Sustainable Forestry and Forest Carbon Sequestration: Discussion

I welcome the Minister of State at the Department of Agriculture, Fisheries and Food, Deputy Connick, and his official. The joint committee has been consulting other stakeholders in this area, including Coillte, the IFA, the Irish Timber Growers Association, representatives of the private sector, the Bank of Ireland and EcoSecurities Group with a view to publishing a report on our findings. I invite the Minister of State to commence his presentation.

I thank the Chairman and the members of the joint committee for inviting me to discuss sustainable forestry and forest carbon sequestration. I am accompanied today by Dr. Eugene Hendrick. I made several attempts to meet the committee prior to Christmas but we were busy on the fisheries front. I am glad to say we did well in that regard.

Ireland's forest sector makes a significant contribution to the Irish economy and climate change strategy. The sector employs over 16,000 people in the planting, management and harvesting of forests and the transport and processing of Irish timber. Despite the difficult market conditions arising from the recent global economic downturn, Irish exports of sawn timber increased year on year between 2007 and 2009, reflecting the capacity of this indigenous industry to adapt and develop new products and markets.

Ireland's long-term strategy for forestry as outlined in the Growing for the Future document published 1996 is to develop forestry to a scale and in a manner which maximises its contribution to national economic and social well-being on a sustainable basis and which is compatible with the protection of the environment. This means managing our forests on a sustainable basis by providing and maintaining the economic, environmental and social benefits of forests for both present and future generations. With approximately 730,000 hectares, or 10.5% of the national land area, under forest Ireland is among the least forested countries in Europe. Despite this relatively low level of forest cover, our forests are already making a significant contribution to Ireland's climate change strategy. In recognition of the contribution this indigenous sector makes to the climate change strategy and the national economy, the Government has allocated €114.5 million to fund the forestry programme in 2011. This allocation, which is maintained at near 2010 levels, is clear evidence of the Government's continued commitment to forestry. The funding allocated will support the planting of over 7,000 hectares of new forests in 2011 and facilitate the continuation of a range of support measures, particularly forest infrastructure development. A further €3.2 million has been allocated to support ongoing research and development activities, with a particular focus on the interaction between forestry and climate change.

Forestry offers significant potential to reduce emissions. The three main ways in which the forestry sector contributes are carbon sequestration in forests, fossil fuel substitution and materials substitution. The rate of forest carbon sequestration can be affected by many factors, including tree species, growth rates, soil types and management activities. Land use change resulting in deforestation releases carbon stored in forests and forest soils back into the atmosphere and, furthermore, removes the opportunity for further carbon sequestration. Greenhouse gas emissions from deforestation account for some 15% to 20% of total global emissions.

Under the Kyoto Protocol, countries can offset the net carbon sequestered by new forests planted since 1990 against net carbon emissions. Between 1990 and the end of 2009, Ireland planted over 270,000 hectares of new forests, predominantly by farmers. As the forest estate is relatively young, with a large increase in new forests planted over the last two decades, there is considerable potential to use the forest carbon sequestered by those forests to help meet our Kyoto Protocol commitments. In 2008, the net contribution of these forests to Ireland's carbon emission reduction target was 2.8 million tonnes of carbon dioxide, representing a saving in the region of €45 million to the Exchequer in avoided carbon credit purchases.

The substitution of fossil fuels and carbon intensive products with wood fuels and timber products also makes a significant contribution to climate change mitigation and there is significant potential to increase this contribution. This is particularly valid in regard to energy for heat and electricity energy. Energy from wood biomass is renewable, sustainable, carbon neutral and available locally. The potential contribution of wood to reducing Ireland's greenhouse gas emissions and achieving national renewable energy target is recognised by the Government. A range of measures have been put in place to increase the use of wood in the generation of heat and electricity. An estimated 600,000 cu. m. of wood is already being used per annum to produce heat and electricity in Ireland, leading to an estimated reduction in greenhouse gas emissions of 420,000 tonnes of carbon dioxide. This is in addition to sequestration figure previously mentioned.

Wood fuel not only contributes to reducing greenhouse gas emissions but also contributes to the diversification of the national fuel mix and the reduction in Ireland's dependence on imported fossil fuels. It is clear, therefore, that a considerable volume of wood is potentially available to the energy sector from privately-owned forests. Mobilising this resource is a high priority for the Government and forest owner organisations. To assist forest owners in realising the emerging market opportunities in the wood energy sector, my Department is working in conjunction with Teagasc to assist private forest owners to work collectively by forming local forest owner producer groups. To date, 16 private woodland owner groups have been established around the country and these groups are now supporting farm forest owners to achieve economies of scale in the management and marketing of their forest crops, with a particular emphasis on the wood energy market. This builds on previous work undertaken by my Department to actively encourage the development of the wood energy sector through a range of support measures aimed at creating an effective and efficient supply chain from private forests to end users.

During 2007 and 2008 my Department provided grants totalling €550,000 under the wood biomass harvesting machinery scheme to support the purchase of four self-contained and self-propelled whole tree chippers and three mobile whole tree chippers, thereby stimulating an associated investment of some €1.6 million within the woodchip energy supply sector. The additional harvesting and processing capacity created by this support measure has assisted the development of a market for small diameter timber from forest thinning operations into the woodchip energy sector. These measures are aimed at complementing other measures being implemented to increase demand for renewable energy technologies.

The third benefit of forestry relates to the potential for substitution of wood products for more energy intensive products such as steel and plastic.

Ireland's forestry sector is an important resource not only from a climate change perspective but also for economic, social and environmental reasons. As well as absorbing carbon dioxide, forests provide the timber we use to build, furnish and heat our homes. They contribute to the production of the oxygen that we breathe, they are among our most important wildlife habitats and they provide important amenity and recreation opportunities for people. It is important that we continue to plant new forests and protect the forests we already have.

As I am conscious that the Minister of State will have to leave at 3 p.m., I will try to be concise. There are two concerns I would like to raise. The first relates to the value of forests in Ireland and the new afforestation as it relates to greenhouse gas emissions and carbon sequestration. There is the issue of translating that into a monetary value for land and forestry owners, which the Government should consider. Currently, the State benefits from new forestry in meeting target commitments for greenhouse gas emissions and it saves considerable amounts that it would otherwise would have to spend on purchasing carbon credits. The Minister of State made this point in his contribution.

As a result, the land or forestry owner is essentially handing over an asset - a carbon credit - to the State without any payment being forthcoming. There have been several interesting presentations to this committee concerning the value of forests not only for harvest and timber value, which is important because timber is increasing in value, but also the value of carbon credits. We must plan for a day which has already come when people who have and own forests - the State owns most of them - can gain a monetary value for the carbon value of new afforestation. This can be traded in a carbon market.

I am anxious to hear the views of the Minister of State in this regard and how the State could potentially manage the issue. It essentially gets a carbon asset for free now from private forestry plantations, which is not sustainable as landowners and companies must realise the value of the carbon credits.

The second question is more fundamental. I agree that the Department has acted positively on biomass in terms of putting price supports in place along with grant aid for harvesting machinery and so on. We are now preparing for a future where certain forms of biomass will replace other forms that are not as sustainable, such as peat, as well as other forms of fossil fuels that generate power and electricity. The question must be asked of whether we are planting enough trees to be able to do what we currently do with our timber product as it is harvested, as well as doing what we plan to in future to replace carbon-based fuels with timber, a much more sustainable fuel source. The answer is clearly "No". We do not plant anything near enough in our afforestation programme to be able to sustain the kind of vision hinted at in the Minister of State's presentation. Unless we plant 15,000 ha. per year - that is the figure I have been given - we cannot possibly meet the kind of demand we are trying to create for wood and we will end up importing it when it could be grown here. That would be a massive wasted opportunity for job creation and industry, even before we take in the carbon value of growing trees here rather than importing them and allowing other countries to benefit from the carbon element of forestries.

Are we planting enough trees and is there a plan to finance an effort to plant more trees? We should consider the potential of selling off harvesting rights for State-owned forests. We would not sell the land but could sell harvesting rights in order to finance an afforestation programme that would ensure we will still have many trees to harvest in ten, 15 and 20 years. Is that kind of thinking happening in the Department?

I apologise for being late as I was in the Chamber dealing with legislation. I thank the Minister of State for his presentation, on which I have approximately three brief questions. The Minister of State spoke about the value of forestry being recognised as carbon sequestration with regard to the Kyoto Protocol but he did not discuss EU requirements spelt out in the climate change legislation proposed by the Government. I would like an update on that because it is a different regime, taking in the non-recognition of forestry and its important role in providing the opportunity in agriculture, in particular, to fulfil commitments set out in legislation. This committee prepared a better piece of legislation but we will talk about that another day. Both are within the framework of the EU requirement of a reduction of 20% by 2020.

I do not see this in the Minister of State's contribution and I do not understand its omission, as it is critical for our future as we look to ensure Irish agriculture can have a good and prosperous future. It will not happen unless there is a new kind of approach from the European Union in recognising that forestry has a part to play in reducing our overall burden of carbon emissions. Perhaps the Minister of State can provide an update in this regard as the topic has gone around the Houses for so long.

The Minister of State did not deal with another issue. The Government programme set out a commitment of 10,000 ha. of afforestation but what is the current figure? I understand it to be approximately 7,000 ha., which is a failure. Deputy Coveney has remarked that we should be doing much more and mentioned a figure of 15,000 ha. There is a serious problem if the Government cannot even meet its own programme. With all due respect to the Minister of State, there is no explanation of why we are not meeting those targets, which we would all support. If anything they are fairly modest but the target should at least be achievable. As it is not happening, the Minister of State might tell us about the issue.

My last point relates to biomass and bio-energy, on which there is universal agreement that the area should be developed. It has many benefits. Members of a private company, which was developed in Ireland, addressed the committee, indicating that it was growing its business and jobs in Britain. I wonder if the Government has done a close assessment of the supports available elsewhere compared to here and how we can ensure that where there is innovation at home, the benefits will accrue at home. There are no borders for business and I do not criticise an Irish company for developing elsewhere; I wish it good luck. At a time when we must build on our natural resources, how is it that an Irish company which made a presentation here is expanding elsewhere? That is a matter of concern and perhaps the Minister of State could talk about that as well.

I thank the Minister of State for his presentation. I equally thank him for the recognition he gave to the last action taken by the last Fine Gael-led Government in publishing the development plan for forestry in 1996. At that time we produced 22,000 ha. of forestry per year and it is to that end that I wish to move our thinking. Deputy Coveney brought up the issue dealt with by the Bank of Ireland in that emissions are worth money and payments would encourage increased production in forestry. There are private companies and investment groups that would be prepared to increase the acreage of forestry if incentives existed. The Minister of State mentioned a figure of 7,000 ha. being covered this year, but the Government plan says 10,000 ha. Most of the people we talked to said we should be aiming for at least 15,000 ha. because the demand is there.

I wish to follow up on the issue dealt with by Deputy McManus, namely, that somebody from this country is able to advance his or her business in a much greater way in the UK because of the different means of support and so on. We must consider this issue in a stronger way. For example, chicken litter and other waste is burned to generate power in Germany, where there are more than 2,000 generation systems, but we are tied to such a level of support here that power generation cannot not be justified. These are the things we must consider - not only the issue of forestry, but how to utilise the energy structures that are there in light of the ongoing difficulties in international oil markets. I thank the Minister of State and I hope we can do something to maximise this potential.

Although I have fought for years to retain the quota system for dairying across the country, the system is changing now, and I have no doubt that milk production will go to areas with better land in the future. If this occurs, more land will become available for forestry in counties such as Cavan, Monaghan and Leitrim. We need to be sure we are able to utilise that land, as Deputy Coveney said, to produce products for which there is a market, not only in this country but also abroad. When one sees Irish companies selling not only to the UK but also to France, one realises there is an opportunity there that did not exist in the past.

Does the Minister wish to respond to any of the questions asked or points made?

I thank the Deputies for their questions. After my appointment in March of this year, I set out on a tour, travelling around the country to see the companies that have set up in the industry. Some of those involved are here today, including constituents of mine, and I welcome them. It is an industry that, like many people, I was aware of, but I did not have a lot of knowledge about it. I was impressed with the level of professionalism and commitment among these companies, as well as the amount of structure and the consultation that was taking place between the Department and those involved from the different sectors, which fed into an information-sharing exercise. Members will appreciate that shortly after that, in July, we were faced with the capital review programme, which raised the possibility of the annihilation of forestry planting this year. The figures took us back to somewhere in the Middle Ages - back to 1948 levels of planting, about 2,000 ha. Much of my energy has been focused on fighting the fight in the forestry sector to retain the funding to ensure we had a major planting programme for this year.

In 2010, approximately 7,800 ha. were planted. I am hoping that some slight adjustments made in recent times to the grants will add an extra 600 ha. to this year's figure, which will take us back up to almost 8,000 ha., a target I hope the sector will reach this year. I accept the point that the programme for Government has a target of 10,000 ha., but that is something to be aimed for. I was in a fire-fighting situation, trying to ensure we got as much money as possible, and I was delighted when we got the €114.5 million to take us back up to 8,000 ha.

A question was asked about the value of forests. When I was considering how to fund forests and the planting programme for this year, I considered a number of issues, not just carbon sequestration but also Coillte. The question was asked as to whether we could transfer the €45 million that is currently applicable to carbon sequestration in order to bring our figures back up. In the end, the capital programme facilitated the planting programme, so I was happy with that. Currently, the State owns the carbon and has the right to do with it as it chooses. That is the legal position.

Are we planting enough trees? The answer is "No." We would love to plant 15,000 ha., but it is the usual chicken-and-egg scenario - I need the money to do that. I will link that into Deputy McManus's question about other countries. I did consider the grants and premiums in other countries, and there is a substantial difference, but they are at different stages in forestry development. We have one of the lowest levels of forest cover in Europe. Premiums were much lower in other countries, so we are paying a fairly high premium, as well as 100% grants - in fact, I was informed they were greater than 100%. All of these figures were considered before the budget, and after the budget, when I had the figures, I tried to see how we could maximise the planting programme.

The other thing we considered was moving forestry to the rural development programme from 2012 onwards. That would lead us to a co-funding situation. However, there are a number of difficulties associated with that. If we go down that route, we will be reducing the term of the premiums. At the moment we pay premiums for 20 years. To make the adjustment to go in under that programme we would have to change from 20 years to 15 and, in the case of some species, 12 years. We would also be facing reductions in the premium payments, and particularly in the grants, to a level of 80%. There are pluses and minuses in this regard, but it is a debate that will have to take place in the next year or two.

The other aspect of which I was conscious in the preparation of this year's funding was the importance of protecting existing premiums. They had been subject to a cut of 8% previously, and if we had cut them again we would have destroyed any confidence that farmers and the private sector had in forestry. Thus, it was paramount for me to protect existing premiums. As I said, it was only after I got the figure for the budget that I was in a position to protect premiums for this year. This was a help to the sector.

For me, the eye-opener was the National Ploughing Championships this year. After the "Today with Pat Kenny" show, I spent about six and a half hours visiting the stands of new small businesses in the biomass sector. These business produce heat logs, woodchip pellets and so on, and employ five, eight, ten or 11 people each. The number of people who have entered the sector is phenomenal; a whole industry has been created. People are now more aware of thinnings, and that has created a whole industry in itself. In addition, a machinery industry has arisen from the small businesses. It is an area that has major development potential over the coming years. I hope our focus over the next few years will continue to be on consistent investment in that area.

There are two issues with regard to the Climate Change Response Bill. I intend to discuss what I would like to see as part of the Bill with my colleagues in Government. Currently there are no sectoral targets, and we should consider including these, particularly sectoral plans. Forestry is one of those areas that will require such a plan. I do not want the development of the forestry sector to be impeded by the Bill. I have concerns about this.

I do not wish to interrupt, but I am not clear about the EU position. That is my major concern.

I was going to come to that. I put them down. The current EU situation is that forestry is included in the 20% figure up to 2012. After 2012, forestry is not included. It is expected that there will be an international forestry agreement. That is what we are depending on after 2012. That might bring about a situation where targets might be ramped up, but that would take place after 2012.

Is that within the EU?

Yes. Perhaps Dr. Hendrick will add a comment.

Dr. Eugene Hendrick

It is in the context of the United Nations Framework Convention on Climate Change, UNFCCC, negotiations. The EU has stated it would consider moving from a 20% reduction target towards a 30% target if there were international agreement.

I am keen to clarify this.

There is one other item. Chicken litter in Germany was mentioned and I said I would touch on it. I attended the Young Scientist & Technology Exhibition yesterday. A school from Wexford studied the burning of not only chicken litter but cow manure. They gave me an interesting presentation on it yesterday afternoon and it was interesting to see what they are doing in this area. There were interesting results as well. Perhaps someone in the commercial sector will consider it. The IFA will be looking closely at the issue because it will be an issue for carbon emissions in future. I am sorry for interrupting the Deputy.

No. It is interesting

Incidentally, there are no odours from it and it burns well; the equivalent of up to 75% or 80% of normal timber.

It would turn into gas.

Apparently it is healthy gas once it is burned but I would have to bring in the scientists to explain it.

We can look forward to a chicken litter mountain eventually.

There may be an industry based out of Wexford, although they focused more on cows.

There was a hope - perhaps it was less than an expectation - that because we are unique in Europe in terms of our under-afforestation, if there is such a term, we could argue the case successfully that it should be taken into account in terms of the measurement of our carbon emissions and that it should be allowed as carbon sequestration because we have the capacity to grow more trees. It seemed this was being pursued by the Government or the Civil Service at European Union level. Now it seems the Minister of State is suggesting the battle is over, we will have no joy in that regard and we must simply consider the possibility that the target goes to 30%, which is a real mountain to climb. Further, we must consider the possibility, if that does take place, that we may have some international agreement. This seems to be a daunting prospect. I seek clarification on the matter. Is it the case that the argument at European Union level is over? I would have thought we would have a strong case for some kind of exemption or special status on the grounds that we have certain needs and the possibility of developing forestry to a more advanced level. Would that argument have gained purchase at EU level? Is that simply not a runner now? This is something for which we had all been hoping.

The Irish position is to seek the target of 20%. The Department of the Environment, Heritage and Local Government is negotiating on our behalf at that level and I do not have the information the Deputy requires now. However, I know the Irish position is that we hope to achieve the 20% target. We aim to include forestry in the 20% overall target.

I believe we need an update from the Department of the Environment, Heritage and Local Government. I would have thought there would be better communication between the Department and the Department of the Environment, Heritage and Local Government. This case is being made in the area of agriculture.

I defer to Dr. Hendrick because he represents the Department of Agriculture, Fisheries and Food at the various negotiations and talks.

Dr. Eugene Hendrick

The Irish position is that we wish to include forestry in the overall 20% emissions reduction target. In the event of a step-up or international agreement to go towards 30% from the current 20% level, the EU has agreed unilaterally that forestry would be included in that step-up as well. The Irish position is to include forestry in the 20% emission reduction target.

There is an EU agreement that if it goes to 30%, forestry will be included. This sounds to me like if it stays at 20%, forestry will not be included.

Dr. Eugene Hendrick

The Irish position is to include forestry in the existing 20% target. In the event of an international agreement, the EU has stated it would consider moving from the 20% towards the 30% target and forestry would be included in that additional target. This is the Irish position at EU level.

I presume Dr. Hendrick is saying that if the level is 20%, forestry will not be included. This is what I am hearing. We must have an answer, whether it is disappointing or good. I know the Irish position. Has there been any recognition at EU level not only of our position but that we have a special case? We can only argue it on the basis of a special case and because we are different to other European countries. It seems Dr. Hendrick is suggesting nothing will happen unless the target goes to 30% in the forestry area.

Dr. Eugene Hendrick

No, the Irish position is that we wish to include afforestation since 1990, which represents Article 3.3 of the Kyoto Protocol forestry amounts, in the 20% emissions reductions target.

When does Dr. Hendrick believe that will be resolved one way or the other? Has it been resolved?

Dr. Eugene Hendrick

It has not been resolved and it is under negotiation at present in respect of the effort-sharing decision. Articles 8 and 9 of the effort-sharing decision call up certain procedures if there is no international agreement. This is under discussion at present. The Commission has held a consultation process with stakeholders on the inclusion of land use, land-use change and forestry, LULUCF, which includes forestry, in terms of the emissions reductions targets of members states. This is ongoing and Ireland is inputting into the process. I understand the Commission will produce a paper on the issue next year.

Will that be in 2012?

Dr. Eugene Hendrick

Sorry, it will be 2011, this year.

If there are no further questions, I will finish by thanking the committee and the delegation for the questions and comments and especially the Minister of State for his submission and presentation. We have probably exceeded the time we expected. I hope the Minister of State has not missed out on any momentous decisions in his absence. The Minister of State is excused for the remainder of the day. Go raibh maith agat.

The joint committee went into private session at 3.20 p.m. and adjourned at 3.30 p.m. until 3.30 p.m. on Wednesday 19 January 2011.