, European Union allowances. Endesa Ireland is concerned that the levy to reclaim windfall profits will also affect those that have not enjoyed windfall profits, namely, Endesa Ireland.
As part of the asset strategy agreement between the ESB and CER, the ESB divested 1,068 MW of generation plant which had been purchased by Endesa Ireland when the economy was at its peak. The company probably paid €200 million over the odds but the country benefited considerably from this purchase. As part of the package, Endesa Ireland purchased the EUAs allocated to these stations and the rights to future allocations in the period 2008 to 2012, valued at 2008 spot price. Since 2008, the value of the EUAs has fallen, meaning Endesa Ireland has suffered a loss relating to the EUAs rather than the windfall profits enjoyed by all the other generation companies in Ireland.
Endesa Ireland is looking to make significant investments — €500 million — in its stations in Great Island and Tarbert, bringing much-needed jobs to those regions. Its ability to invest is diminished with each additional reduction in its income. The projected incomes from the existing units have fallen significantly since Endesa's purchase of the stations. The introduction of an emissions levy when Endesa is not profiting from any profits on its EUAs would further reduce these incomes.
Endesa Ireland considers that the levy should not apply to its stations as it has not enjoyed the windfall profits as received by all other generation companies in the country. The company is of the view that the legislation deals unfairly with it and asks that it not be treated unfairly. Such a levy will further reduce its income and this might affect its future plans to invest in Ireland. The board of the company will probably take a very poor view of what has happened. The company bought at the height of the market and would be discouraged by this imposition.
The Minister's amendment should be drafted in such a way as to take account of circumstances where ownership of an installation changes hands and market value has been paid to the original recipient in respect of the corresponding EUAs. Given that Endesa Ireland's existing units are old and inefficient, they are not scheduled to run in the market. Generally these units run only when EirGrid needs them due to changes in wind patterns to support wind power generation, congestion in the network or line outages. These stations are used to provide critical support to the system. If the legislation were drafted so that the levy only applied to generation units that were included in the market schedule by the single electricity market operator, Endesa Ireland could be largely exempted from it. I hope the Minister will take this into account.
Endesa Ireland purchased all the carbon allowances, EUAs, allocated to its stations from the ESB as part of the competition organised by the ESB to divest some of its assets. The competition rules required the participants to include a separate line item setting out the value for the 2008 carbon emissions allowances that was included. The 2009-2012, EUAs, were valued at the expected market rate of €25 per tonne at the time and included in the total offer. Since taking ownership of the assets, the value of the EUAs has fallen, so rather than a windfall gain, Endesa Ireland has suffered a loss. EUA prices are now around €12 per tonne compared with the €25 per tonne that Endesa paid to ESB. If any company has enjoyed windfall assets, it is the ESB.
Endesa Ireland is seeking to make significant investment, approximately €500 million, in generation stations in Great Island, County Cork, and Tarbert, County Kerry, bringing much needed jobs to the areas. Converting the Tarbert station to gas would create 300 jobs over two years. It would also ensure the provision of a gas pipeline from Foynes to Tarbert, bringing a natural gas supply to the county for the first time, either through Bord Gáis or Shannon LNG. A plant like Kerry Group's Kerry Ingredients, employing 700 people in Listowel, County Kerry, would have its energy bills reduced considerably. The Minister must examine Endesa's case for an exemption from the levy.
The 2009 Endesa's running hours were 50% less than 2008 and in 2010 they are expected to fall by half again. The capacity payment was reduced by 15% from 2008 to 2009 and this too is expected to fall further in 2010. The introduction of an emissions levy would further reduce Endesa's income. This levy is seeking to recover windfall profits which it has not enjoyed. I hope the Minister will consider Endesa's unique position in this regard. There should be a level playing field for all companies in this area and none of them should be penalised by this legislation.
This legislation is the start in moving over to bio-fuels. To make up the other 6% target by 2020, most of the fuel will have to be imported unless incentives are put in place by the Government to ensure it is profitable for Irish operators, such as Wexford-based Green Biofuels Ireland Limited, to come into the market .
Endesa's unique position is recognised by Deputy Simon Coveney, Opposition energy spokesperson. I am sure the Acting Chairman, Deputy Kathleen Lynch, also has an interest in the company's position considering Great Island is in her constituency. I hope the Minister will continue to meet with Endesa's representatives and work out some solution to the levy.
I welcome the opportunity to contribute on the Energy (Biofuel Obligation and Miscellaneous Provisions) Bill 2010. Any measure to improve environmental protection must be welcomed. There is a view that this is a Green Party Bill but all parties in the House are green because they all support improving more environmental friendly approaches to energy production and consumption.
JHM Crops Limited, based in Adare, County Limerick, along with experts from the University of Limerick, was the pioneer in introducing the energy crop miscanthus into the country. Miscanthus can be used by peat-burning electricity stations. In January 2009, miscanthus crop-growing companies were informed by the Department of Communications, Energy and Natural Resources that a renewable energy feed-in-tariff price would be announced by January 2010. This would enable the miscanthus product to be able to compete with peat for use in peat-burning stations. Therefore, peat could be replaced with a highly efficient, environmentally friendly material. It could facilitate competition or a partial replacement. If the development were to take place as promised, it would represent a great boost to the industry and to the suppliers and farmers who grow the crop. At present, some 5,000 acres are grown nationally but that could expand exponentially if the power station market were opened up.
Interestingly, some 10% of the national crop is grown in my constituency in Limerick. A commitment was given by the Department of Communications, Energy and Natural Resources that an announcement would be made on the renewable energy feed-in tariff, REFIT, price by last January. This was promised at a meeting held on 2 December 2009. The REFIT price is crucial for the survival of the miscanthus business in Ireland. In excess of 5,000 acres have been planted. The scheme pays the ESB and Bord na Móna a special price for electricity produced from biomass such as miscanthus. The scheme makes it viable for those in the industry to help the Government achieve its aim of 30% biomass co-firing in peat power stations by 2015. This is an excellent opportunity for the Government to achieve the objectives it set out. Failing an announcement very soon, everyone involved, including the developers, manufacturers and growers of the product, will be put in a very difficult position. The industry is relying on the promise made by the Department of Communications, Energy and Natural Resources upon the announcement of the REFIT scheme and it has put considerable investment into the supply chain to deliver miscanthus to peat-fueled power stations. Investment has already taken place on the basis of the promise given by the Department. Everything is in place to deliver miscanthus immediately and the industry is waiting for the REFIT price to be announced. Uncertainty is crippling the business and the industry in general. I understand some miscanthus is used already in peat-fueled power stations at a loss of between €38 and €39 per tonne. I suggest the proposal is viable and can operate in an efficient manner.
The proposed approach to the power stations is part of the much heralded green economy. It has significant potential and simply requires a relatively small amount of support to succeed. The alternative is to forget about using indigenous biomass and to import fuel to meet the 2015 goals, leaving the State without security of supply. During the next five years we will have an opportunity to ensure that in reaching our target we supply the product from native sources with consequential benefits for the economy, job creation, farmers and the agricultural industry which produces the crop.
In concert with the Department of Agriculture, Fisheries and Food, the miscanthus business in Ireland has emerged from the research and development stage to early demonstration. At this stage it is essential to establish solid end-use markets for the growing yields of miscanthus in 2010 and beyond and to develop the number of acres grown with consequential benefits for the growers, the economy and job creation through the manufacture of the final product.
I refer to JHM Crops based in Adare, County Limerick. It has taken a lead in each stage of the miscanthus expansion in Ireland and the end use of the produce has been no exception in this regard. The company has researched markets that expressed interest in the product for heat, horse bedding and the building of processing plants for growers of miscanthus. Such processing and power plants are not pipe dreams but real tangible projects that will be up and running by the middle of this year with promised Government support. Such support should involve the inclusion of miscanthus in the ReHeat programme which has been delayed as well as the delay in the announcement of the REFIT price. The company has also undertaken a rapid expansion in the selling of miscanthus logs which has gone from strength to strength and will be rolled out on a national basis during the course of this year.
These markets will develop off the back of a large end-user, affording the industry confidence that demand and supply are secure. The large end-users were to be the peat power stations referred to in the bio-energy action plan. The failure to announce the REFIT price for electricity produced from biomass such as miscanthus is a major factor affecting the industry. The miscanthus business is ready and all aspects of the supply chain are in place to deliver to power stations immediately. However, a viable price must be paid by power stations and passed on to farmers for growing the crop. Given due attention to the demand side through the announcement of the REFIT price and other supports in the form of grants for pilot schemes for processing and commercial heat plants, there will be growth in the market in the short term leading to solid viability in the long term. The industry will then reach a stage at which it could take advantage of the progress being made by miscanthus for bio-fuel. I refer to examples of upgrading from oil to biodiesel and others involving water treatment and fertiliser.
One advantage to Departments and agencies willing to lend support to the miscanthus industry is that it is a proven feed stock for boilers and power stations. It is not a new, untested energy crop. Austria has been burning miscanthus for more than 15 years without cause for complaint. Drax in the UK has been confident enough in its use of miscanthus to commission three new biomass plants.
The industry was confident that the Department of Communications, Energy and Natural Resources would add miscanthus to the renewable energy feed-in tariff scheme but, unfortunately, this has not taken place. Support from the Department of Agriculture, Fisheries and Food is crucial for the industry as well. The Department should establish grants that attract interest from farmers and companies. They could work closely with all Departments and agencies to achieve a strong biomass market to ensure clean, secure heat and power together with jobs in rural areas, which have had little good news recently. The industry supports farmers by encouraging them to take the lead and to take ownership of projects. All that is needed is the support to get demonstration projects off the ground and then the existing significant interest will mushroom.
JHM Crops in Adare has been the pioneer at each stage of expansion in the miscanthus market with a vast range of projects instigated and supported by the company. It has carried out research on best practice in regard to growing, harvesting and processing, as well as in-depth research on potential market opportunities. This gives the company a competitive advantage over possible rivals but it has pointed out that it has been quite cost intensive to rely on its own resources. In the current climate, the opportunity now exists for a Department or agency, with all the resources available, to take ownership of progressing the miscanthus and biomass markets further. JHM Crops has said that its wealth of experience and expertise in the sector will be available to advise and assist. However, without an immediate announcement by the Government on the REFIT price, the market will never take off and proposed projects will have no foundation on which to build. If the REFIT announcement is made, Ireland has a great chance of becoming a European leader in the miscanthus and biomass industry, putting us on the road to a low-carbon economy.
Most people do not understand what biomass is because it is a minority crop but one that offers an enormous opportunity for development. Miscanthus, also known as elephant grass, is a fast growing, perennial, woody-type grass that originated in south-East Asia. Already familiar as a flowering plant, the non-flowering forms are of interest agriculturally as they grow rapidly, have low nutrient requirements, produce high yields, suffer from no known pests or diseases, are environmentally friendly and may be harvested every year after the first two years. The energy crop grows to a height of 2.5 m to 3 m and is harvested in cane form every spring. Once established, the crop does not require fertilisers, disease control or weed control.
This low level of maintenance together with the fact that it remains in the ground for a minimum of 15 to 20 years, yielding a crop every year after the initial two years, has made it a popular choice with farmers. It has been shown to be well suited as an energy crop to the Irish climate and soils, and a minimum yield of six to seven tonnes per acre can be achieved from the fourth year onward. Mr. John Clifton-Brown of Trinity College Dublin, an expert on miscanthus, sees parts of Ireland as having the most suitable conditions in the world for growing miscanthus. Miscanthus is one of the most efficient and environmentally friendly means of producing sustainable biomass for renewable energy and other markets. It produces biomass three times more efficiently than wheat, yielding a quality product that can be used across a range of markets.
With more stringent environmental regulations and biodiversity laws coming on stream in the coming years, energy crops such as miscanthus provide farmers who require a steady return from their land with an alternative land use option. We have heard much from Government agencies and non-governmental organisations on the importance of using carbon-neutral fuels in the era of the Kyoto Protocol and the Copenhagen climate change summit. Miscanthus is a carbon negative source of energy, a net carbon sequester. This is achieved through two mechanisms. Leaf, which represents in excess of 30% of dry matter and the majority of the nutrients, falls to the ground during senescence where it composts returning the carbon to the soil. In addition, the fibrous root structure which can extend up to 1 m into the soil during the growing season dies off during senescence and represents deep recalcitrant carbon in the soil. Therefore, as an energy crop, miscanthus offers exceptional carbon savings. Put together, the high yield, low labour cost and carbon negative nature of the crop make miscanthus an attractive energy crop for Irish farmers to grow.
I am making the case for the immediate promotion of miscanthus production at a crucial stage in the development of the product itself and of the market for that product. Experience on the Continent shows it is a crop suitable for use in power generating stations. Although I stand to be corrected on this, a source tells me that Bord na Móna supplies peat to power stations at no cost to the ESB. I ask that support be given to farmers who grow miscanthus so that they can compete in the market. We are asking for the support promised to the industry on 9 December 2009.
I welcome the opportunity to contribute to the debate on this Bill. We must provide as many alternatives to oil as possible. The Bill is a response to the European Union directive which stipulates that 10% of transport fuel must be supplied from renewable resources by 2020. This is an opportunity for us to engage in the direct production of bio-fuels. Unfortunately, it seems that, at least initially, we will be replacing imported oil or gas with imported bio-fuel produced either in Europe or possibly even in South America. Some of my colleagues, including Deputy Neville, have gone into the technicalities of the Bill in great detail. I propose to focus on the question of how we are using the opportunities available to us to provide Irish-produced products.
I recently carried out an examination of what was happening to waste plastic in the State only to find that the vast majority is being transported all the way to China instead of being turned into oil for use at home. I was pleased to see in a recent press report that Cynar Recycling Limited in Portlaoise has opened a plant costing €6 million to turn mixed plastic into a synthetic fuel and intends to build further plants across Europe. Its Irish plant will require only 3,000 tonnes of plastic initially. According to Government figures, 50,000 tonnes of waste plastic comes from the waste recycling groups annually. The system proposed by Cynar has been in operation elsewhere for several years. For instance, the PlastOil plant in Switzerland is using 10,000 tonnes per annum having been in operation on a commercial basis for the last three years. This system is proven and is just one example of how we can better use our waste in order to supply alternative energy and provide employment.
We must examine as an issue of priority how the bio-fuel industry is structured and supported in other countries across the European Union.
Last year the sub-committee of the British-Irish Parliamentary Association produced an in-depth study of different forms of alternative energy. One of our most interesting trips was not to Switzerland or anywhere like that, but to Donegal and Derry. On one side of the Border, in Derry, the industry is viable and workable, and waste from the city is used to generate the necessary forests and plants to provide the energy. We must question why we are not using the same mechanisms here. We visited units in Donegal, and they were finding the situation much more difficult. There was much less support available.
We must, as a priority, examine how different countries throughout the European Union support the necessary structures to allow alternative energies such as biomass to work. It is strange that there are different support structures in a supposed Common Market. There is one approach in Germany, another in France and yet another in Denmark and Britain.
My colleague, Deputy Simon Coveney, spoke at length on the Bill. He said Ireland should be brave enough not to go the same way as the UK, even if it caused problems on the Border such as fuel smuggling. I warn Deputy Coveney that I have a fairly strong knowledge of the problems that smuggling causes on the Border. For the past 40 years, the washing and smuggling of fuel across the Border between Northern Ireland and the Irish Republic has been significant and was ignored for too long. I would not like any structures to be put in place that would encourage that type of thing.
As someone who lives in County Monaghan, I note that tillage farming is not a possibility there. Deputy Dan Neville and other Members mentioned some of the crops that can be grown, but those would not be suitable for the Cavan-Monaghan area. However, there is a great opportunity in the tillage areas in the midlands and the south to produce and manufacture ethanol in this country. That would need some European support or a change in structures to ensure it would be viable. We cannot go on indefinitely depending on sugar cane from South America or other places.
We need to proceed with caution. We should double-check how other countries organise vibrant and profitable bio-fuel production operations involving farmers and local businesses. It is vital that the Minister makes certain that whatever is needed to ensure that Ireland produces its own bio-fuel is dealt with before the Bill is finalised.
The fact that we import 95% of all the gas and oil we use makes us very vulnerable in any situation. If something were to happen to the gas pipelines at Moffat in Scotland, for instance, we could be left without gas or electricity. There is no doubt the price of oil will increase significantly, especially if there is any increase in world trade. In that context it is vital we use any energy we can produce at home.
In the years when the country believed there was plenty of money and we did not need to utilise our own resources, I questioned the then Minister for Agriculture, Deputy Joe Walsh, on the logic of paying for the storage and exportation of our meat and bone meal to Germany where it was used in biomass plants to produce cheap energy. If any effort had been made, that product could have been utilised with very little effort in some of our existing electricity power stations.
To that end we must consider why biomass plants — especially anaerobic digesters — are in place on farms all over Europe, in countries such as Germany. Under the present regulations in this country, such plants are not viable. That is due to lack of any grant support and more especially to lack of access to the electricity grid at a reasonable price. Some of those issues are not directly related to the Bill, but they are all relevant to meeting our EU obligations on energy and carbon. I urge the Minister to re-examine the access and support systems.
When the British-Irish Parliamentary Association examined the situation, the results were startling. There is a need to reconsider how we can utilise energy produced in this country.
In my own county, poultry is a major issue. I tried for 12 years or so, with the help of others, to get a biomass plant going there. However, there were all sorts of objections on the basis that the plant contained an incinerator. Some of that poultry litter is now being pressed in Northern Ireland and sent to a similar plant in Scotland — the type of plant I wanted built just outside Monaghan town.
Some of us, although we are not members of the Green Party, have had those ideas for years. I started my efforts at Government level in Brussels approximately 13 years ago. We got the funds out of Brussels eventually. However, we met with objections from the Department of Enterprise, Trade and Employment in Ireland. The Department owned a site outside Monaghan town, and agreed that would be the site for the biomass plant when it got the go-ahead. However, when we got the go-ahead, the Department said the site — and all its property — had been sold. If the Minister went to that site on the Armagh road outside Monaghan today, he would see that not one inch of the area concerned has been sold or utilised since. It was not just local objections that prevented the plant being built, but lack of effort at Government level at that time to see the project through. That is just one example.
In Cavan, we are faced with a major issue regarding Quinn Insurance Limited. In one way, that is irrelevant to this discussion, but it is relevant in other ways. There are massive pig units throughout County Cavan, and major problems will arise for them in the next 12 to 18 months when the nitrate regulations become tighter. I beg the Minister to re-examine the situation and consider how those units can be supported to put in anaerobic digesters of the type that are being used throughout Europe, so they will be financially viable. The problems are the lack of grant money, and the difficulties involved in linking up to the Electricity Supply Board and getting a proper return from it for the surplus energy.
Each unit can do three things. It can utilise the waste that is produced — which should be used as fertiliser, but that is not allowed under regulations. It can produce homegrown energy, and it can produce some jobs, which are badly needed in that area. I urge the Minister to re-examine the systems that are in place. I know the issue is not relevant to the Bill, but we have to think beyond the bend at present to ensure that structures are in place to produce an industry, lower the carbon problems and get the issue going. The carbon tax, introduced a week or ten days ago, has serious consequences for farmers. I ask the Minister to consider how it might be dealt with in a positive and constructive way.
I welcome the opportunity to contribute to this Bill, which presents Ireland, an agricultural country, with many opportunities. It has many welcome features. If the legislation is properly handled and if proper support mechanisms are put in place, it could be successful. However, I have concerns about it and hope the Minister will address them. Perhaps some are invalid but they are concerns nevertheless.
The Labour Party issued a paper entitled "Biofuels — A Reassessment" that expresses great concern over the effects of bio-fuels, particularly the increase in food prices, in the developing world. Will the Minister address this concern?
This legislation is placing an obligation on certain people and I am concerned about this. It is supposed that our approach would be a failure were it not for the fact that we are including an element of compulsion to achieve our modest goals. I welcome that there is to be a reduction from 5.8% to 4% in the required bio-fuel content of transport fuel. Essentially, we are talking about the effects of bio-fuels in the transport sector alone. That a further levy is being imposed through this Bill is unacceptable. Deputy Crawford said that, only last week or the week before, the Minister levied a carbon tax at a rate of 8.7% on agricultural diesel and heating fuels and imposed a tax at a rate of 4.4% on auto-diesel in particular. Despite this, a week later the Minister is responsible for a further levy.
It is odd that, on foot of this Bill, the people who are to be administering and regulating the imposition of the levy are those who are directly involved in the oil industry. This is in spite of the considerable bureaucracy that seems to exist in this area. I refer to administration, licensing, monitoring, guaranteeing that the proper mix will be used and the compelling of the relevant parties in the industry in this regard. Compulsion is a backward step. There should be an incentive rather than compulsion in many cases to achieve national targets.
The Minister has a far greater opportunity than that under discussion to reduce carbon emissions, yet the Government has failed to compel ESB Networks to allow operators to realise the potential of wind-generated renewable energy in the west. I refer in particular to the area I know best in County Galway. By tapping into this resource, we would lower our dependence on fossil fuels, which are largely imported.
It is Fine Gael elected representatives who——
While you can state that for as long as you like, accuse others, walk away from the issue and introduce this proposal on paper, no effort at all is being made.
It is Fine Gael representatives who are raising the greatest objections.
I ask Deputy Burke to make his comments through the Chair.
I did and I will. I am directing my comments at the Minister through the Chair. He has a valuable resource at his fingertips. If he wants to deny it and blame somebody else, that is fine, but people know the reality, even though he is not totally to blame.
I agree with the Deputy that the building of the grid infrastructure is critical. I ask that all the Fine Gael representatives support that very important project in the House.
I remind the Minister that on the Government benches there are people who orchestrated total opposition. I speak in particular about west Galway where there is a proposal for an improved network extending from Cashla, Athenry, to Connemara in west Galway. A former Progressive Democrats Deputy who supports the Government is one of the most vociferous in opposing this project. I invite the Minister to speak to him and ask him to withdraw his very forceful objections, for which he is known. Furthermore, Deputy Fahey——
The Deputy must make his comments through the Chair.
I am making them through the Chair to the Minister.
The Deputy must address his comments to the Chair.
Okay. I will rephrase them.
Through the Chair, can I respond? I will take up the Deputy's advice.
I thank the Minister. Will he include in his discussions Deputy Fahey, who for some reason best known to himself will always oppose such projects? The Minister's colleague at the Cabinet table, who is promoting the inclusion of this infrastructure——
I will support the Deputy and take up his advice but I ask him to reciprocate and try to encourage his colleagues in his own party who are taking up positions of opposition in the north east of the country.
If the Minister names them, I will talk to them. I named the Minister's colleagues and he should do so for me.
I refer to each and every one of them.
I am on record as having said about a week ago in this House that it was appalling that so many groups have lodged objections to the infrastructure proposed to extend from Meath to Monaghan. I am on the record and ask, therefore, that the Minister not lecture me.
I am not lecturing the Deputy. I am with him and I accept his comments.
Talk to the people behind you, Minister, and we will do something with the powers here.
Deputy Burke, when continuing, should make his comments through the Chair.
Let me return to the issue of renewable resources. With regard to compulsion, it would be greatly appreciated if the Minister and his Department requested, as a matter of urgency, that access be allowed to the renewable resources to which I referred.
The Minister's colleague, the Minister for the Environment, Heritage and Local Government, should be very favourably disposed to intervening in respect of groups such as BirdWatch Ireland. Only this week a major project was stifled and delayed, at a huge additional cost to the developers and in spite of the fact that the local authority had recognised as very favourable the potential of the project to bring jobs to the area and increase supply. There is already a deficit in County Galway at large. Birdwatch Ireland has made an unbelievable objection to a simple proposal that has already received planning permission. The company in question, in order to comply with the need to show greater consideration for the environment, has agreed to reduce the number of turbines by approximately 30%. Naturally, that will necessitate reinvestment and the site plan will have to be altered. It is prepared to do that but the project is being stifled anyway. There is an absolute urgency in this regard. I welcome and support what the Minister is trying to do with regard to bio-fuel. The most important thing is to point out that there is an alternative at his fingertips. It could bring far greater benefit to the country. I ask him to consider it.
I am with the Deputy 100%.
He is agreeing with us, which is amazing.
I appreciate that very much. We have had various experiments and pilot schemes with regard to the production of alternative fuel products and crops. People embarked favourably on such schemes. They invested heavily in various crop projects. The sowing in the spring was one thing, but their confidence had gone by the time of the harvest. They had to burn and scorch the ground of what they had intended as an enhancement to their income.
Many Deputies who have spoken on this Bill have referred to alternative ways of using our land. That would be very welcome because over the last three years there has been a substantial decline in areas of agriculture like cereal production, crop production and dairying. I refer to activities on which farmers depend for their livelihoods. They are getting fed up. Over the last two years, the climate has had a major effect on them. Cereal and other crops have been lost as a result of frost, etc. The Minister and his Government colleagues cannot do anything about that, although it is possible that a reduction in carbon emissions would bring our climate back into a more stable situation.
If we are to ask farmers to adopt alternative land uses — to encourage individuals to make a significant investment in the production of these crops — there will have to be an absolute guarantee of a market for such produce at the end of the day. Individual farmers will not be able to go through the entire production process without some sort of guarantee. The agriculture industry currently benefits from various EU crop production guarantees and support mechanisms. We had beef mountains and wine lakes, etc., in the past when products were produced excessively in the EEC. If the bio-fuel sector is to be introduced into this country, why can we not divert some of the existing EU support mechanisms into that sector? I ask the Minister to investigate the possibility of such a transfer to assist those who intend to move from traditional crops to crops in this area. It would be important. It is obvious that the move to a new blend of bio-fuels — I refer primarily to auto diesel, etc. — will necessitate additional expenditure by those involved. Will there be some sort of recognition of the costs which are entailed in adjusting engines and degrees of horse power to facilitate to the greater use of bio-fuels in the transport sector?
We have been told that 98% of fuels used in Irish transport are imported. We can reduce that figure because we have an alternative. That is why I cannot understand the focus on one aspect of this issue. As I see it, the bureaucracy in this Bill, as presented, will make it difficult for it to be implemented satisfactorily. That could be eliminated by using alternative sources of transport. I refer to rail transport, rather than road transport, for example. We are very lucky in this sense. It is fair to say that the Government has delivered part of a new railway line in the west of Ireland. There is a commitment in Transport 21 to continue that project. The reality of what is happening on the ground is that forestry products from counties Mayo and Galway generally go through Dublin to get to Waterford by rail. If the railway line is continued to Claremorris, as we hope it will be — the next leg of the project, from Athenry to Tuam, could start tomorrow morning — that freight traffic could be diverted from the Dublin-Waterford railway line. It could instead be brought to Limerick and across to Waterford, using the west and south coast railway lines.
We need to get real about some of these things. There are alternatives in a series of areas. I will finish on this point. I welcome the start we are making. A report produced by the EPA in 2008 states that the introduction of bio-fuels leads to "reduced dependency on oil and a reduction in the environmental impacts of transport and, in particular, greenhouse gas emissions". It claims that bio-fuels "can help to reduce greenhouse gas emissions and improve energy security, while yielding national and local economic benefits". It summarises the whole idea that underpins this legislation. I wish these concepts were supported by other things the Minister could do, with his Government colleagues, to ensure there is far greater use of renewable sources of energy. Such an approach would immediately reduce our dependence on imports and increase the security of our energy supply. A fortnight ago, the House debated the complications and difficulties that might exist in less peaceful times than we have at the moment.
I am pleased to have an opportunity to say a few words on this important Bill. I welcome its introduction in the House as it gives us an opportunity to discuss the concerns of the general public in this regard. Many people would like to do something about the alternative forms of energy that are available in this country. This issue affects individuals and industries around the country. When I visited the Bulmers cider plant in Clonmel some weeks ago, I discussed with management the issues and problems being faced by this old established employer. It produces a very saleable product at its modern plant, which is one of the finest facilities of its kind in the world. The first and most problematic difficulty that was mentioned by management was the cost of energy. The manager said if the company could control the cost of energy, it would guarantee the future of the plant for many years. When one examines this issue, the first question one must ask is whether the company has considered alternative energy but he replied it was too costly. What will the Government do for companies such as Bulmers in Clonmel? At the same time as introducing the legislation, the Government has imposed a carbon tax——
The price of electricity has reduced by 30% over the past 18 months on the back of good Government policy.
The Minister must allow the Deputy to contribute without interruption.
I am relating a factual case in my constituency of a large employer worried about the cost of energy. That is what the managing director told me and if the Minister does not believe me, I invite him to visit Bulmers cider factory in Clonmel to listen to him——
Does the Deputy accept that electricity prices have reduced by 30% over the past year?
Yes, but I am relating what the managing director of a large company in my constituency told me three weeks ago and it is my job as a representative of that constituency to tell the Minister what he said.
This is not Committee Stage.
On a point of order, I would like the Deputy to pass on a message to the manufacturer. I intend on Committee Stage to include provisions that will help companies to keep their prices low and competitive and to retain jobs in Clonmel and elsewhere. I hope the Deputy will bring that good news to the company to show what is being done in the House through the legislation to help them out.
I will. I thank the Minister for his intervention. I am trying to outline the difficulties people are experiencing on the ground.
The carbon tax is creating difficulties. Some people have said it is absolute madness. Farmers have experienced two of the worst years they have ever had and then the Green Party introduced a carbon tax through the programme for Government. Milk, cereal and beef prices are all on the rack. The very time of the year there is a huge need for diesel and other fuels to keep tractors going——
What is the price of milk?
Will the Minister allow me to make my contribution?
I have been in the Chair on numerous occasions. I have never seen a Minister interrupting like this.
I apologise.
I must be hurting the Minister.
The Minister will have an opportunity to reply to the debate shortly. Please allow the Deputy to contribute.
I thank the Acting Chairman. I must be ruffling the Minister's feathers because he has reacted to the two issues I have raised.
I only asked the price of milk.
The Ryans in Tipperary, to whom the Minister is related, are making representations to me every second day of the week about the cost of diesel, which is impacting on their business, particularly where it relates to agriculture.
Is milk 40 cent a gallon?
The price of milk and beef is increasing but farmers are in huge debt because they lost fortunes over the past few years. The Government should help them. The Minister has a duty to consider the hardship he is imposing on people. I spoke to an oil supplier in recent weeks who said he cannot collect money because customers do not have it. However, the Minister then decides to add another tax which has made the bills bigger and harder to pay. He is not living in the real world. I reiterate my invitation to him to visit my constituency at his earliest convenience to listen to what people are saying in Bulmers of Clonmel and Tipperary co-operatives and to agricultural contractors who have almost gone to the wall because of the huge imposition that the carbon tax is on their business.
The Minister is not jumping to his feet now as quickly as he was earlier.
I was stopped from making a contribution.
Will the Minister visit Tipperary to see the issues on the ground that are affecting people? The invitation is open to him in the next month to accompany me and I await a response.
Alternative energies are good in theory. It is better to develop alternative energy sources rather than import fuel. If we could produce our own energy, we would be better off. For example, Bord Gáis proposes to create a significant number of jobs through wind farms, which is welcome. However, people will be up in arms because some wind farms have been built too close to private dwellings. The Minister should send guidelines to planners in local authorities to ensure such farms are not constructed too close to private dwellings. A number of regions would benefit from these farms but we have all attended public meetings where fear and concern has been expressed about wind farms.
The same issue has been raised in County Meath regarding the erection of overhead wires. It was reported recently in the newspaper it would cost X amount to bury them underground. Why could they not be buried if such a long-term investment is being made? The Minister needs to bring the public with him regarding alternative energy projects. There is not public confidence in wind farms and in one instance when planning permission was granted for a wind farm, the people behind the project applied for a bigger farm before the first one was built. That does not instil confidence in the local community.
I hope the Deputy can give people confidence by reassuring them that there is no reason to be fearful about such projects, that we have a proper, independent planning system, which will make sure such farms are not built too close to their houses, and that this is safe and clever technology that will protect our people's----
Deputy Hayes, without interruption, please.
Guidelines need to be sent to local authorities because their planners are responsible for the day-to-day work but if the Minister or his colleague, the Minister for the Environment, Heritage and Local Government, send guidelines, which they are laying down in every other area, to the local authorities to make sure they are not imposing on people, the wind farms will be welcome, particularly if the benefit and good they can provide is pointed out to the community.
The explanatory memorandum refers to the transport of bulky biomass around the country and states trains could be used. That could be important because it would be a way to improve the use of the railways and it should be encouraged.
Many other aspects of the Bill are welcome. The discussion on the Bill has been good. I refer to some of the points I made about the carbon tax and the difficulties associated with it. It is important that we do a good public relations job when we send out the message about alternative energy. We must educate people on why it is being done and why it is a benefit to the economy in the long term. I welcome the discussion on the Bill.
I thank the Acting Chairman for his forbearance. Debate works well in this House when it is two-way.
The Minister seemed to enjoy it anyway.
It must be controlled as well.
It is debate in the proper way. There is not a monopoly or ownership on the switch we have to make. We all understand the sense of this, that if we do not do it we are leaving the country exposed, and if we do it we can help out the farming community. I see farmers as being probably the most important group in making the switch towards a more indigenous fossil fuel system, with wind power, biomass and fuel crops. We are on a similar line on that. The issue is how one best does it. That requires political support as well. We need to make difficult decisions that might not be popular. It will be difficult to build the electricity grid.
I could spend all my time talking to Deputy Tom Hayes. Putting lines underground might seem the most attractive option, which we will do wherever we can because of the landscape and other benefits, but in certain instances it is not technically possible and would not be desirable for a range of reasons. Crucially, for the people of this country, especially in rural areas, if we do not build the grid there will not be any jobs. I do not mean there will not be any jobs at all but none of the modern jobs that come from factories provided by foreign direct investment. That is what has helped rural Ireland tremendously in the past 30 or 40 years.
In my mother's town of Macroom a series of factories set up on the edge of the town. They need good quality electricity. I refer to big investments such as modern bio-pharma, biomedical devices, ICT and data centres. They need a rock solid guarantee that they will have power. They cannot afford for the system to collapse. A data centre cannot be allowed to go down. Likewise, the ovens in a bio-pharmacy plant cannot be allowed to cool down. Often one needs two electricity connection points on either side so that if one goes down, one has a backup. In order to do that one needs a grid. It is not easy or popular to do that but it is important. Some people say "Yes, we should make the switch" but at the same time they do not want us to put in the grid, but that will not work.
I wish to refer to some of the other contributions that have been made in concluding the Second Stage discussion of the Bill. I thank Deputies from all sides of the House who have contributed to the debate. I have listened with interest to the points raised and I will take them into account as we move on to Committee Stage. Bio-fuels will play a central role in meeting our binding European Union targets for 2020, and in so doing, greatly reduce our greenhouse gas emissions, improve energy security and help the agricultural sector to diversify into new areas.
We must strike a balance between taking advantage of these opportunities and at the same time ensuring that the fuels are from sustainable sources and that increased penetrations of bio-fuel take place at least cost to the consumer. The bio-fuel obligation scheme, as set out in this Bill, meets all of those requirements. I appreciate the support I sense across the House for the model we are adopting.
A number of amendments are likely on Committee Stage, primarily to clarify certain matters with regard to the operation of the obligation, but also to make provision to impose a levy on electricity generators in respect of carbon allowances. In July 2009 the Government agreed to progress legislation to recover these gains and to use the proceeds to reduce network charges for large energy users in order to support employment and economic recovery. Amendments on Committee Stage which will place a levy upon electricity generators to recover a substantial proportion of those gains have already been published. My Department has engaged with the Commission for Energy Regulation and the electricity industry on those measures. I look forward to engaging further with the Opposition on the issue.
In response to Deputy Tom Hayes's comments about a plant in Clonmel, it is the intention to use any such revenues. They do not go back to the State; they will go back to the large energy users, the big companies that have high electricity bills to make sure that they remain competitive. We have brought our prices back down to the European average. We need to stay at that level and one of the ways we will do that is by means of the amendments we intend to introduce on Committee Stage.
The point I was making is that the company could not see its way to get into some of the alternatives.
I agree. One of the things we are doing among a range of different measures through the Sustainable Energy Authority of Ireland, primarily, is to put in support grants for a range of new alternative technologies, be it combined heat and power, CHP, systems fired by biomass or high efficiency energy systems. One of the reasons we are providing that support is that we have had almost 150 years of a fossil fuel fired infrastructure. We have built up a gas and oil infrastructure and supply chains to suit that. We are at the start of a new alternative energy system which will take from ten to 30 years to build up. At the start in order to build up the experience we will provide grant support. When the system is up and running the State will step back and allow the market to take over. That is the general approach we are seeking to adopt.
We have a real advantage in this country in that we have one of the best growing climates in the world, we have the best wind resource in the world and we have huge ocean energy potential. Therefore, it makes economic sense for us to do it. There is a cost initially to bring in the economies of scale and the supply chain which has not existed previously and once that is up and running one can make it market effective and efficient.
The Bill is an important measure in delivering on our targets for renewable energy in transport. Furthermore, the safety provisions of the Bill will deliver benefits to LPG consumers and to the public in general. I look forward to working closely with the CER on ensuring the speedy implementation of the Bill's provisions, following enactment. I will be happy to consider carefully any proposed amendments from all parties in this House. I have accepted many amendments in the Seanad. I prefer to listen and to accept amendments where they are appropriate as long as the Attorney General's office tells me that it is kosher. I look forward to the early consideration of this Bill on Committee Stage where I am sure the opportunity will present itself for a more forensic review of the legislation.
Question put and agreed to.