JOINT COMMITTEE ON CLIMATE CHANGE AND ENERGY SECURITY díospóireacht -
Thursday, 29 Nov 2007

Energy Policy: Discussion with Sustainable Energy Ireland.

Chairman

I am glad good friends in Sustainable Energy Ireland have agreed to make a presentation to the committee. Hopefully, we can all learn something from them. I look forward to doing so. I welcome an ex-colleague of ours and former member of the Oireachtas, chairman of Sustainable Energy Ireland, Mr. Brendan Halligan. I also welcome the chief executive, Mr. David Taylor and Mr. Matthew Kennedy, senior planner. We thank them for coming here. This is only our second committee meeting, so we are finding our way. We are anxious to learn and get whatever professional advice we can in order to do our work properly.

I remind visitors that the members of the committee have the benefit of privilege, but that privilege does not extend to visitors and they should not mention the names of people outside of the committee, as offence could be caused.

Mr. Brendan Halligan

Sustainable Energy Ireland, SEI, is grateful for the invitation to the committee. We will make two short presentations, one from me and the second from the chief executive, Mr. David Taylor. My presentation will concentrate on the work programme. I had the benefit of an informal discussion with the Chairman and he helpfully indicated that it might be preferable for me to concentrate on that programme and for Mr. Taylor to concentrate on security of supply. Having heard much of the discussion that has taken place, I realise most of my remarks are now redundant. It appears the committee is well ahead of what was, perhaps, indicated.

Sustainable Energy Ireland is described as the Sustainable Energy Authority of Ireland in the legislation and I hope it will be more commonly known by that name in the future. Its main tasks are to promote and assist sustainable energy development, energy efficiency and greenhouse gas reduction. It is interesting the legislation was passed in 2002, which demonstrates the Oireachtas was aware then of the need for greenhouse gas reduction and that it was giving a particular agency of the State special responsibility in that area. SEI is also required to encourage, promote and assist research and development in this area and engage in demonstration projects.

The fact that climate change is an area in which the Irish have had an important, historical role might be something on which the committee should reflect. The great Irish scientist, John Tyndall from County Carlow, was the first to observe the phenomenon of global warming. It is interesting that he is more honoured in the United Kingdom and that a large network of research institutes have been named after him. A search on the Internet would yield a long list of establishments engaged in climate research which are named after this great, self-taught scientist.

Another prominent individual in the area is a former colleague, recently retired, the former Senator and Cathaoirleach of the Seanad, Mr. James Dooge. He took the initiative in setting up the international panel on climate change, now the great engine for bringing together the science in this area. The work he did in the late 1970s and the early 1980s will stand out as one of the greatest contributions of an Irish figure in the area of international public policy. He is somebody we should celebrate and honour and this committee in particular might consider doing that.

When considering its terms of reference and its work programme, the committee will start with the science because that is the foundation for the policy. If we do not have a proper understanding of what the science is and what it is telling us and what challenges it will throw at us, then we will not come up with the right policy responses. The scale of the challenge is what we must comprehend and internalise. In limiting the climate change increase in temperature to 2o Celsius, we are putting up to ourselves as a species a challenge we have never previously confronted. Already the climate change phenomenon has got to the point where it is irreversible and the task is to slow it down and stabilise it so that over a long period of time it might go into reverse.

The committee is planning to travel to Bali and the science to be presented at Bali has just been agreed in Valencia. The synergy of the three initial reports of the international panel on climate change will all be brought together and synthesised. It would be well worth while putting the committee in possession of a synopsis of that report because it will provide the framework for Bali. It is hoped that Bali will set up a global framework to which this country will need to respond.

A framework for 2012 is in existence and Bali will give a framework for 2020. The circumstances for Bali are probably much more favourable than they would have been previously. I believe the science is not now internationally contested, although a free newspaper is in circulation in Dublin at the moment, the front page story of which is headlined, "Climate change, a great hoax". It might be worthwhile reading the article.

The results in Australia over the weekend and the imminent demise of the Bush regime in the United States give us great hope that Bali can produce something significant. At the recent congress of the Chinese Communist Party it seems the Chinese have faced up to the question of what they are doing themselves in terms of pollution generation. Bali offers us great prospects for the future.

My first recommendation for the work programme would be to establish a consensus on the science and also to agree a popularisation of it. I took the point made by Deputy Coveney about schools. Everybody should sing from the same hymn sheet in a simplified manner and not use jargon but rather present the issue in terms that are easily understood by all.

If the United Nations and the science is the foundation, then the European Union is the framework for Irish policy. It is essential for us all to understand what it is the EU is doing. It is critical to understand that the EU is the pioneer in fighting climate change. At the March Council meeting, the heads of state and government have unilaterally from a global point of view imposed a target upon themselves of a reduction of 20% by 2020 on the 1990 level of emissions. It should be remembered that in the event of a global agreement, if Bali becomes very positive and leads on to a Kyoto 2, in those circumstances, the EU has agreed for itself a 30% reduction in 1990 levels of emissions. This has real implications for us because whatever the reduction decided by the EU, whether 20% or 30% on the 1990 levels, this will be parcelled out among the member states under a burden-sharing agreement. Ireland will have to decide what will be its contribution to the reduction.

I suggest the second part of the work programme might be to constantly monitor the process of burden-sharing and to take a view on the strategic positioning of Ireland within that arrangement. Should Ireland be a leader or a follower in a strategic sense? In that regard it is important to note that the programme for Government has a critical objective, an astonishingly ambitious objective, a pioneering objective that gives a headline for the rest of the world. It has committed this country to a 3% reduction in carbon emissions annually. Extrapolating that forward in very simple mathematics, by 2020 the Bali 2 target date, we would be at approximately 85% of our 1992 emissions. At the moment we are approximately 25% ahead of that number. We are asking ourselves to make cuts to bring us to 15% below out 1992 level. That is an astonishingly ambitious target.

Based on what I have heard of the committee's discussions, it would be very important to have national consensus on these figures. In other words we need to ascertain the real distance between where we are now and where we want to be or will be required to be under the burden sharing agreement by 2020. The business as usual scenario is not an option. We must engage in very substantial cuts. It would be helpful to have agreement on the matter nationally. There is considerable dispute about those figures even though I have offered them to the committee.

Taking a long historical view, the scale of the problem before us in getting down to whatever we impose upon ourselves or have imposed upon us at EU level — I would hope we would volunteer for a very ambitious target rather than being forced into something — is tantamount to the establishment of the State in the period 1922-24 or to the State exercising and maintaining its neutrality in the Second World War. As a friend of mine puts it, it is as if Ireland were asked to put a man on the moon and to do so out of his own resources by 2020.

Deputy Liz McManus

Or a woman.

Mr. Brendan Halligan

Or a woman, I stand corrected. That is the scale of the problem. I am very encouraged by the committee's discussion. It is clear it has decided its task is to create the consensus, which I welcome. It is a most important step forward.

We will talk about security of supply. The problem is very simple. It is that we use fossil fuels for three different reasons and each of those reasons causes great problems. We use them for heat, power or transport. We need to have an understanding of the figures that the Chairman indicated at the start as to what we need to do in each of those areas. Clearly we cannot carry on with the use in which we are currently engaged. As a task perhaps we might look at the challenge other societies have put upon themselves. For example, Sweden has committed itself to being an oil-independent society by 2020, which is probably too soon. Low carbon economies are now becoming national objectives. We should study what is being done elsewhere and ascertain whether we can imitate and in many cases go ahead of them.

On security of supply there is a considerable amount of geopolitics of which we should be aware. The committee will require much expert assistance and advice on the matter. For example, the question of peak oil and peak gas has been in the public domain for some time. I believe in the peak oil understanding of the geology of oil. Interestingly the main powerhouse of ideas is in Ballydehob in County Cork, with Dr. Colin Campbell. Ireland is leading in the whole question of understanding of peak oil. There is also peak gas. Recently the SEI held a conference in Croke Park where an English expert gave some very scary figures about the availability of gas beyond 2020. The emergence of China as a world economy, coupled with India, means that we are looking at a completely different world from the one we thought we understood two or three years ago.

The International Energy Agency has just produced a report, the World Energy Outlook, which is comprehensive but very scary. China is basically gobbling up resources and is clearly engaged in a resource acquisition policy. It is taking oilfields in central Asia, buying into the Middle East's oil, placing troops in Africa to protect its access to oil and creating strategic alliances in South America. We need to understand this world and where the European Union and Ireland will fit into it.

If we are to secure an energy supply, we must ask whether we have indigenous resources we could use to give us security, whether such resources are clean and would help us avoid climate change and whether they are infinite in the sense that we could continue to use them. The answer to these questions is probably "Yes". We have copious quantities of wind, both onshore and offshore, we are an island surrounded by the seas and, therefore, have potential sources in wind and tidal energy and we have bio-energies such as biomass and bio-fuels. We also have some generic sources, for example, solar and hydrogen, which offer further possibilities.

The joint committee could give a lead by encouraging the Government to engage in a research and development programme. Responding to a report published by the United Nations, the European Commission stated that we, as a people, do not invest sufficient amounts in research and development in this area. We should place research and development in energy on a war footing. Ireland could be a leader in many technologies. I apologise if I sound preachy but I am passionate about this issue. The clock is ticking in respect of climate change.

Chairman

It dawned on me recently that not only is peak oil imminent but the population is about to increase significantly. According to projections, the global population will increase from 6 billion to 9 billion in the next 20 or 30 years. This population growth will create horrendous demands in the area of energy.

Mr. Brendan Halligan

The problem is made worse by the fact that, as an economist might argue, not only will there be more consumers but they will have more money. For example, approximately half of the population of China does not have access to electricity. Let us consider what will happen when the whole population is on stream. I understand the Chinese are building a power system equivalent in size to the Irish power system every week. They also plan to add to their current power supply a power system the size of that in place in the United States. These figures are almost beyond our comprehension.

Mr. David Taylor

Sustainable Energy Ireland warmly welcomes the invitation to provide input into the joint committee and values the opportunity to share our perspective on some of the issues. In the invitation, SEI was asked to concentrate primarily on the security side of the committee's brief. I have attempted to do this with a view to feeding into the joint committee's considerations around its work programme. I submitted a note for the record and for members' reading now or later, from which I will select some highlights with a view to working towards the concrete offering I would like to make to members.

Sustainable Energy Ireland is five years old. We produced a brochure entitled Making a Difference, which gives a good overview of the types of activities we are engaged in, namely, energy efficiency, renewable energy and achieving the benefits of the increasingly important areas of integration and innovation in a development and urban context.

The joint committee's orders of reference indicate the main areas of its inquiry. In the paper I have noted in italics some of the SEI outputs which might inform the joint committee's early considerations. One of these is in the area of agriculture and biomass. I would be pleased on another occasion to give a detailed presentation on this issue because it is a matter of great interest to members.

It will be useful to take the end consumer into account in all of the joint committee's deliberations. What energy consumers expect of Government in this area is that it would put in place the necessary arrangements to ensure they can enjoy the services energy provides. As the Chairman said, these include the benefits of electricity, transport and heat. The task of Government is to further the sustainability of those services, as provided in Ireland. The sustainability dimensions of these are clear; they must be socially and environmentally sustainable and above all in the current context they have to be secure. One suggestion to the committee is to think of services, the main blocks to which I have referred and the various dimensions of sustainability within them. What concerns the consumer is affordability, availability and local and global environmental impact.

Another issue relates to the effect of demand on to where fuels migrate. This is a long-term strategic issue about which the committee might invite others to talk to it. I will sketch it out for the benefit of the committee. Currently, transport is totally dependent on oil. We see more and more of the world's oil reserves being further refined to provide the fuel for that growing transport market. The price of oil is being driven in part by the huge growth worldwide in transport demand, and that is likely to continue. In the short term there is not an alternative technology available for mass deployment at an early date.

Natural gas is an extraordinary fuel in terms of its ability to provide us with heat in an urban setting. One has the possibility to convert it to heat at very high levels of efficiency and to do so in a way that the emissions do not cause any problem with regard to local pollution. At the same time it is the fossil fuel with the lowest carbon content. If one wants to address the issue of climate change, one would lean towards a fuel policy that brought one towards natural gas, but of course in doing that, one gives rise to issues of security. This committee will find itself trying to balance the issues of security and climate change and be reminded by many of the people who will make presentations to it that costs, competitiveness and affordability matter in all that is done.

I would recommend to the committee to get some understanding of one scenario, namely, how Shell approaches making decisions in three dimensions, as is the case with energy policy. If one wants to achieve a balance, one has to take them two at a time, and that begins to have an influence. The committee has been invited to take them two at a time but this has consequences for price. At some stage it would be worth the committee's while to gain an appreciation of where the development of those scenarios take it because it is in a long enough range to inform the work in hand.

If we see oil going increasingly towards transport due to demand and we see natural gas going increasingly towards heat, the question remains of how one addresses the security and price of electricity. Basically, the committee needs to consider a wide range of fuels in that mix.

The Chairman referred to the energy security and climate change conference, in particular to a paper by Jonathan Stern, not the same person who produced the Stern report. We need to recognise we are highly dependent in the electricity sector and there is also a growing dependency in the heating sector on natural gas. In the security of supply in Ireland 2006 booklet, we provided an index that would assess our relative security in terms of both supply and demand. Members may wish to use that index for comparative purposes. The index may change over time. The principal driver of that change will be the need to source our gas from locations further afield, including Russia.

This brings into play the EU dimension referred to by Mr. Halligan. The importance of the European gas market, with appropriate European infrastructure, cannot be underestimated in terms of securing supply. The relationship between that infrastructure, policy and the external suppliers, namely, Russia, is also crucial. The first area of our work programme should involve overseeing how EU policy affects our interests and ensures our ongoing security within those wider terms. This suggestion is fleshed out a little more fully in my paper.

The second suggestion is that we should recognise that consumers feel the impact as energy prices rise. The most appropriate response to energy price rises is to use resources more efficiently. This is the key to contributing further to security. The size of the energy efficiency prize is well over €1 billion per year in Ireland and this is the kind of business to which the committee's deliberations can contribute.

The Government has received responses in respect of its consultation on the energy efficiency action plan. Every other member state in the Union is producing such a plan, as is the United States and Japan. Members referred to the importance of consultants. The key issue regarding an energy plan is its implementability in terms of the goals that exist. The committee should seek expert advice in assessing the plans, picking what one might regard as the appropriate models and examining the characteristics of successful delivery that go with them. Thus, it can see for itself how progress is being made in terms of institutional arrangements and the resources necessary to deliver through so many different channels, as is occurring in Bali. If my organisation can facilitate this process by introducing members to agencies, it will be delighted to do so.

The third point concerns renewable energy sources. Reference has been made to their abundance in Ireland. We are making most progress in the electricity sector and are embarking on a long-term project to transform it in terms of regulation, the grid and decarbonisation. This is a very long-term prospect and project.

The committee members will have heard the Minister speak of smart meters, the function of which is to alter the behaviour of consumers. They also comprise an early step in involving consumers in the electricity market as active agents. These are the people who can take a price signal and respond to the variability of wind, for example, or other sources. This kind of electricity market is capable of development. Technical, regulatory and commercial interventions are required, and long-term strategic oversight will be a key part of delivering this in the interest of consumers and Government policy. This is my third suggestion for a live-action work programme.

We will be very pleased to contribute in any way possible to informing the committee's choices and making our public good offerings available. The committee is already familiar with some of these on foot of some of the different roles members have had in the past. An example is what we produce in our energy policy statistical support unit, which is located in Cork and proximate to the Central Statistics Office. We work very closely with it to ensure analysis of the highest quality and to make evidence available for the consideration of committee members and everybody else.

Senator Fiona O’Malley

I thank the delegates for their presentations. Receiving direction on our approach has been very instructive. This is a fascinating and important area and internationally it is the most important political issue we face.

I listened with great interest to the presentations. I agree with the view of Sustainable Energy Ireland that research and innovation is a critical area in which Ireland has led in small areas but could lead in others. I always believed SEI worked in a similar way to IDA Ireland, in that it had large budgets and was involved in large projects. There are large opportunities in this area. I would like to see more offshore wind energy projects but there are other areas such as tidal resources. Is that the type of work into which SEI would like to go?

I appreciate Mr. Brendan Halligan's analogy that the scale of the problem of carbon reduction is similar to the establishment of the State and remaining neutral in the Second World War. SEI could achieve much in cutting emissions, like IDA Ireland did with the economy, if it was properly resourced. Could it become advocates for that?

Mr. Brendan Halligan referred to achieving a national consensus on reduction figures. Where is the absence of consensus? Is there a difficulty in getting a consensus? I presume he did not mean the political sphere. The one matter we have to agree on is the target. We will never solve the problem if we do not agree the problem is the same. Which organisation is the authority for carbon emissions in Ireland? The WHO is the recognised international authority for statistics on health. Is there a similar one for climate change?

How reliable are the 2006 figures? How often are they updated? It is critical we have reliable information.

I thank the delegation for its presentation and I have no doubt the committee will have further discussions with SEI either privately or in public. I welcome its offer of assistance to the committee.

Deputy Liz McManus

I thank Mr. Halligan and Mr. Taylor for their excellent presentations. There is so much in them it will take some time to digest the various points. One key question I took up on was are we going to follow or lead? I do not know if Ireland is in a position to lead because it is hard to get a handle on this as we have not been behaving ourselves until now.

One area Ireland could pursue is the area of research into renewables. We have many resources in the winds, waves and tides. Geothermal sources were not referred to but I presume we have some potential there. If Ireland can lead in research and development it would be beneficial to us and a model to other countries.

SEI has proved considerable public interest exists in the area of energy efficiency. It even seems to have run into difficulty in keeping up with it when it was giving out grants. There is much more good will and interest that has not been tapped. I get the impression that for industry and business, the emphasis has been that they need to do it because it will cost money, rather than because it is a good thing to do. I do not know whether there is a lot more that could be done if SEI had the resources, both in the commercial and residential sector.

Fuel poverty is a real issue and it will grow as costs increase. Some people are helpless in trying to keep warm and those on low incomes are often living in houses that are poorly constructed in the first place. What does the delegation think about insulation and trying to develop policies to support those who are experiencing fuel poverty? The message I have been getting about the electricity market is that we will be using more coal. It seems to be in abundance and we may be heavily relying on it in the future. What are the implications of that? I understand that there will be much more natural gas exploration in 2008 and 2009, given our offshore potential.

The dreaded word "nuclear" was not mentioned. It seems straightforward that if we build our interconnector to France, we will get nuclear power and we will not have to dirty our hands. The argument is still being put that we need to be self sufficient, which means that we at least have to look at the nuclear option.

I am very concerned about the break-up of the ESB. While it is Government policy and is in the programme for Government I do not see the sense of it. I imagine the ESB could be a very effective champion of the development of renewables, but as we go into a bigger market, the ESB will be a very small player. It does not make sense to break it up and remove assets from it, which will be a costly exercise in the first place. I do not know whether the delegation can comment on it, but I would be very interested to hear its views if it can.

Deputy Phil Hogan

I welcome Sustainable Energy Ireland and I expect we will see a lot of each other in the next few years. Against what do we measure progress? What is the benchmark to measure progress on climate change and energy security? What EU countries should we be looking at for best practice? We do not need to re-invent the wheel and we can implement the best practice of those countries that have gone through this pain barrier, as long as they are appropriate to this jurisdiction.

Deputy Simon Coveney

I welcome the delegation today and the fact that it is the first outside group to come before us is an indication of the importance we attach to the work of Sustainable Energy Ireland. It has been a reasonably good first five years for SEI. The public is starting to buy into the idea that we must fundamentally change our lifestyles in order to respond to the challenge of climate change.

It is important that we get an understanding of the budget SEI receives from the Government and tax payer, how it is spent and how it is broken up. There has been some controversy this year about the budget allocated to the greener homes scheme. We started with a €17.5 million budget which rose to a €31 million budget under a Revised Estimate a year ago. A further €16.2 million was then required, that sum having already been spent under the scheme.

It is important for the credibility of SEI that we have a clear understanding that we are planning ahead in terms of demand-led schemes. In many ways, the fact that phase 1 of the greener homes scheme needed more funding is an indication of its success and the number who have bought into it. However, it also indicates the lack of planning and foresight in terms of the level of budgeting that will be required to change habits in Ireland and physically change the infrastructure around heating houses and businesses. The greener homes scheme is a good example of the people being ahead of politicians and, to a certain extent, SEI in terms of what they are demanding and how enthusiastically individually will buy into schemes offered to them. In one way, this will salve their consciences with regard to becoming more energy efficient but it also makes financial sense for them to do so.

Perhaps SEI could explain what happened in this regard. As part of the reallocation of funds within the Department, €6.2 million came from the energy research or RTDI budget. I am conscious of Mr. Halligan's point that research and development are very important. For example, SEI has been doing great work with UCC, in particular, on ocean energy policies. There are now prototypes off the west coast which are producing exciting results. Nonetheless, questions arise. Are we taking money from the research and development budget to bail out a scheme that is demand-led and has been allowed to wheel out of control? What budget is thought necessary next year for phase 2 of the greener homes scheme? Can SEI provide guarantees that we will not have the same difficulties at the end of next year?

This is just one small element of the responsibility of SEI but it is a good example of demand leading supply and the budgetary requirements that will need to be met. I would appreciate a definitive comment on the issue. Apart from this, the representatives of SEI are welcome. I could not agree with them more on the problems in regard to finite oil and gas resources and the need for us to exploit in a proactive way the renewable energy sources available to us.

Mr. Brendan Halligan

I will respond to some of the questions and my colleague, Mr. David Taylor, will respond to others.

To respond to Senator O'Malley, the idea of an IDA-type body for renewables is an attractive one. We can take great pride in two economic policy innovations in the past half century that are possibily unmatched anywhere — certainly, when one puts the two together, they are definitely unmatched. The first is the creation of the national partnership process which creates consensus on a long-term strategy. The second is the IDA. I would like to see these two experiences built on along the lines suggested by the Senator. As to where such a body should be positioned, I have no opinion as yet but perhaps it should be in the enterprise, trade and employment area, in other words, in the host Department for the IDA and that complex of organisations.

I should say in passing that in July the Minister for Communications, Energy and Natural Resources, Deputy Eamon Ryan, called together all the businesses involved in the energy sector for a meeting with a green or renewable focus. It was an astounding success. The take-up rate was much higher than expected and many who were looking to get in could not do so. The Minister also recently met the banking community to try to persuade it to take this issue on board. David Taylor and I were present at that meeting.

The Minister is doing much to encourage the process. I will meet IBEC next week and this is one of the issues I want to discuss with it. I would like to see it having, for want of a better title, a green energy section within its structure. I do not think it should be outside IBEC. I want to talk to ICTU to ensure the trade unions are part of this. Senator O'Malley's idea this morning was very good and gave it a sharper focus than I had done earlier so I thank her.

I misstated myself about the figures. Is that what President Bush might say? There is no dispute about the base figures. We have the Department of the Environment, Heritage and Local Government, the Environmental Protection Agency, which is completely expert in this area, the Central Statistics Office itself; our own unit in Cork, and these figures we have produced. There is no debate about the base figures. With regard to their reliability, like all figures they are subject to continuous revision. Even GNP or GDP figures are constantly updated and revised by the CSO, so that is not the problem.

I was talking about a different matter. More than anything else, it is a psychological matter. One professional, Professor Hans Joachim Schellnhuber, who set up his own institute in Potsdam just outside Berlin around 1992, committed himself to this area of study and is passionate about it. He is now the adviser to Chancellor Angela Merkel at G8 and EU level. He spoke recently at the Institute of European Affairs where he said something that was profoundly interesting. He said that the first thing people do about the problem of climate change is deny its existence. He went through the five stages of grieving. The first stage is denial and the second is anger, a stage many people are in at the moment. They say that perhaps it is a problem but that it is not that big. The third stage is bargaining where one bargains, usually with God. Professor Schellnhuber said we cannot bargain with nature. Nature will react in a particular way if we keep shoving this stuff into the environment. In response to the point made by Senator O'Malley, that was what I was talking about.

Therefore, I would like to see a very cold, calm, clinical and detached debate about these figures so that, at the end of it, we can see what we have to do. If we do nothing, we will be up around the equivalent of 75 million tonnes of CO2 emissions. We must get down to roughly 45 million tonnes if we go by the target of a 3% reduction per annum. That is roughly a gap of 30 million tonnes, give or take 10%. That is the sort of thing we must internalise and then ask, as Deputy Coveney and some other members argued earlier, how we attribute that across sectors and how, as Senator O'Toole noted, even bring it down to a particular local authority so that its carbon footprint is laid out for it and it is told every year that it must reduce by so much. I am sorry for misstating my position.

In response to the point made by Deputy McManus, of course I should have mentioned geothermal energy. She prompted me to think about Science Foundation Ireland, which should also appear before the committee. The foundation would have a role in the matter referred to by Senator O'Malley. We have a relationship with Science Foundation Ireland which we would like to see developed and intensified.

In respect of whether businesses are doing it just because it is a good thing to do in itself or because of profit, the system under which we operate operates on the basis of profit and people do things for profit but sometimes they also do things because it is the right thing to do. There is a phenomenon known as the Wal-Mart moment, which is when the chief executive of Wal-Mart, which is one of the world's largest companies and certainly the largest retailer in the US, suddenly realised that he was not in the right business. As members have seen, Wal-Mart has now gone completely green. One can see this in the big retailers here. The Wal-Mart moment, where they understand that it is both the right thing to do and good business, is very important and I would not deny its validity.

Irish business is very much on the edge of this process. We have seen one business which has done that and established a virtual research centre of excellence in Dunleer in County Louth. Mr. Taylor had a meeting in the past few days with a major Irish multinational which is thinking along these lines and wants help and advice. In response to Deputy McManus, we should encourage it regardless of the motivation. A bit of both would be great.

Deputy Liz McManus

My question was on how far it can be taken. I agree with Mr. Halligan, but is it a question of resources? If there were more, could this be developed further?

Mr. Brendan Halligan

General Electric is one of the few US companies to have survived for more than one century, one of only two such companies in the Forbes 100. Recently, GE reorganised its large business in terms of going green. Examining its website would be worthwhile. It outlines what it calls Ecomagination, which brings aspects together. Mr. Jeff Immelt, its CEO, has stated that GE will proceed in this fashion from now on because it is what the consumer wants, the world needs and GE does best.

I will leave Mr. David Taylor to address the point on fuel poverty. While we have programmes running in respect of this important matter, more may need to be done. Coal is the scary element for the future. The World Energy Outlook is heavy, but the summary would be a worthwhile read. The key issue is that India and China will continue to use more and more coal. The more they use, the more carbon they will pump out. We do not anticipate a scenario in which there will be a serious reduction in coal usage. In terms of world energy usage until 2030, coal usage will continue as a source of electricity unless something is done and India and China will use approximately 45% to 50% of the world's coal.

There is no prospect of clean coal technology despite discussions on same and carbon sequestration. I wish the case were otherwise, but CO2 emissions are expected to be 25% above the current level. We are heading dangerously beyond the level of atmospheric carbon parts per million at which we can arrest global warming or maintain it at 2%. There is no question that the world will have a considerable issue with China and, to an extent, India.

The Minister for Communications, Energy and Natural Resources stated that he would welcome an intelligent, ordered and objective debate on nuclear energy. It was a wise comment to which I suspect the committee will respond in the same manner. Importing through an interconnector from Paris might be a consequence, but the idea should be considered. The break-up of the ESB is partly a matter of EU legislation on the unbundling of utilities, but SEI is not in a position to comment because such is not our role.

Deputy Hogan asked two simple and practical questions, namely, how to measure progress and where to go to find best practice. Progress can be measured through the carbon budgeting the Government is introducing. At SEI's board meeting yesterday, we saw figures that, for the first time, indicated an emerging methodology. How to measure progress? One would estimate the CO2 output for each sector year by year and, like a business, track the situation. One would set a target for each sector and determine to what extent there is a variance, almost like a set of management accounts.

Deputy Phil Hogan

Has SEI worked out the model?

Mr. Brendan Halligan

Only up here.

Deputy Phil Hogan

Will SEI let us know when it has a model?

Mr. Brendan Halligan

We will return to discuss it. The carbon budget is a great innovation in public policy, but let us not expect too much of the first one. There will be a high-level series of reasoning, but consider what the budget will be like in terms of detail in five years' time. That the Government has agreed to do a budget is the most important matter.

In efficiency terms, best practice can be found in Germany. Best practice regarding certain types of policies on renewables can be found in Denmark, to where we went in the 19th century to see how co-operatives worked. We should return, as that country is close to ours in many ways. It has achieved 45% penetration of renewables in its electricity market, its people are superbly organised and it has great beer.

The third place I would go to is Spain, which has done an enormous amount with renewables. It uses its great natural resource, the sun. I hope to visit Spain shortly on business to see what they are doing. They have creative support regimes for renewables. The secretary general of the socialist group once said to me that Spaniards are the Prussians of the south. They have been extremely well organised since democracy. I would be glad to go there with Deputy Hogan if he would let me carry his bag.

Deputy Phil Hogan

I could carry Mr. Halligan's bags.

Mr. Brendan Halligan

I invite Mr. Taylor to deal with Deputy Coveney's questions.

Mr. David Taylor

Regarding Senator O'Malley's research and development question, we have concluded a joint agreement with the Marine Institute on how ocean energy might be exploited and commended it to the Department. It has been adopted as a strategy. We are working on a geological survey of Ireland and the UK to identify sites for carbon capture and storage. This is the agenda. I alluded to our plans for the electricity market to facilitate high levels of penetration in wind energy. Examples of this include the inclusion of storage facilities, such as flow batteries, or off-grid storage such as plug in hybrids. We are doing research on this and as these ideas mature and the commercial possibilities become more evident, the development agencies are more likely to support us in a structured fashion, as suggested by the Chairman.

The reliability of the figures is improving. The 2006 Energy in Ireland report will be a robust data set, with some of the errors corrected. The successive publication of such reports leads to incremental progress.

In response to Deputy McManus's point on leaders and followers, it is largely a question of benefit and costs. Where the benefits are global, powerful and will return to us, as the Chairman has suggested, it behoves us to lead the development of EU policy. It is in Ireland's interest and in the global interest to do so. We should lead in areas where we have a competitive advantage. These are the two areas in which we have leverage.

Regarding the Deputy's point on resources, wind is an example of an energy form in which we could have competitive advantage. This is the reason for our identification of lines. The point made about price, impact and consequences is true and one of the long-term projects under way is the transformation of the building stock, particularly homes. One can see how regulations are developing, including home energy ratings and other initiatives. Transformation of the energy performance in that building stock must be the major societal project in Ireland from now until 2020.

Coal use, for domestic use and industrial use and for power stations has declined in Ireland since 1990. The resurgence to which the Deputy alluded is true of the power market, which is at its greatest in Europe and is true of some aspects in Ireland, but it is temporary or intermittent. The long-term trend is downwards. Coal reserves are large, it is competitively priced and, as the Chairman suggested, if we increase use worldwide it will become a serious issue. There is urgency about the deployment of clean coal technology. We must take an interest in it because of the supply perspective of the fuel mix. Hence, our work on carbon capture and storage. I am not in a position to make an informed comment on exploration of natural gas other than to state that the Government has carefully reviewed its position and the Minister announced new terms.

If the committee has a hearing on nuclear power it should have a hearing on energy efficiency at the same time and choose its options after weighing them in the balance. Do committee members want something which ab initio will convey benefits to everybody in society and to the mandates of members or do they want to buy a risk?

Deputy Liz McManus

There is no point in having a debate about nuclear energy in terms of having resources here.

Chairman

That is an interesting point. I met a group of six people from the Irish Senior Citizens Parliament. During the course of the discussion about energy supply I asked them what they thought about nuclear and all six of them stated it was inevitable. It was extraordinary that they did not state they did not want to hear it mentioned.

Mr. David Taylor

We have a programme on low-income housing for warm homes and I would like to see it scaled up.

Deputy Liz McManus

A lot more.

Mr. David Taylor

We should have a time-bound target in which to complete this work. We should not have a legacy in 2020 of people in what is termed "fuel poverty". We must progress at a sensible and appropriate pace.

I will respond to Deputy Hogan's question on metrics and how we will know how well we are doing. One interesting metric is published in Energy in Ireland. It shows how the carbon dioxide per unit of electricity has changed since 1990. It is a real success story because one can see it going from more than 900g per unit to 650g per unit. We now produce electricity more efficiently and more environmentally benign in Ireland.

Chairman

Energy causes 23% of our emissions. What reduction in that 23% could be achieved through the progress mentioned by Mr. Taylor?

Mr. David Taylor

I have not grasped the question.

Chairman

The EPA divided up the various sectors responsible for our emissions. Energy supply accounts for 23% of our emissions. If we have success such as that referred to by Mr. Taylor, what level of reduction in the 23% does he hope for?

Mr. David Taylor

It is a challenging question to answer because we have enormous pressure for more energy services, transport, heat and electricity. Demand is rising and efficiency is improving in all sectors. In some cases, such as the household sector, consumers are taking the benefits of improved regulation and energy performances of houses in the form of comfort. Technology alone is not a solution. It is an absolute requirement but other items are also required, including public awareness and having clear metrics to allow communicability.

Deputy Simon Coveney

What Deputy Hogan was looking for and what this committee needs is the type of equation that is in Mr. Halligan's head but not yet on paper. That would mean that every six months we would obtain accurate figures on how each sector is performing from Sustainable Energy Ireland or whoever is given responsibility for it. We could then measure performance in terms of the target of an annual 3% reduction. Only being able to do so once a year puts us at a disadvantage. We should do it quarterly or every six months so we can follow progress. We would have a graph of progress in each of the sectors and would know which Ministers to put under pressure and where to assign priorities in terms of budget spend. The first thing we need is a way of measuring performance because otherwise we will be shooting in the dark regarding whether we are discussing 23% or 25%, and which sectors are performing. SEI would do a great service to this committee and the issue in general if it produced a credible method for measuring Ireland's greenhouse gas emissions at any given point in time.

Deputy Andrew Doyle

The other part of the equation if we want to get the message across is that energy costs are increasing as a percentage of the family budget. We could demonstrate that the greener we go, the better we can manage the increase. This country can only take the renewable route for energy security. It should be demonstrated that reductions in carbon output can bring reductions in energy costs because we do not want to see the graph rise in respect of energy poverty.

Mr. Brendan Halligan

I will try to respond to the questions. The difficulty with projecting forward to 2020 on a sectoral basis is that different variables apply to the respective sectors. We will have to take a view on, for example, the rate at which the built environment sector picks up on proper insulation programmes and ratchets up building regulations. Consumer perception could change, with the result that people start demanding passive housing standards for new buildings. We have had discussions on this matter, including a seminar in Croke Park and meetings with architects and builders, and I am beginning to see the practical problems involved. We might not, for example, have sufficient craftspeople to transform the entire built environment within the time period. There are not enough people coming through apprenticeship schemes to produce the level of craftsmanship needed. Further significant bottlenecks will arise, so it is difficult to forecast the situation in 2020. We should conduct a sensitivity analysis for each of the sectors to determine the potential ranges.

None the less, Deputy Coveney asked a question and I should respond to the challenge. I do not ask anybody else to stand over my analysis when I say that in addition to what we need to do to reach 33% penetration of renewables in the electricity sector, we would probably have to strip out a further 4 million tonnes of carbon by increased renewables. In terms of percentage of the total, that implies a staggering and frightening figure of an additional 20% of renewables. That is why I returned to the Deputy's earlier point on people accepting the figures.

Deputy Liz McManus

Is that to get the 3% reduction?

Mr. Brendan Halligan

Yes. The 3% reduction is something we have put on ourselves and it is an enormous challenge. It is reasonable to foresee that a political consensus will be developed in the two Houses between parties. This would be very much analogous to the past policy of saving the economy in the 1980s, and our policies for the North and membership of the EU, neither of which was ever allowed become a plaything between parties. All the main parties have agreed on the broad thrust of national policy so we will have to do the same with this issue.

If that is done, the figure being spoken about is not impossible. The Chairman has asked the right figure and I hope he goes on to ask those sorts of questions of all the sectors. At that stage we can begin to do what Deputy Coveney wants, which is to point out what everybody should be doing.

The figures are pretty frightening. I was so frightened about this that I never really circulated it. It is now on the record of the Oireachtas and perhaps I will suffer for it when some economist comes after me.

Chairman

Does Mr. Taylor wish to continue? We have other speakers.

Mr. David Taylor

We have an absolute commitment to bring forward appropriate metrics, historical and projected, on a regular and timely basis. Our ambition is not restricted to where we are now. In other words, the direction indicated by Deputy Coveney is the one in which we will go.

We have some good indications in terms of how demand is evolving by sector and how the carbon intensity of the demand is moving. We publish price comparisons on a much more frequent basis. We have a strong commitment and visible metrics are placed in the public domain in a timely fashion.

The original budget for the greener homes scheme as announced in the 2006 budget was €27 million, and an additional €20 million was provided in the 2007 budget. The total cost of grants in the first phase of greener homes is €47 million. That is the broad picture of expenditure provision.

Deputy Simon Coveney

That is not the broad picture as I understand it, which is the reason we need some clarity on the issue. I have a note from the Department which was given around the time we had the discussion on the token Estimate, as it is called, which takes money from one section in a Department and puts it into another. It is clearly indicated that the revised Estimates figure agreed after the budget was €31 million. It was only some weeks ago we approved an extra €16.2 million on the understanding that the money had already been spent or committed.

With regard to the greener homes scheme, if commitments are made in a demand-led scheme, we must meet that demand. The note also states that it was anticipated we would not allocate enough money to this scheme at the beginning of the year and at some stage we would need to reallocate funds to solve the problem.

I do not want to go over the issue of how we got the figures wrong and how we can justify taking money from other sectors. The issue is whether we have learned the lesson from that. No money is allocated currently for the second phase of the greener homes scheme, which has a slightly reduced capital grant allocation for a number of very worthy expenditures. The greener homes scheme is a great success but the problem is the budgeting around it which has not been accurate or successful. It has not been handled well by the Department or SEI.

I wish to ensure next year we will not have the embarrassing case of having to top up a fund by almost 30% of the original budget because we have the figures wrong. If we have a demand-led scheme, will we have enough money for the second phase of greener homes? What is the estimated cost of that given that more people will install solar panels on their roofs and more efficient heating systems in their houses? This is thanks to the work being done by Sustainable Energy Ireland so it is a victim of its own success regarding the need for a bigger budget. I understand phase 2 of the greener homes scheme is under way but has no budget. Can the committee be provided with an estimate of the sum that might be needed from next week's budget to avoid a repeat of the recent situation in 12 months?

We are dealing in specifics and this is a general matter, but I believe there is an important point of principle in question in this. It is important that in addition to SEI being effective in changing mindsets, we allocate money in a responsible way.

Chairman

From past experience many of us know that home improvement schemes were introduced and it was not possible to fund them sufficiently because there had to be a cut-off point at some stage. Does Mr. Taylor have the information that was requested?

Mr. David Taylor

In terms of customer metrics, scheme performance and consumer and industry interest it has been an outstanding success and put renewable energy in Ireland on the map. Thanks to the scheme there are now solar panels on more houses than anyone could have envisaged. The most important thing about a demand-led scheme is that it reveals the strength of underlying demand and it is no surprise to anyone that an additional budget allocation was necessary. The original figure was €27 million and another €20 million was added because this was viewed as an important scheme that needed to be appropriately resourced. Many lessons have been learned by SEI in this regard and I am satisfied the scheme will continue next year within the existing level of service provision.

Senator Ned O’Sullivan

I find this discussion quite interesting and the two presentations were very stimulating. It is clear this committee has more than enough work to do. I will respond to Mr. Brendan Halligan's challenge regarding what Ireland can hope to achieve because he approaches this matter from a pessimistic point of view, deeming Ireland so small that our tiny footprint makes little difference to the global situation. My grandmother said that many a mickle makes a muckle and Ireland has a contribution to make to this issue that could see it in an exciting situation of giving leadership as a small country. This is what we did during the information technology, IT, revolution and if we did so in this regard, we could make an important contribution in the process.

Efficiency is an area that must be more closely examined because I believe there is always a deficit in this regard. I come from a background of working in local authorities and I am not aware of any emphasis on green issues and energy efficiency in planning regulations imposed by local authorities. I have dealt with planners all my life on issues such as the size of houses, locations and so on but I am not aware that local government and the commercial sector are serious about energy conservation. This must be examined.

I am especially interested in tidal energy because Ireland is an island nation and there is room for growth in this sector. What is happening in terms of wind energy? There was a big surge — excuse the pun — in the construction of wind farms and it has become common to see planning applications for them in the newspapers. Has this waned and, if so, why? Surely the popularity of wind energy has not already peaked. I would like to know more about this.

I am interested in the gas situation because I recently read that gas will be the new oil, but I am not sure that was meant as a compliment. I am especially interested in liquified natural gas. As the Chairman is aware, plans for the establishment of a LNG terminal in Ballylongford on the Shannon Estuary, which is near where I live, are well developed. How new is the science of LNG? Is it well established? To what extent will LNG be a serious contributor to the overall gas supply? For example, what percentage of the gas supply is derived from LNG at the moment? How secure is that supply? This project has been fairly well received by the public in Kerry but there are rumblings of concern. I notice that a small group of people has been briefed by the Shell to Sea people. I hope we do not go down that road. Perhaps this is a micro-question for a forum such as this, but I would like to know more about it.

In the same vein, what do the representatives of SEI think is the future of a plant such as Moneypoint, which is a major polluter? Do we have to suffer from this for much longer? I do not propose to close it down but I wonder about its future. Can we reshape or refit it in some way so that it can make a serious and meaningful contribution to output without polluting the whole area?

I was interested in the Chairman's comments about opinions on the nuclear option. We should have grasped that nettle 25 years ago when it came up first. It is not too late. There is a different climate out there now, if listeners will pardon the pun. There is a different view about where we are in terms of energy. The debate should be reopened and I would certainly welcome the chance to participate in it.

Deputy Ciarán Cuffe

I also welcome the representatives from SEI.

The European building performance directive has been on the horizon for many years and is almost a reality. What will be its impact on the work of SEI? I presume the organisation has a direct involvement in upskilling, whether it be of craftspeople or professionals. In the five-year review windmills and photovoltaic water heating are frequently mentioned. It is hard to pose behind a bale of insulation, but insulation is probably much more important than any number of windmills or solar panels on our roofs. Would the representatives agree that insulation or, as one person mentioned, energy efficiency is hugely important? I am thinking as an architect as well as a TD.

I am not sure whether Mr. Halligan is agnostic on the issue of carbon capture and storage. I note with interest that George Monbiot, who is usually quite a sceptic in these areas, has expressed an interest in carbon capture. Does SEI have a view on this?

Deputy Bobby Aylward

I also compliment SEI on its achievements in its first five years.

I am from the south east and have an agriculture background. The beet industry was recently lost in that area and in Cork. There is much expertise there that may be applied to raising biofuel and biomass crops. How can we promote that industry and make it viable and profitable for farmers to change over to biofuel crops? It is important not to lose the expertise that exists among farmers.

Research and development is very important. Ireland is a small country on the western periphery of Europe which is surrounded by sea. We can lead the way in innovative thinking in terms of what is available on this island, particularly from the point of view of wind, sea and tidal energy.

To follow up on what Senator Ned O'Sullivan said, has local government led the way sufficiently in wind energy and greener homes? What is the way forward? I know from my constituents that they think about building greener homes but when it comes to cost, they back off. How are we to promote greener homes? Should it be through the local authority or grant aid?

We all talk about wind farms, windmills and so on. I have noticed in my area, however, that there is much objection to windmills. It was a very innovative idea five or six years ago but people are concerned about them from a heritage and scenic point of view, especially how they affect landscape, hills and so on. How does one overcome such concerns? How does one promote wind energy while dealing with the objections of people to them because of their fears about the effects on their heritage and scenic areas?

Mr. Brendan Halligan

The two of us will respond to the best of our abilities. I take Senator Ned O'Sullivan's point and thank him for his comment about the quality of the contributions. His suggestion of giving a lead analogous to that on IT is a good example that we should have at the back of our heads. I will correspond completely with the Senator on that issue.

On the issue of whether we are serious about planning and regulations to make our houses green, the chief executive will respond in more detail on what we are doing. As the committee is aware, the regulatory regime has emerged from the EU. It is clear we must do this. I cannot comment whether we have been serious in the past, but certainly we must be serious in the future.

The scale of the problem is something of which the committee may wish to apprise itself. If we are to tackle every one of 2 million buildings, which is a major challenge, we must be certain the systems and human resources are in place. I am not so sure we have got to the point where we understand the scale of the challenge given the time in which it will have to be done. Deputy Cuffe made the point that one of the quickest ways of changing our outputs of carbon substantially would be to have the highest quality of insulation. There is no question about that. One can get zero carbon housing and carbon commercial buildings.

It was interesting to note at the conference in Croke Park that this does not necessarily mean that the higher the standard, the higher the cost. There is an issue in this that needs to be examined seriously. I recommend the Chairman puts this matter high on his agenda. It would be of great interest to the public because there is nothing more important than one's home.

Chairman

I have taken a note. Arising out of all these meetings we should take positive action.

Mr. Brendan Halligan

Yes.

Chairman

The committee will write to the appropriate Department or Departments pointing out that we cannot pursue a proper programme of encouraging insulation and so on without the available skills and asking them to carry out a study on our behalf of the availability of these skills. If members agree, I will write in the name of the committee. That is a positive move to which we will return.

Mr. Brendan Halligan

May I suggest another? I do so with tongue in cheek to a certain extent, and also I am putting a friendship at hazard. The Houses of the Oireachtas could give a lead. What more iconic building is there than Leinster House? Why not have a programme to make this building as carbon neutral as possible by whatever year we want to suggest?

Deputy Simon Coveney

On that point, it is worth noting that I received a response to a parliamentary question today which shows that the Department of Communications, Energy and Natural Resources in all its buildings uses only 4.5% energy from renewable sources. There is an issue here of leading by example, whether in Leinster House, Government Buildings or Departments. That is a significant point.

Senator Ned O’Sullivan

We could start by switching off the lights at night.

Mr. Brendan Halligan

I take the point made by Senator O'Sullivan on what the State sector is doing in this regard. The energy efficiency programme has a demanding target for the public sector. This is already official Government policy. I am simply talking in terms of marketing the idea. Perhaps the Houses of the Oireachtas could give a lead.

Chairman

We could write to the Chairman of the Houses of the Oireachtas Commission — I ask the clerk to note that — asking what programme is in place to make the Houses of the Oireachtas carbon neutral.

Deputy Bobby Aylward

Is Mr. Halligan telling us how to go about it?

Mr. Brendan Halligan

No, I am not. I have a slightly mischievous suggestion. The Chairman's point of leading by example is important. That applies to us all, even down to the car we drive. Two Ministers travel by bicycle. That is leading by example but I am too elderly for that.

Senator Fiona O’Malley

One is never too old.

Mr. Brendan Halligan

I drive a hybrid car, which I have just purchased and I find it an astonishing success so far.

As regards wind energy, the surge, to use the Senator O'Sullivan's word, has not dissipated. The targets the Government set for itself are being met and may be exceeded. The great challenge, however, is to go offshore. Perhaps the committee could seriously examine the technologies, changes in planning and the support mechanisms that would be required to get offshore wind energy projects up and running to the extent that would be required. This relates to the question of energy security. There are vast quantities of wind in the Irish Sea. The story on wind energy is not so bad.

A great deal of work has been done on Moneypoint by the ESB. The future of Moneypoint depends on future advances in the technology with regard to clean coal, even if I remain an agnostic in that regard.

I will leave it to Mr. David Taylor to deal with the issue of the EPBD mentioned by Deputy Cuffe. On the question of biofuels, development in that area comes under the committee's terms of reference. I come from a background of having worked in a sugar company for three or four years. I am familiar with what was then the capacity of that company in terms of the farmers. Some 30,000 farmers grew sugar beet at that point. We had four factories that led the world in beet technology. It was an extraordinarily successful venture initiated in the 1930s.

The Deputy is correct in the sense that it is not too late to recapture a good deal of that infrastructure, and the skills used in that industry still exist. Both the IFA and the ICMSA have produced important and significant documents on the development of biofuels. It would be worthwhile to seriously discuss with those organisations what they believe can be done.

Deputy Bobby Aylward

It is about profitability. That is the issue. Such development will not come on stream until it is profitable for a farmer to grow the crop.

Mr. Brendan Halligan

That depends on the speed at which we implement various EU directives on the quantity of biofuels that we have got to use in our cars. It is the sort of research Mr. Taylor mentioned. This is an area in respect of which the committee needs to be equipped with the requisite research facilities. The Deputy is correct in which he said. It is an area that could have a very significant pay-off for this country.

Senator O'Sullivan questioned why we are not playing a leadership role in this area. It would probably be in the area of biodiesel rather than bioethanol, but the same growing skills would be required in terms of the farmers who would be involved. I will hand over to Mr. Taylor.

Mr. Taylor

I will deal with some of Senator O'Sullivan's questions that Mr. Halligan has not dealt with. The Senator asked about liquified natural gas. A significant liquified natural gas trade has existed between Indonesia and Japan for many years. It is well established as a technology. It depends on there being a source of natural gas, the existence of tankers and the possibilities to receive and regasify. The attractive aspect of the liquefied natural gas trade which is developing worldwide is that it does not have the same monopoly elements that go with a fixed infrastructure, which is quite difficult to regulate. That said, the investments involved are very large at source, at sea and at delivery. It is not an area one goes into lightly. Three such facilities have been developed in the United Kingdom over the past three years. It is a new departure for these islands but there are well established precedents in the world. I understand Rotterdam has an ambition to be the centre of that trade for Europe.

Senator Ned O’Sullivan

Is it true there has never been an accident in an LNG transmission?

Mr. David Taylor

I cannot comment. I have no knowledge about it but have no reason to believe there is a particular danger. With regard to Moneypoint, the committee should bear in mind the price of carbon. The European initiative to establish a carbon market for the electricity sector and large emitters is an important development in the sense that it sends a price signal as to the value of capturing and sequestering carbon and for the viability of coal under conditions of constrained emissions. It is an important instrument that we must see develop. The committee is aware of my views on nuclear power.

In response to Deputy Cuffe, the energy performance in buildings directive is a significant development for us. Aside from our statistical work, it the first piece of work we can envisage going on forever; in other words, this is an intervention where SEI is required to establish a service that will enable sellers and buyers, but principally sellers, to discharge their obligations under SI 666 which implemented the directive in Ireland. We are working hard on the development of the home energy rating part, that is, building an energy rating for homes. So far it is in accordance with an action plan developed with the two responsible Departments. The number of trained assessors we have is in the hundreds, the number of training providers is in the teens and we have developed and issued software for use in the home energy rating of new homes.

The national administration system, which is an automated all-electronic file reception, verification and placement on the register process, is in its final test phase. What we call the contingency system, which is the first version of it, is ready for launch in January. The Deputy will be impressed when he sees the system in operation. It is not unlike the approach Ryanair has in terms of facilitating certain on-line--

Deputy Dara Calleary

Does that refer to customer service?

Mr. David Taylor

I mean in terms of business processes.

Deputy Dara Calleary

The technology process, please.

Mr. David Taylor

At the end of the day there is a cost attached to everything for which one regulates. It is incumbent on an implementing agency such as ours to get the cost to the minimum. We are aiming to reduce the transaction costs to the lowest possible level while at the same time providing a high quality service matrix. Progress is significant. I believe the committee will be pleased with what it sees as it rolls out. That is not to say it is not a major undertaking; it is huge. We envisage 150,000 transactions per annum in 2009. It is not unlike the level of activity that occurs in the Land Registry.

I have alluded to our interest in carbon capture, in identifying sites, and how the establishment of a price for carbon will drive commercial interest and will help facilitate the introduction of clean coal. There are technological and other permitting issues to be addressed but the various interests are live to them and are pushing ahead.

On biofuels, the pace of development of many technologies and solutions depends on what are the competing feasible options. In other words, the prices of oil and gas matter because where they are high, consumer demand is expressed in quite a different way and one gets the appropriate incentives to farmers to make a business out of delivering fuel crops. The commercial side is one part of it. The other side concerns technological requirements. It is recognised that the energy yield from many crops we can grow here, in terms of conventional bioethanol, is relatively low compared to what one can get in the tropics, so there is an issue there. However, when one looks at cellulistic ethanol the picture changes quite dramatically, but for that we are still at--

Chairman

What is cellulistic ethanol?

Mr. David Taylor

It is the possibility of converting the cellulose one finds in materials such as wood and straw into bioethanol. It is from starch, to sugar to ethanol — that kind of conversion process. If that can be done on the processing side at an appropriate scale economically, it opens up the market for woody crops into the premium fuel market as opposed to the heat market.

Mr. Brendan Halligan

This is being examined at the University of Limerick. The committee may wish to invite representatives from there to come here. Some of the professors there have grand ambitions and believe there could be quite a good future in the cellulistic process.

Senator Fiona O’Malley

That is the right direction.

Mr. Brendan Halligan

Indeed.

Chairman

The O'Malleys will be very welcome. I can see this will be a busy and widely-travelled committee.

Deputy Bobby Aylward

Is enough being done on research and development?

Mr. Brendan Halligan

It is getting there, yes. Another agency to talk to in that regard would be Teagasc.

Chairman

I was interested in Senator O'Malley's point about research and development programmes. We should write to the Taoiseach on this matter and ask him about the possibility of setting up an agency or passing responsibility in this area to an existing agency. We should take that step and let the Taoiseach reply to us.

Deputy Simon Coveney

That has already happened. My understanding is that Science Foundation Ireland is the body involved in research and development.

Mr. Brendan Halligan

Yes.

Deputy Simon Coveney

Am I correct in saying that the energy RTGI programme is essentially being transferred to Science Foundation Ireland, or how is that working? That is why I raised the issue earlier, which has not been answered, of taking funding from a research budget and putting it into a greener homes budget. Given the importance of research and development, which Mr. Halligan rightly pointed out, I would like to know who has responsibility for it. My understanding is that it is Science Foundation Ireland, but it would be helpful to have that clarified. If we ask the Taoiseach, I think we will be told that Science Foundation Ireland has responsibility for this area.

Chairman

There is a further element of this, in terms of grant aid, that goes beyond research.

Mr. David Taylor

On that point, there is a continuum of research, development and deployment. In other words, at the most basic level one is doing basic research, while at the next level one might be developing and testing a prototype. At another level one may have something that is ready for production. Lastly, one may have a policy desire to see something that is market-ready being deployed much more rapidly than it would be otherwise. It is useful to have that concept behind developing technology options and deploying them in the market. They require different interventions. That is why Science Foundation Ireland concentrates on third level involvement in early research which will lead to the development of core competences in some of the generic areas about which we are talking such as second generation biofuels. That requires a scientific effort and collaboration with university researchers, whereas the work we do with the Marine Institute, for example, involves working with developers who have ideas for prototypes they wish to have tested. We have funded some early work in UCC which has a hydrology laboratory and moved on to the next stage where we test and fund prototypes at sea. Should the results prove successful, the development agencies will take an interest in the establishment of production facilities, etc. At some stage the CER would take a position on offering a tariff for such machines.

Deputy Dara Calleary

I refer to wind energy and apologise if the issue has been covered. Does SEI have a position on EirGrid? If somebody is lucky enough to get planning permission to build a wind farm, he or she must apply to EirGrid for admission to the grid. That is a nightmare process, particularly for small operators such as the independent person or community wind farm. I have come across incidents where EirGrid refused access to the grid because a semi-State company had planning permission to build a wind farm which it had no intention of building. By virtue of the fact that it has planning permission to build it, smaller operators in the area are blocked in accessing the grid. Does SEI have a position on this or is it aware of the matter?

Mr. David Taylor

There are two aspects to it. One is below what size is there a requirement. This is being addressed in planning consents and by the CER. In other words, there is a deliberate intent to minimise bureaucratic or permission issues as they affect smaller scale operations.

The other aspects concerns how projects interact with one another. EirGrid comes from the perspective of having an obligation to meet the interests of all electricity customers and to use fair procedure in dealing with applicants for connection agreements.

Those are the two principles which govern the practical implications of what follows. Once early applicants have been offered a connection agreement, it is binding on EirGrid.

Deputy Dara Calleary

Are connection agreements dated? Is there a time limit within which one needs to take them up?

Mr. David Taylor

Those aspects have been considered and there is a position. It means someone who comes along later is doing so in a new context.

Chairman

I thank the chairman, Mr. Brendan Halligan, and Mr. David Taylor and Mr. Matthew Kennedy. The fact that we could stay here for another couple of hours is indicative of the interest in this area and variety of points for discussion. SEI's ongoing offer of assistance is very much appreciated and I am sure it will help us in our work. I thank its representatives for coming.

Before members leave, there is some housekeeping to be done. Deputy Cuffe represented the committee at a climate change conference in Brussels and our thanks go to him for doing so. A report on the conference will be prepared and circulated to members.

Senator Fiona O’Malley

Before the visitors leave, there was an offer made to provide those of us going to Bali with a briefing note on the issues. If we could get it, I would welcome it very much.

Mr. Brendan Halligan

Yes, certainly.

Chairman

There are three of us — Deputy Coveney, Senator O'Malley and myself.

Mr. Brendan Halligan

Can we continue the briefing on the plane and in the hotel? It will be a long briefing.

Chairman

Mr. Halligan can send it to the clerk to the committee. I again thank Mr. Halligan.

The other matter is to remind members that on Wednesday, 19 December at 10 a.m. we will be receiving the Minister. Will the Seanad will be sitting on 19 December?

Senator Fiona O’Malley

It might.

Chairman

I remind members of the invitation to lunch in the European Parliament office at 12.30 p.m. on Monday, 3 December. I ask members to notify the clerk to the committee if they are available.

The joint committee adjourned at 12.27 p.m. until 10 a.m. on Wednesday, 19 December 2007.