JOINT COMMITTEE ON AGRICULTURE, FISHERIES AND FOOD díospóireacht -
Wednesday, 24 Mar 2010

Development of Anaerobic Digestion in Ireland: Discussion.

Chairman

I welcome Mr. John Butler and Mr. David Duggan from Duggan Brothers (Contractors) Limited, who will make a presentation today on the development of anaerobic digestion, its problems and potential. There are representatives from other groups here and I understand that Mr. Butler will introduce them. I welcome them all here today.

Before we begin, I draw witnesses' attention to the fact that members of this committee have absolute privilege but this same privilege does not apply to witnesses appearing before it. Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside the House or an official by name or in such a way as to make him or her identifiable.

Mr. John Butler

I am here with a number of colleagues to talk about anaerobic digestion, the massive potential we see in this industry, and the problems that are preventing it from developing. Before I start, I thank Deputy Brady and the committee for the opportunity to make this presentation. We have a unique opportunity with this technology to develop a new indigenous industry.

Our plan is to give a 15 minute introduction on the industry, which has the potential to create at least 15,000 new jobs and supply 50% of our current electrical requirements from small 380 kW digesters while, critically, not reducing current agricultural output but reducing greenhouse gas emissions. It is important to note the industry is not dependent on additional capital investment by the Government to become operational.

After the presentation we will try to answer as many queries as possible. We have tried to anticipate the questions that may be asked and have prepared a number of slides to help answer them. Our goal is that at the end of the meeting, the committee will have a greater understanding of the potential and enormous benefits anaerobic digestion could bring to the country if it is allowed to develop.

What is anaerobic digestion? It is a technology that enabled us to generate electricity and provide a heat source from our most renewable natural resource, green grass, in small farm-based generation plants known as digesters.

How does the technology work? Our flow chart demonstrates the principle behind it. The feedstock, silage and slurry in this case, is loaded into the digester, where organic matter is broken down by bacteria in the absence of oxygen — an anaerobic atmosphere — to produce biogas. This biogas is then used as a fuel to run a combined heat and power engine that powers a generator to produce electricity and heat. The other biproduct, digestate, can be spread back on the fields as a fertiliser and soil conditioner. The digestate still contains all the original nutrients — N, P and K — the only thing anaerobic digestion removes is the gas which, in normal circumstances escapes into the atmosphere. In summary, we are capturing a resource that previously escaped into the atmosphere, and in the process creating much needed jobs and protecting our environment.

The next slide shows a typical plant. The digesters are concrete tanks with a rubber membrane for gas storage at the top. There is then a feed-in hopper. The material is put into the feed-in hopper and from there into the digesters, where it is heated. The bacteria then break down the organic material and release the biogas, which is then transferred to a combined heat and power engine, generating heat and electricity. The plant does not have a huge footprint and we see it fitting on many farms around the country. We can sustain 4,000 such digesters. The main feedstock would be grass silage, which can be grown anywhere in the country, and hence provide a much needed additional income stream for the agriculture industry. The number of plants we are talking about would need approximately 10% of our land bank, which we believe is available or not currently being used to its full potential.

It is important to note that we see this industry as a bolt on to the existing agriculture enterprises. We do not anticipate a reduction in our current agricultural output.

This technology has been used successfully in Europe for the past 50 years. The main economies in Europe, Germany, France, Britain, Austria and Italy, have all recognised the benefits of the technology and either have a significant industry developed or are currently developing one. More than 9,000 plants are currently operating on mainland Europe and the vast majority of these were constructed in the past ten years, with the number increasing every year.

Our panel comprises representatives from the technology companies, academia and the agricultural and construction industries. We are fortunate that agriKomp, a major supplier of the technology, has flown in from Germany to share its experience and expertise on how the industry has developed in mainland Europe and how that model could be applied here, while learning from its experiences.

Our panel comprises Dr. Jerry Murphy, a lecturer from UCD, who has completed a master's degree in AD and a PhD in energy production from waste. He is a lecturer in transport engineering and a principal investigator in bio-energy and bio-fuels in the Environmental Research Institute in UCC. Dr. Murphy is regarded as one of the leading experts in the field of anaerobic digestion and has had more than 40 papers published on bio-energy and bio-fuels. Mr. Donal Buckley is a founder member of Kedco, the bioscience energy company, and is its chief executive officer. Mr. Buckley has played a key role in the development of Kedco to its current position as one of the leading companies in the fields of anaerobic digestion from gasification here and, in particular, in the UK. He is a graduate of UCD and is currently finalising an executive education programme in leadership at Stanford University in California.

Mr. Desmond Buckley is an agricultural scientist who works for Kedco. He is its business development manager for both Ireland and the UK and a graduate of UCD and has previously worked for AIPB.

Mr. Tim Meagher farms 230 acres outside Roscrea, County Tipperary. He is in the top 10% of beef producers in the country. Mr. Meagher hopes to develop an AD plant on his farm to supplement his existing enterprises. Mr. J. J. Kavanagh is a tillage and dry stock farmer from New Ross, County Wexford, and is leader of the IFA project team on alternative land use. He has held numerous posts with the IFA in the past at national and local level and is a board member of Wexford Farmers’ Co-operative.

Mr. Robert Bugar and his associates established agriKomp in 2000. It now employs more than 250 people and is one of the leading providers of AD technology. It has established offices in Germany, France, Italy and Austria. Prior to starting agriKomp, Mr. Bugar has been intensively involved in the production of bio-gas from renewable raw materials.

Mr. David Duggan is a contacts director with Duggan Brothers. He graduated from Waterford Regional Technical College with a degree in construction management and also holds a diploma in project management from Trinity College. He has 20 years experience in the construction industry with ten years at a contracts manager-contracts director level. Mr. Duggan has successfully completed projects up to the value of €35 million.

I am a contracts manager for Duggan Brothers (Contractors) Limited for the past 11 years and I have worked in the construction industry for more than 20 years. I am also a corporate member of the CIB and a graduate of Waterford Regional Technical College. I have been involved in a number of wind projects with Duggan Brothers (Contractors) Limited and have recently completed extensive research on various renewable energies.

In our panel we were trying to get a mix of all the necessary people required to get this indigenous industry up and running. To complete this brief introduction, I invite Mr. Robert Bugar to discuss the technology and the position in Europe as it now applies. I will then invite Dr. Jerry Murphy to explain briefly how this will apply to Ireland.

Mr. Robert Bugar

I thank the Chairman and members of the committee for the invitation to appear before the committee and to be a part of this presentation. I wish to add to what Mr. John Butler said about me. I am also a farmer. This is where our roots are. We tried to develop a technology that will provide an option and an alternative in the farming sector which is experiencing its own well-known problems. AgriKomp started ten years ago. We are part of an industry which has more than 11,000 employees in Germany. I have 250 employees plus some colleagues who are working in eastern European countries. Nowadays we give an option and an alternative to the farming sector but, on the other side, we are awaiting the infrastructure in Germany and we are stabilising the energy prices in the future when the natural resources are running out.

The slide shows a typical farm in Italy where we are conducting many projects. In Germany, more than 4,700 plants are in operation. We have supplied roughly one quarter of the installations with turnkey plants.

Dr. Jerry Murphy

I work for the International Energy Agency and have been on the bio-fuels task for the past five or six years. We have seen what other countries do. There is corn ethanol in the States and rapeseed oil in various countries. Ireland is unique in that it has the third highest level of bovinity, that is, the ratio of cattle to people. We have roughly 8% of the cattle population of the EU and 1% of the human population. The cattle are grass fed. Some 91% of our land is under grass. Energy crops for ethanol or bio-diesel come from arable land. We have only 9% arable land, which is fully used. We import wheat. If we are to have bio-fuel energy, one is going into that small quantity of land. Ireland is unique in that it has lots of grass and a small quantity of arable land. In cross-compliant states one cannot plough up grassland and convert it to arable land. One cannot decide to have a quarter of land under a miscanthus plough of grassland. It would not be considered a bio-fuel under the renewable energy directive because by ploughing land one releases carbon dioxide.

In Ireland, grass is our feedstock. The next question is how to make energy from grass. Perhaps members would look at slide 81. We have been looking around the place for a while and much of our work has been related to bio-gas. One plant we came across that I was impressed with was in Salzburg. A dairy farmer and a few of his colleagues got together and converted to digestion. They have 150 hectares. They cut the silage and take it to a silage pit and put it into tanks which are underground. At the gate of the farm they have a service station. They sell gas as a transport fuel. In that service station one inserts one's credit card and types in the amount of fuel one wants. They are very happy farmers and make a good living. They are making a better living than as dairy farmers.

An earlier slide shows a plant south of Vienna which has an upgrading facility which sits on the gas grid. South of Austria they take 60,000 tonnes of food from shops that is out of date. They make gas and put it into the gas grid. We have a fantastic gas grid. Bio-gas is very flexible. We can be put into the gas grid and we can make electricity and transport fuel. In Germany, there are 4,700 anaerobic digesters. Austria, which has a population of 8 million, has 600 digesters. Ireland has three. In terms of bio-energy for Ireland, we cannot do grain ethanol because we do not have the land. We do not have the arable land to produce rapeseed bio-diesel. We have to deal with grass. From our point of view, slurry is grass. We have 40 million tonnes of slurry from cattle. Slaughter waste is grass and grass is grass.

Germany has very good rates for bio-gas electricity. It gets about 20 cent per kw hour. In Ireland, we get 12 cent per kw hour. The argument we are making today is that in Germany, because there is a rate which makes the facility bankable, it has 4,700 digesters employing 15,000 people. If we can get a rate for bio-gas it will not involve the Government in grant aiding. If there is a rate, developers will come in. We published a paper and we think that by 2020 there could easily be 200 big farm digesters. That is a conservative estimate. That would amount to approximately €800 million of capital investment which would come from the private sector and create jobs in rural communities. There would be four or five people working in every bio-gas plant.

An argument was made previously by a gentleman from Iowa about corn ethanol that when one buys ethanol from Iowa, all that money stays in Iowa. People work in Iowa, they go to the restaurant in Iowa and to the shop in Iowa. His view was that grant aiding or giving a step up to an industry paid back because the money stayed in the industry. If we had 400 or 500 farm digesters spread around Ireland making combined heat and power, putting it into the grass grid, making transport fuel, etc., people would be working in rural Ireland in Irish digesters and spending their money in the local restaurant and local clubs. We believe it must be supported. The pen is mightier than the sword. If we do not get a proper rate on return, it will not happen. A developer must be able to go into a bank and say this can work. At 12 cent per kilowatt hour, it cannot work.

Mr. John Butler

Mr. Buckley will refer briefly to the problems hindering the development of this industry but if I may summarise, we can create approximately 15,000 jobs. We are not looking for capital investment from the Government, which I presume is not available at the moment. We will reduce our greenhouse gas emissions. We have the potential to do all of that. We see this enterprise as a bolt to the agricultural industry. Mr. Buckley will explain the reason this industry has not taken off, so to speak, before now.

Mr. Donal Buckley

The answer is that we require 19.5 cent per kilowatt hour for agricultural based anaerobic digesters to have them built in this country. That will put money back into farmers' pockets and into local economies, from the tip of west Cork to the top of Donegal. It will cover every area in between those locations.

Our price must be as good as if not better than the average European price because in the globalised world we live in, the capital will follow the price. If we leave our price at 12 cent, we may have an AD, anaerobic digester, industry in 12 years' time when the rest of Europe will have built its AD industry. If we increase the price to 19.5 cent, it will not cost the Government anything. The international capital will flow in and the plants will be built. There will be one in every parish and in the coming years it will create the number of jobs we mentioned, as well as supply up to half of Ireland's electricity needs while not reducing agricultural output by one degree. That is the summary of what we require.

Chairman

Have the witnesses completed their presentation?

Mr. John Butler

Yes.

Chairman

In that case we will take questions. I call Deputy Creed.

Deputy Michael Creed

My apologies for being late. I got my wires crossed in that I thought the meeting was starting at 11.30 a.m. I thank the delegation members for their presentation.

If I read the delegation's request correctly it is that we need joined up thinking. We have requirements and legal obligations to meet in respect of moving our energy requirement from non-renewable to renewable sources by 20% by 2020. We have EU directives on limiting organic waste to landfill and it is the way we manage all those steps in a coherent fashion that will enable us avoid punitive financial sanction for failing to meet those objectives and enable us capitalise on the opportunities they present.

In respect of the delegation's requirement that a realistic tariff be paid, that is accepted. We must acknowledge that most of the momentum for this kind of development is now in the United Kingdom rather than here. I understand the Department of Communications, Energy and Natural Resources is conducting a review of this issue, and I believe the end of March is the timeframe it has in mind for that review. I have taken the matter up with the Minister.

The delegation's pitch is for 19 cent, which is significantly more than what is currently on offer. If I am correct I believe it is 11 or 12 cent but the reality in terms of price might be somewhere in between. Obviously, the representatives will say 19 cent because that is their calculation but it must be increased significantly.

There is an aspect I may have missed, and I apologise if I did. Electricity is one of the products from this industry but another significant energy product from it is heat. We do not have a tradition of municipal heating facilities, etc., but are we ignoring a significant energy source in respect of anaerobic digestion? The delegation made reference to experience in Germany in that they have a far greater tradition in this regard. I understand that in the Netherlands no premium is payable on electricity. Most of the heat is sold to municipal heating facilities, hospitals and so on but on farm sites of anaerobic digestion the heat is used to heat piggery units, domestic houses, nearby glasshouses and so on. Do we need to close the loop in respect of the energy generated from what is a by-product — call it what you will- that is a significant asset also? My information is that in some instances of anaerobic digestion they pipe the water over long distances to heat apartment blocks, hospitals or whatever. There is a potential in that regard which we should not overlook.

What is the capital investment required? Agriculture as it operates, and Deputy O'Keeffe has left but I am sure he will be back, is a subject we have touched on previously. Around the Mitchelstown area, for example, there is a big concentration of piggery production. What is the capital investment required for, say, a pig farm to get involved in this industry? Is it viable on an average Irish intensive pig unit? Are we talking about a number of units coming together?

How far is the technology developed? For example, the delegation appears to have concentrated a great deal on the agricultural side of it but what if I am running a small hotel and I have a degree of organic waste in the kitchen, grass cuttings on my lawn or a relationship with a local fast food outlet or other restaurants to take its organic waste? How developed is the technology on small scale anaerobic digestion facilities that can be self-financing on the basis of the capital investment and what they will return for, say, a stand alone commercial entity, be it a hotel, a hospital or whatever, that can use its own grass cuttings, kitchen waste or that has a relationship with a number of local outlets? That is just another observation.

Regarding the planning process, do we need to examine the current planning regime? Having spent many years on a local authority I am aware that when people do not know anything about something, and anaerobic digestion is a new phenomenon, there tends to be an instinctive reaction against it. We need an education process to assure them that this is a good industry but is there a need for an accelerated planning process, particularly if one is running an anaerobic digester under a certain size or that is exclusively dealing with its own on-farm, industrial or hotel waste? How cumbersome is the planning process in dealing with that? Those are my initial observations.

Chairman

We will group the questions if that is acceptable to the representatives because this room is needed for other meetings and we have to vacate it at a certain time. We will take questions from three members at a time if that is acceptable.

Deputy Martin Ferris

I thank the delegation members for their presentation, which I found to be informative and also challenging in that utilising the potential of this industry for the greater good must be examined in a positive way.

The presentation stated that 4,000 digester plants can be sustained. Is that correct? In terms of the utilisation of these plants, considering the size of the island and as a lay person looking at the potential benefits, they would have to be strategically placed, for example, in close proximity to small towns and so forth to maximise the benefit of what is produced in these units.

A number of avenues can be followed in regard to these units being strategically placed. They must be in close proximity in terms of grass, slurry and other types of waste that can be used and digested. At the other end of the scale, whether it is electricity, heat, bio-fuel or anything else that comes out of these units, that can be distributed in that proximity. That would be a way of maximising its benefit. That is a very exciting project. Again, there is a large onus on both the Government and us politically to reduce our greenhouse gas emissions. According to the presentation, it would be a big advantage in that regard. The witness said that 12,000 or 15,000 jobs could be created. Could he break down how they can be created and say how they can be sustained? Is it in the initial construction phase or in the maintenance, running and supply side into the future? The country is crying out for jobs, particularly in rural areas. I am from a rural area as are probably all the Deputies and Senators on this committee. It is important to bring employment back to rural areas and generate sustainable employment there for the benefit of all communities.

I welcome the presentation. It is very exciting and offers huge potential for areas of this island that have been consistently neglected. I look forward to seeing how it develops in the future. There is an abundance of grass in this country. Is there any differential with coarse grass, as we would call it, on a hillside with overgrown rushes and so forth? Will it become part of the material necessary for the anaerobic digestion to create the energy at the other end of the process? I wish the delegation well.

Deputy Christy O’Sullivan

I thank the panel for the comprehensive and informative presentation. Ten or 12 years ago I met a lady, Ms Sally Barnes, in my west Cork constituency who is famous for smoking salmon but who was also talking about this idea. I mention that just to point out how far behind we are in getting something like this off the ground. She was talking about it ten or 12 years ago and now we have been given a presentation on something similar.

We have heard all the positive aspects but, honestly, there must be negative aspects along the line. If there are, we should hear about them. I am not looking for the negatives. I want positive outcomes for this but the witnesses should tell us if there are any negatives. I know that is not their job but perhaps they would do that.

The jobs aspect is huge. The country is starved of jobs and if 15,000 new jobs could be created with this proposal, it must be examined and investigated thoroughly. Jobs are hugely important at present.

Over the years there has been a huge problem with the disposal of slurry. It has caused much hassle and grief. With this proposal, slurry will be hugely valuable. This is one of the main positive aspects of it. Everybody knows what was done about the disposal of slurry in past years. It was not very nice and did not do much for the environment. Given that we have spent billions on the environmental aspect of storing slurry, it fits in well with what is being proposed here. Slurry can be used for many different things and can be recycled. The witness emphasised the grass issue. Over the last three months we all could have done with more grass. I do a little farming and, unfortunately, grass was not too plentiful. However, I do not envisage that being a problem because this country can produce plenty of grass. We can use our land for the greater benefit of everybody.

By and large, I am supportive of this proposal. The witnesses have made their presentation and the case for it very well. I support it. With regard to the viability of the smaller units, when this process was mentioned to me 12 years ago, it was envisaged that there would be one unit in a district which would be supplied with slurry by pig farmers, smaller dairy farmers and so forth. Do the witnesses envisage one of those units in an area or it being confined to two or three farmers in the area? What size is viable? What scale is not viable for the installation of a unit? How big should we go?

Mr. John Butler

I will reply to the first question from Deputy Creed about the heat. We will go through the lessons learned in Germany and Dr. Robert Bugar will explain that. He will show what the Germans are doing.

Mr. Robert Bugar

There have been many questions and I will try to answer them. What is interesting is that we are now discussing a very high level for using the gas, and I am very pleased about that. In the biogas system we are much more efficient when compared with the huge energy production industry we have with coal and so forth. If there is a fair feed-in tariff, the rest will happen automatically. Members will see on the slide the farm scale biogas plant. There was a question about how big might be an ideal size. If one has a farm scale biogas plant, one can easily transport the gas a few miles. One must not pressurise or clean it with very high sophisticated technology. One just transports it a few miles and then do little district heating systems. All these technologies come forward automatically if there is a fair feed-in tariff. One thing that is interesting is that it automatically generates local jobs; for example, if one has free heat, one saves electricity costs. If one has heat for free, somebody locally will investigate district heating systems and somebody local will be required to service it. Fair feed-in tariff is solving many problems because problems are solved automatically with local intelligence.

The question about the ideal size and the negatives is very good and interesting. It is difficult to ask somebody who is working in a company about the negatives, to be fair. One of the biggest mistakes is not using the heat. However, there are technologies if there is a fair tariff and people are intelligent enough about using a by-product they have for free or for a low price. The next disadvantage from my point of view is if the projects are too big because then there is a lot of transport. If one has a centralised biogas plant to which a lot of grass silage is transported, there is a lot of transport and one does not have a huge efficiency advantage. The plant should not be too small. If it is too, one will not have economies of scale. In Germany, the typical size nowadays is between 250 KW and 400 KW or 500 KW. That means that using 1 hectare, one can produce 2 KWh. Therefore, we have to know how much——

Dr. Jerry Murphy

It is 125 hectares.

Mr. Robert Bugar

Yes. One does not have to change much in the farming system.

The other question is how sustainable are these jobs. I ask myself this question every month. As I will have to pay 250 employees next month and the following month, I need an income. Looking at the matter in detail, one third of my company staff are working in servicing. As all of the plants run for 8,000 hours a year, they need to be serviced. Even if the level of construction of new plants is going down, we still require a local service. That is why in Germany we have already started to train people in planning. We transfer our know-how and they try to follow contractual laws. We have even started to train service personnel. From my point of view, a big advantage of this technology is that we can do this now. At the end of the day, however, someone always has to pay the bill. If we have a feeding tariff of 19.5%, it is a little higher than energy production costs, including nuclear and coal. We will stabilise the price when the price of oil rises in the future. Society in general is supporting new technology which is creating jobs and stabilise prices in the future. I heard recently that in Germany the cost of all renewables together will amount to the cost of one packet of cigarettes a month, therefore, it is affordable.

As regards the target of achieving a figure of 20% by 2020, the actual calculation is that in Germany we will reach a figdure of 45% to 50% for renewables by that date. In fact, we could do this now.

Mr. J. J. Kavanagh

I represent the Irish Farmers Association and head up the alternative land use project. We have been looking at alternative uses of land. How can we do it and why should we do so? We have the land, plus the two main raw materials needed — slurry and grass. It offers tillage farmers an opportunity to produce maize and beet. We have lost sugar beet production and will now lose malting barley production also; therefore, as a result more land is becoming available for other uses. It takes care of greenhouse gases; we need to find a way of dealing with such problems. It can be bolted on to existing agricultural practices without major changes on farms.

The question was posed as to where it would work. It would probably work in most parishes, with most farmers drawing into it. When fed into a digester, it is the best form of fertiliser. There is no smell and it can be used to grow crops. The farmer puts it in at one end and takes it out at the other as a safe material with no smell or gases. It will grow crops and involve job creation. However, we need a road map to find out if the Government is really interested in the matter. We will also have to hit some EU targets; therefore, we will be caught for carbon credits or emissions in some shape or form. As regards how will we handle this, this is a way forward. While I mentioned the bolt-on aspect for agriculture, there could be potential earnings for farmers of €100 per cow.

Chairman

Of €100 per cow.

Mr. J. J. Kavanagh

Per cow, whether dairy cows or beef cattle. All beef fattening units will face the same equation, as well as pig units and anyone with slurry.

Someone asked what were the downsides and negative aspects. On the negatives, it may be difficult to get through the planning process; therefore, we might need help in that regard. We need a tariff to make it work. If the tariff is not right, the investment will not be made to make it work. The biggest downside is that we are running against the clock; time is very much against us.

Chairman

We will certainly have objectors because no matter what one tries to do in this country, there are plenty of them.

Mr. J. J. Kavanagh

Absolutely.

Chairman

Can chicken manure be used?

Mr. J. J. Kavanagh

Yes

Mr. John Butler

I will ask Mr. Buckley to deal primarily with the questions asked about jobs, planning and costs.

Mr. Donal Buckley

I will deal with the question of how realistic are the job numbers about which we are talking. I know the committee probably hears numbers cited every day. Dealing with the service industry alone, over 10,000 jobs have been created from having almost 5,000 plants in Germany. There are about three jobs for every plant running on a farm. We are being conservative as regards the number of jobs. The jobs on farms are completely sustainable in the long term.

Realistically, how many plants can be built? We have done a quick calculation and 10% of the land area is used by a 380 KW plant, as Dr. Bugar mentioned. Animals are outside for part of the year, but when they are inside, we calculate that animal slurry, including pig slurry, would reach about 4,000 plants in Ireland. That would provide for around 40% or 45% of total electricity needs, plus heating needs. These are high figures, but they are realistic.

As regards the tariff to be set, we did not pick the figure of 19.5 cent out of the sky. We could decide to set any price we wanted for it, but would the capital follow to build the 4,000 plants required? If we were to pick a price of 16 cent, there would be a few plants built, but the international capital would not flow here, rather it would go to Italy, Germany and the Unitd Kingdom where it would make sense to build them with a higher price base. Whatever price we pick, therefore, we will decide our own destiny as a result.

Deputy Tom Sheahan

A former colleague of ours, the late Senator Peter Callanan, was a strong advocate of anaerobic digestion facilities. I listened to him talk about the subject many times, into which he had a great insight. It all looks very positive. Mr. Buckley made a good point in saying that we could decide our own destiny in choosing the tariff. That is a strong point, but is the figure of 4,000 digesters aspirational, given that there are 9,000 on mainland Europe? It was also stated it would not reduce the agricultural output of a holding, which I find hard to understand. Will a farmer with 200 acres be able to farm as intensely, or will there have to be a set-aside scheme to operate the digesters?

Are there difficulties in connecting to the grid? Ireland is preoccupied with wind energy production. We have gone wind energy mad. Many of the complaints from developers concern connection to the grid.

I will direct my next point to Mr. Desmond Buckley. Was he formerly in AIBP?

Mr. Desmond Buckley

Yes.

Deputy Tom Sheahan

He would know about the cost of getting rid of offal and so on from abattoirs.

Mr. Desmond Buckley

Yes.

Deputy Tom Sheahan

This would be very positive for abattoir owners as well. That is something which could be put on to that because the cost of disposing of offal and so on from abattoirs currently is crazy.

Deputy Ferris asked about rushes. Would rushes be acceptable because there are approximately 500 of them in south Kerry? If they are acceptable, we will look for many of them to be put in there.

Mr. Bugar spoke about planning permission. It is less environmentally sensitive than wind turbines and wind farms. Perhaps it might not be too hard to sell it to planners. It is an excellent idea and it is a pity the late Senator Peter Callanan is not here because he would have been in his element.

Chairman

He advocated it for a long time.

Deputy Eamon Scanlon

I thank the delegation for the presentation. I first heard about anaerobic digesters many years ago from the late Senator Peter Callanan who is sadly not with us anymore.

At the end of the day, this all comes down to money. If people can make money, that will decide how successful it will be. What is the minimum cost of providing one of these units, although I know it depends on capacity and so on? I am sure there are certain areas in which one would need much larger systems. County Monaghan, in which there is much pig and chicken production, would be suitable. My constituency counties of Sligo and Leitrim would not have that type of production, whether of cattle, pigs or chickens. What is the minimum cost of providing the system?

I refer to the comparisons between the UK farmer and the Irish farmer in the case study. The UK farmer can show a profit of €168,000 while the Irish farmer shows a loss of €29,000. Even allowing for the 12 cent to 19 cent difference in the cost of kilowatt of electricity produced, why is the Irish farmer at such a disadvantage?

I refer to the average price of a tonne of silage at €25. I am sure that would be much less than people would achieve if they were to bale silage and sell bales, although there is a cost to that as well.

At the end of the day, it will all come down to how farmers can best get the maximum price for the products they produce. How would one marry those things?

Deputy Andrew Doyle

I thank the delegation for the presentation. The initiative shown is to be commended because generally, with things like this, it takes a mix of academia and private enterprise to get them on the agenda.

I refer to electricity, heat and fuel for transport. I heard Dr. Murphy speak at the Oireachtas Joint Committee on Climate Change and Energy Security. He made the point that in Scandinavia many of the buses are run on gas in their roofs or something like that. The three potential areas in which this can be used are electricity, heat and fuel for transport.

I refer to the materials which can be used. Would Mr. Meagher, who is a potential AD plant developer, use grass and slurry, in particular, to have a year round supply? Would he envisage going beyond his farm to incorporate other holdings to feed into the plant he might develop at his location? He is just about on the baseline of the lower end of the scale at 125 hectares of land available.

I notice a price has not been included for income receipts for disgestate nor for the cost of slurry. In terms of the way the plants work, is the slurry transported and does the digestate come back as a sort of barter or trade?

Mr. Donal Buckley

Yes.

Deputy Andrew Doyle

I thought that might be the case.

I know it is impossible to shrink on bulk but if one is going to use slurry to a large degree in the system or, grass — slaughterhouse waste which, in many ways, probably has the highest calorific value of all three from a bulk point of view — is there a size beyond which it cannot go in terms of the logistics of transporting it over a distance unless there are many large farms and much land available in a very small area, such as the Golden Vale?

I refer to the principles of how anaerobic digestion would work. When one looks at the county development plans — Deputy Sheahan made this point — we already have issues in terms of and expensive methods with which we will be burdened in regard to spreading slurry, trailing shoe and so on. That is expensive, although for many it will not be obligatory so there will be a more distasteful way to dispose of slurry on farms. That is happening all over Europe and not just in Ireland. If this system was incorporated, it would improve the environment and the harmony between farmers spreading slurry and urban communities. It should be sold on that point.

I notice the tariff is way below the European average. The average is 16 cent to 18 cent. I propose that this committee recommends to the Minister for Communications, Energy and Natural Resources that the tariff should be brought into line with that in the rest of Europe and with what the sector states is necessary to make this viable.

If we could establish this nationally, even if there are only few hundred starting off, the potential is considerable not to mention dealing with greenhouse gases, which it does. The fact it is an add on to rural enterprise and communities and would sustain jobs makes it worthwhile, apart from the added benefit that it achieves in terms of reducing greenhouse gases.

I propose that we write to the Minister——

Chairman

Will the Deputy remind me of that at the end of the meeting?

Deputy Andrew Doyle

Yes.

I have one question on the materials. There is an extensive list of them. Is there potential from mulching from thinnings from woods or even Christmas trees? Do they work in digesters? Are they compatible with everything?

Deputy Jimmy Deenihan

I am not a member of this committee but this is an area in which I have an interest. I watched the presentation on the monitor in my room. I compliment those who made the presentation. It was clear and persuasive in its own way.

At present, we spend a great deal of money investigating different technologies for alternative energy and it is becoming a bit of an industry. We have a technology that has been proven throughout Europe and yet there is only one anaerobic digester operating in Ireland, in Limerick. The delegation might confirm that and I suggest the committee should go and look at it if it has not done so already. The main reason for this situation is economics. If the refit if not made attractive, it will not happen. That is very much in the hands of the Government, especially the Minister. Often the Minister, Deputy Ryan, has referred to alternatives and the delegation probably have met him. Perhaps they would convey his view on this technology and whether he supports it. That would be important.

Federico Pucciariello, who played rugby with Munster up to last year, has gone back to Argentina to produce biodiesel. The reason it is attractive to do so in Argentina and not in Ireland or somewhere in Munster where he would like to do it is because of the tariff. He is getting a guaranteed price in Argentina where he has investors and the money to follow his investment. It will be up and running shortly. He would like to do the same in Ireland. Only a small shift would make it attractive and he would get the investment. It is great that the committee has this group of people here today. It is a matter which this committee can follow-up aggressively and, I hope, get a positive result.

Deputy P. J. Sheehan

I compliment the witnesses on the excellent presentation they made. They certainly have brought it to a fine art. I note they stated that in Germany the company has in excess of 4,000 plants employing 10,000 people. Does that amount to fewer than three jobs per plant? They stated there would be an opportunity of having a plant in every parish from Mizen Head to Malin Head. That would be a major innovation but it would mean that the farmers in each parish would want to form a co-operative to do so. It cannot be done by individual farmers in rural Ireland because they do not have the money. What is the cost of constructing the unit the witnesses envisage could be of particular benefit to each parish, and the cost of running that unit in case of breakdowns? The Cork-Swansea ferry gave teething troubles the first three days and the same could happen with these plants in every parish.

On the supply of silage in rural parishes, as far as I know there is a scarcity of silage for what cattle we have in rural Ireland, and farmers find silage costly. I do not think there would be an excess of silage. Perhaps we could grow other crops. Could forestry thinnings be used in any such system? It is acceptable in Germany where there is probably a great deal of feeding material for cattle and where there is not as high a cattle population as there is in this country.

At the same time, taking all into consideration, this is a step in the right direction. It is a step for progress and prosperity for future generations when we run out of oil and gas, which I presume is in the not too distant future. This innovation would be of enormous benefit for home heating purposes. We look forward to a bright vision for the witnesses' enterprise. Any backing that we, as a committee, can give, I can guarantee we will give it.

Chairman

I am sure Deputy Sheehan will be looking for one, two or three, of these in Goleen. How many parishes are there?

Deputy P. J. Sheehan

I live only seven miles from Mizen Head. I am the Deputy furthest from Dáil Éireann and nearest to the White House.

Deputy Bobby Aylward

The nearest to New York. I welcome the presentation. I apologise for being a little late. I did not hear the entire presentation but I understand the matter. As far as know, there is an anaerobic digester in Callan, County Kilkenny, which is working brilliantly. I have never been in that plant although I have been invited on several occasions.

We all agree the principle is good. In this downturn and in recessionary times, it is a win-win situation. It provides energy, heat, electricity and job creation, it gets rid of our waste and it has implications for greenhouse gases, etc. I compliment the witnesses on their presentation. I hope the committee can support the project in every way possible and get it up and running.

The witnesses spoke of a potential 4,000 plants. How much would each cost to set up? With 4,000 plants in the country, it looks like there would be one in every region or parish into which we all could feed. As a farmer myself, I could feed into it. We could all supply the raw material for it. The waste, especially from the pig and poultry sectors, is problematic in farming and the potential of having this kind of system throughout the country into which we could feed would be fantastic.

The witnesses stated that if there were 4,000 plants, they could produce 48% of the electricity in this country. As they will be aware, we have a problem with the grid network. We encounter it already with the electricity generated by wind energy having difficulties accessing the grid network. The network would create problems. Have the witnesses looked at how they would feed into the grid?

On the heating aspect, I recognise there is potential in this regard. I have been abroad in Europe and seen the potential for heating, but one needs to be near urban areas for heating. If one is to build them, one must be within a certain distance so that one can provide heating into housing estates. It is no use out in the country in the middle of nowhere where there are only a few houses.

Overall, the idea is brilliant. Indigenous companies such as this will create employment, which we need at present. What is the timespan for the roll-out? Would the witnesses see two, four or ten of the plants rolled out in the next 12 months? Over what timespan would the 4,000 be rolled out?

Chairman

Deputy O'Sullivan has a quick supplementary question.

Deputy Christy O’Sullivan

On the planning permission that would be required for these plants, is there an odour from them? That was something that was highlighted at the time when it was mooted previously. How can that be addressed? It will be a significant factor in the planning process and objections will arise on that basis.

The other matter is the extra traffic that would be generated in the area in which one of these plants is located. My colleague, Deputy Aylward, highlighted the fact that heating will be a significant issue. How will it work for one of these plants located near a town or built-up area? Need it be out in the country? Within what distance of a town can one be located?

Chairman

I saw such plants in European countries some years ago. They can be close to a town or they can be out in the country. We are probably far behind other European countries in moving ahead with these. Deputy P. J. Sheehan referred the scarcity of silage and the availability of land. There will be many hectares available in light of what happened in recent years to those who grow corn. I am of the view that grass will be grown on an enormous amount of land in the future. There is great potential for that in parts of Leinster and Munster.

Deputy Andrew Doyle

Combined heat and power, CHP, plants in rural locations must pipe the energy they produce to certain locations. Given that the gas is the most reduced element that results from the extraction process, would it be possible to establish central depots to which gas could be transported?

Dr. Jerry Murphy

Members posed a large number of questions and I will deal with a few of them. The issue of grid connection is interesting. The problem with wind energy has been variability. With biogas, however, there is a constant flow. Those who operate the grid would much prefer to have electricity produced from biogas than that which comes from wind because they know the flow will be constant. They do not wish to be obliged to wait for windy days to obtain energy.

We visited many facilities in Germany, Austria, Sweden and Denmark and I noticed that with biogas there is a great deal of variability and this means that one can be flexible. For example, a plant that we visited in Austria was attached to a pig farm. The gas produced was piped into the houses in the nearby village and used for cooking and heating. The gas was not combusted at the pig farm but was rather piped directly to local houses. We visited a plant in Munich where rather than operating a CHP facility on-site, the energy is piped down the line to a gas grid that is large user of CHP. Breweries use heat all through the year, even in summer. There is great potential, therefore, for gas to be pumped into the electricity and gas grids for use 4 km to 5 km down the road. In Europe, CHP is utilised to a great degree.

When one puts slurry into a digester, it must be sealed. If anything is allowed to escape, then the process is not anaerobic. As a result, there is no smell associated with digesters. In addition, there is no smell associated with the gas that is produced. When slurry is spread on the land, only 10% to 20% of the nitrogen is available. However, when it is put into a digester and the resultant digestate is spread on to the land, all of the nitrogen is available. We visited a number of farms in Austria and Germany where mineral fertilisers are no longer in use. The digestate takes care of all their mineral requirements.

Deputy Bobby Aylward

Is it possible to transport the gas over long distances?

Dr. Jerry Murphy

Yes.

Deputy Bobby Aylward

Is it pumped or is some other process used?

Dr. Jerry Murphy

It is compressed. There are two types of gas grids, namely, high-pressure and low-pressure models. If the gas is compressed and transported into the gas grid, however, that is all that is involved. It would be possible to establish a debit system whereby someone 30 miles away could state that another person put gas into the grid, that he is removing it and that it is renewable gas.

The number of jobs per plant would be two. However, there would be many indirect jobs. For example, plumbers and others would be involved in servicing, and so on.

If one is using mulch or wood with a high lignan content, this would take a long time to break down. It might be suitable in a dry digester. There are many different types of digesters and feed stocks. If one is dealing with slaughter waste, one would be using a slightly different digester to the one someone would use if one were dealing with ordinary waste or grass.

On the tariff, those who deal with household waste are satisfied with 12 cent per kilowatt hour. When one takes rubbish to a landfill site, it costs €100 per tonne. We need differentiation in this regard. This is where the Germans have done extremely well. In Germany, the feed-in tariff for biogas electricity is 12 cent per kilowatt hour. If one has an energy crop such as grass, however, one obtains an additional 7 cent. If one has slurry to sell, one obtains 4 cent extra. If one sells one's heat, one obtains an additional 2 cent.

The idea of having one feed-in tariff is an issue for me. People may feel that this is over-complicating matters but I have spoken to companies such as Panda and Mr. Binman which can do this on 12 cent per kilowatt hour because they receive €100 per tonne in respect of rubbish transported to their facilities. It is not possible to do it for farm-scale digesters on 12 cent per kilowatt hour. If the tariff is raised to 16 cent per kilowatt hour across the board, this will have no benefit for those in the waste industry because they can do it for 12 cent per kilowatt hour. I would prefer if a basic tariff of 12 cent per kilowatt hour was left in place and if an additional 7 cent applied in respect of agriculture.

Deputy Bobby Aylward

What would be the estimated price per tonne for farmers selling grass into the system?

Chairman

I do not believe we should go down that road at this stage. Our guests should be permitted to answer the questions that have already been put to them. If members wish to ask supplementary questions, they may do so later. They should not intervene willy-nilly.

Dr. Jerry Murphy

What we need — this is why the committee is so important — is rather than having one feed-in tariff for biogas electricity, there should be a supplementary amount for agriculture. The economics of producing biogas from rubbish are good because one can obtain €100 per tonne for such rubbish. An additional 7.5 cent is required for agriculture. In Germany it is 7 cent. This extra amount will allow farmers to become involved. If we want a strong agricultural bioenergy industry, the Government stating that it will provide an additional 7.5 cent will ensure that the necessary capital is invested and that the required facilities will be built. This will lead to creation of employment and development of sustainable communities. A knock-on effect would be that there would be fewer water pollution problems and less fertiliser would be used on the land. What would result would be sustainable, indigenous agricultural communities.

Deputy Michael Creed

I wish to play devil's advocate on that point.

Chairman

I did not allow Deputy Aylward to intervene. I would prefer it if our guests answered the questions that have already been posed before members ask supplementary questions.

Deputy Michael Creed

I merely wish to refer to a specific point.

Chairman

The Deputy may make a very brief intervention.

Deputy Michael Creed

What Dr. Murphy says sounds logical. However, there is an audience out there which has a jaundiced view of special pleading for agriculture. Will what Dr. Murphy is advocating be misinterpreted as such a special pleading? I accept his point — which is entirely logical — with regard to the introduction of a tiered pricing structure for the different waste streams or energy sources. There would, however, be advantages in an across-the-board increase, even though this might lead to inefficiency on the part of those collecting organic waste from houses or restaurants.

Chairman

I want our guests to answer the questions that have already been posed. I will not allow any other members to intervene until they have finished answering.

Dr. Jerry Murphy

On this being a special pleading on behalf of agriculture, it was stated earlier that we have spent a great deal of money on REPS and on allowing people to build larger slurry tanks. It fits into that area. If we allow this industry to develop, we will have a cleaner environment, we will use less fertiliser and we will not have the same level of problems in respect of water quality. I live in a rural area and the well on my property is polluted. I am obliged to use ultraviolet and reverse-osmosis technology so that I might drink the water from it.

If anaerobic digesters were in use across the country, such problems would not occur. This is an environmental subsidy that will allow farmers to clean up slurry and to make renewable energy that will be supplied into a rural environment. It ticks many boxes. What is needed is that the Government should provide the additional 7.5 cent so that those involved in the agriculture industry will receive 19.5 cent per kilowatt hour for biogas. This will create many jobs, change the landscape and lead to a cleaner environment and cleaner drinking water. In addition, it would be of assistance in respect of compliance with the water framework and nitrates directives.

Deputy Bobby Aylward

What amount of digestate is obtained in respect of the raw material put into digesters?

Dr. Jerry Murphy

The return is approximately 90%. We have grass digesters in our laboratory which are approximately 2 m3 and we have discovered that approximately 95% of the grass put into them converts to gas. It is extremely biodegradable. In Ireland we get more grass per hectare than our colleagues in Germany or elsewhere in Europe. We have also discovered that we get more gas per unit of grass. In Germany the average is 2 kilowatt hours of electricity but we would probably get more.

We grow grass well. I did a great deal of work in the past on bio-fuels and I am aware that great sugar cane, which is used in the production of ethanol, is grown in Brazil. We cannot grow sugar cane here. Fantastic palm oil diesel is produced in Indonesia but it is not possible to grow the oil palm plant here. However, we grow grass better than anyone else. It is our crop, our natural resource. Growing grass does not involve digging up the land and growing miscanthus and willow that may or may not work or get to a peat burning plant. What is nice about growing grass is that one can benefit from the proximity principle and keep the industry small and rural, whereas if one were to have an ethanol facility, one would have to spend up to €150 million on a huge facility. It has many benefits.

Chairman

Did Mr. Buckley wish to comment?

Mr. Desmond Buckley

I worked with AIBP and have a good knowledge of the beef industry. Deputy Sheehan said we might not have enough grass. As can be seen from the Powerpoint slide, national statistics demonstrate that beef numbers have fallen drastically in the past ten years. The beef industry is important and if we had these plants in operation, we could add value to the industry by using slurry. This would help to stabilise the industry. As Deputies Sheehan and O'Sullivan probably know, calves are being given away for nothing as farmers cannot sell them. The Chairman has mentioned that farmers are almost on their knees. Anaerobic digesters provide an alternative for farmers and would help stabilise the farming sector. We have tested rushes and found there is a gas yield from them.

Deputy Tom Sheahan

What about using waste from abattoirs?

Mr. Desmond Buckley

I had intended to return to that question and Dr. Murphy alluded to it. Agricultural and abattoir waste should not be mixed. However, Deputy Creed suggested we should combine them. I think differently. The food industry is very important to the country and we have a great track record on food security. Farmers should not take in abattoir waste, a point on which I am sure Mr. Kavanagh will back me. There would be a risk in doing so. Such waste should be kept separate and not used in the agriculture sector. In Germany 90% of plants are agriculture based. The two markets are completely different. It is horses for courses. It would not be a good strategic move to mix the two in the long term.

Deputy P. J. Sheehan

Our famous T-bone steak will vanish within the next decade.

Mr. Desmond Buckley

I do not think so. I am trying to stabilise the position.

Deputy Tom Sheahan

I would like to mention one other issue. Abattoirs could sustain their own industry, while anaerobic digesters would also be a runner for livestock marts.

Mr. Desmond Buckley

I know Deputy P. J. Sheehan comes from west Cork. I would like to show him a slide of a unit that could be an option in smaller disadvantaged areas. It shows a containerised 50 KW anaerobic digester developed by AgriKomp.

Mr. John Butler

Dr. Bugar can tell us about the cost of this unit.

Mr. Robert Bugar

The 4,000 plants mentioned demonstrate the potential of the industry, but even if farmers want that capacity, the infrastructure is not yet in place. The 4,000 plants could be developed over a few years. Germany has the capacity to develop 1,000 anaerobic digester plants a year. It is more sustainable to develop plants step by step. It would be necessary to employ 300 fully trained mechanical engineers to service the engines of the 4,000 plants.

On the grid connection problem, I agree it is totally different using energy generated by these digesters than using the tides and the wind because there are peaks. It would even be possible to store biograss energy overnight for supply during the day. There are many interesting options, but if I go into too much detail, the discussion will never end.

On the issue of cost, the turnover of new investment in Germany in 2010 will be approximately €1 billion. The cost of investment in all of the plants installed, plus the same amount of money farmers earn from farming, is included in this figure. The question of whether farmers earn the money from milk or silage production is not that important because in Germany we have structured the feeding tariff in such a way that the farmer is the owner. The farmer is the one who sells the yoghurt rather than the milk. Farmers are switching a little from milk production and discussing milk prices and moving to a new technology. Energy farming is part of their business.

A study conducted in a southern German university showed that the average investment cost — not just for our plants but those of all suppliers — per kilowatt hour was between €3,000 and €5,000. The cost depends partly on the infrastructure cost, the transformer cost and so on. It is interesting that in Germany the cost of transformers and an allowance to connect to the grid is only one third of what it is in England. These issues should be sorted out here in the next few months or years. The small unit shown in the slide is a mobile unit we have installed in places where there are significant quantities of slurry but no silage. The investment cost of this unit is higher and comes to approximately €5,000 per kilowatt hour.

Deputy Eamon Scanlon

If I was to buy that unit for my farm, how much would it cost me?

Mr. Robert Bugar

The cost for the small unit is approximately €5,000 a kilowatt hour, but for a bigger installation, it would be approximately €3,000 or €3,500.

Mr. Donal Buckley

In money terms, we are talking about approximately €250,000. For the average plant, we are talking about an investment of approximately €1.5 million. There is a large capital investment. We need approximately 400 plants to get it at that level. We need a strong price if we are to get the capital into the country to develop the market.

Deputy P. J. Sheehan

Is there any grant available from the European Union?

Dr. Jerry Murphy

One facility on a 157 hectare farm was mentioned — the one with the service station. It cost €1 million which ties in with the cost mentioned by my colleague. The farm produces approximately 300 KW of energy.

Deputy Bobby Aylward

How much raw material is required to keep it going on a 24-hour basis?

Dr. Jerry Murphy

It has 150 hectares of grass silage, nothing else. Owing to growth levels here, we estimate that a 120 hectare farm in Ireland would produce the same amount of silage. Therefore, the cost on this farm is approximately €3,500 per kilowatt hour.

Deputy Bobby Aylward

Can there be a combination of slurry and grass?

Chairman

Yes, that information is all included in the slide.

Mr. John Butler

Let me answer the question put by Deputy Sheehan about the figure of 10,000. That is the number working in the industry in Germany, but it does not include the number working on farms which supply the feedstock.

Deputy P. J. Sheehan

That is a low level of employment, less than three people per plant.

Mr. John Butler

They are only involved in maintenance.

Deputy P. J. Sheehan

There are over 4,000 plants in Germany and they only created 10,000 jobs.

Mr. John Butler

Above and beyond them are the people who operate the plants, the farmers who bring in the silage and take out the digestate. That is where the other numbers come in.

Chairman

A significant number of contractors would have work.

Mr. John Butler

Exactly. The figure of 10,000 only accounts for those involved in maintenance, those working for companies such as AgriKomp.

Chairman

Whatever can be used to create more jobs in rural Ireland is important.

Mr. John Butler

Mr. Buckley has a response to some of the questions asked.

Mr. Donal Buckley

We have covered most of the issues raised, but it is worth reiterating some of what has been said. The reduced odour is an important benefit. The system cleans up slurry, a major issue from the point of view of planning which presents a challenge. NIMBYism is also a major factor. However, the plants are similar to slurry pits, except they are roofed. We need to drive home the point that this is all they are and that they reduce the odour, in which regard we need help. We have received planning permission for two plants in Ireland and feel comfortable that we can receive permission for more. However, we would appreciate help and support in that regard.

There was a question about whether wood chips can be used in the plants. It would work with this technology but the process is very slow and it is preferable to use gasification. Kedco has a gasification plant in Cork which is the only one of its kind in Europe. We are making electricity out of this wet wood chip in a 100 KW size plant. The committee members are more than welcome to come and see the process.

On the question of what happens if the units break down, companies like Kedco work in co-operation with AgriKomp and other highly-experienced companies. We must not be too hard on ourselves. Ireland has a major advantage in that we can draw on the experience of other countries to develop projects and to overcome the challenges they have faced. We should be able to deal with challenges to a large degree.

On the scarcity of silage and its availability, there are small margins in beef and dairy this year so farmers are not going to spend money on fertiliser or make additional silage. As the margins should improve with the use of this type of technology, the land availability is there and farmers will make more silage. I think I have answered most of the questions.

Deputy Eamon Scanlon

We grow grass at certain times of the year from May to September. What happens during the winter months?

Mr. Donal Buckley

It is just silage. Mr. Meagher will speak about silage.

Mr. Tim Meagher

I have statistical information about silage from Johnstown Castle relating to 109,000 herds. The organic limit under REPS is 170 kg. At the moment the national average is 85 kg so we can double our output of grass. If we have an initiative to produce then we will do so. I regard myself as the guy who will be spending the money. I will have an investment of €1.5 million in a 500 KW plant. Annual running costs will be approximately €300,000 for growing a crop. I will need to produce somewhere in the region of 17,000 or 18,000 tonnes of silage, cut 500 acres three times. It takes about an acre, roughly, to produce 1 KW. That is a simple rule to remember.

I would consider setting up one of these units. I am currently farming 230 acres. I have a bit of ground rented and I have about 80 acres of tillage. I see myself setting up a unit either by renting another 250 acres within a four or five mile radius or else asking like-minded farmers to set up a form of co-operative whereby they would supply slurry and I would pay them for the gas yield produced. This would be my dream and plan.

Deputy Bobby Aylward

Is Mr. Meagher's farm mostly silage?

Mr. Tim Meagher

Yes, but I grow 80 acres of cereals. I have tried growing maize. I am in north Tipperary, in the midlands. If I was in Cork I would grow only maize because the land is on the coast with no frost. I could grow 25 tonnes down in Cork no problem but I could not do that in north Tipperary. It is not the growing of the crop but rather the harvesting of it. I could not risk having 400 acres of maize——

Chairman

With the weather.

Mr. Tim Meagher

——and I would have no electricity for the year. On the question of piggeries, I would take in pig slurry as well; I get pig slurry from a neighbour of mine.

Deputy Bobby Aylward

Piggeries are the big one.

Mr. Tim Meagher

Yes, but they need land in order to spread the digestate so there is a land problem.

Deputy Andrew Doyle

Is the digestate powdered, granulated or liquid?

Mr. Tim Meagher

It is liquid, about 4% soluble, the same as pig slurry.

Deputy Andrew Doyle

The slurry is brought in and then a load is taken back.

Mr. Tim Meagher

Yes, that is the plan. We either pay our contractors to do it or not. The liquid is our biggest cost factor as it costs about €60,000 a year to spread that liquid. On the question of storage, we have six months' storage for the digestate. Many farmers such as my neighbours have smaller storage of 16 to 18 weeks.

Deputy Bobby Aylward

This product can be sold to farmers who will buy it the same as fertiliser. It has a value.

Mr. Tim Meagher

It is exactly the same except if one is running a plant, that slurry will be needed in order to grow grass again. It is a case of continuous recycling.

Deputy Andrew Doyle

Mr. Meagher made a point that the digestate has 100% nitrogen availability. A farmer emptying storage facilities at the end of the closed periods could spread the digestate on the land straight away as if it were slurry.

Mr. Tim Meagher

Yes, it is exactly the same. If we were taking three cuts of silage we would spread a light coat after every cut. We would spread some in the spring and more during the summer and right throughout the year.

Deputy Andrew Doyle

My point is if I empty my tanks on 16 January, I am not going to store it back in those tanks because I will be refilling them.

Mr. Tim Meagher

I will have six months' storage as well.

Mr. Donal Buckley

The capital costs would include a six months' storage.

Deputy Tom Sheahan

The point was made there would not be a reduction in output. Will Mr. Meagher still maintain his 70 suckler cows and buy in the stores?

Mr. Tim Meagher

Why not? Yes, I will, if I can make money. I have calculated that this year I will produce 74 tonnes of carcass beef at below the cost of production. I can add value to that by getting the slurry from them. I calculated that over a winter period of 140 days it will work out at €96 per head and this would make the enterprise viable again. This is how I look at it. I would like to carry on but if it continues the way it is going, and post 2013, it will not be a runner.

Chairman

Have all the questions been answered? Does Deputy Doyle wish to leave his proposal until next week when there will be a full meeting?

Deputy Andrew Doyle

If I may put it on the agenda for next week's meeting, that a proposal be put to the committee that the feed-in tariff be brought into line with European norms. I accept what Dr. Murphy says but we have to keep this simple and straightforward. Some European models have an add-on for gas and some for CHP. I propose that our feed-in tariff be brought into line with the European norm.

Chairman

Should the Minister be asked to attend?

Deputy Andrew Doyle

I think so. He is attending the climate change committee at 1.30 p.m. I thank the gentlemen on the delegation. To be fair, Dr. Murphy has been advocating this project to the committee at every opportunity. It is good to hear the finalised thinking on it.

Mr. John Butler

I will ask Mr. Donal Buckley to summarise the submission.

Mr. Donal Buckley

I thank the committee members and I note the level of research they have undertaken as shown in the questioning. They have asked detailed questions which is very impressive and gives us great heart. Our company has been involved in this process for the past five years. We put our guys on a plane every Monday morning and send them to the UK where most of our work is. However, we would dearly love to have work here in Ireland and to have capital flowing here.

In summary, there is a burden on us to deliver. This is an industry which can create a certain number of jobs now but it is our responsibility to push on further. I ask the committee members to remember it is a case of bringing capital into Ireland and creating 4,000 plants and a multiple of that number in jobs.

Deputy Andrew Doyle

A few years ago, Airtricity was in the same position and it still has to send people abroad. My sister works for Airtricity.

Chairman

I thank Mr. Butler and his colleagues for the presentations and I thank the other witnesses for answering members' questions. This has been a very informative meeting. I wish the project well. We will deal with Deputy Doyle's proposal and an invitation to the Minister at a later stage. I was very impressed with the presentation. I met some of the delegation members some months ago. Today's meeting was very worthwhile.

The joint committee adjourned at 1 p.m. until 11.30 a.m. on Wednesday, 31 March 2010.