Large supplies of environmentally-friendly biofuel for cars will start to become available this year, following the Government's decision to offer €200 million in excise tax reliefs over the next five years, writesMark Hennessy, Political Correspondent
The sale of biofuel-equipped vehicles has been hindered because few filling stations offer biofuel for sale and drivers have been given no financial encouragement to go "green".
Under the plan, 163 million litres of biofuel will be supplied when the programme is operating at full capacity in 2008, Minister for Natural Resources Noel Dempsey said.
Some biofuels made from oil seed rape, or from recycled tallow, or vegetable oils, will be blended with diesel in a 5 per cent mix, while bio-ethanol, grown from sugar beet or wheat, will also be blended with diesel.
Fuel made from 100 per cent oil seed rape under the programme will become available next year in a more limited way, though the department hopes 18 million litres a year will be used by 2010. If successful, it could cut 240,000 tonnes a year of polluting carbon dioxide from Ireland's Kyoto Treaty commitments, equivalent to removing 70,000 cars a year from Irish roads.
Though the final cost of excise-free biofuel is not yet known, it is believed that it could sell for approximately 90 cent a litre - significantly cheaper than current petrol prices, though it is less efficient. The excise cut for blended fuels will be proportionate to the percentage of biofuels used.
Companies and individuals interested in qualifying for excise relief have been given five weeks to apply, though producers and refiners will have to meet production targets. The department has already spoken to fuel companies, farmers and others, sources told The Irish Times last night.
Farmers growing biofuels such as oil seed rape already qualify for €45 worth of grants for each hectare grown, though they can qualify for excise relief if they refine their own produce and sell it directly.
"This scheme builds on a pilot biofuels initiative introduced in 2005 and is a critical step in building a new Irish biofuels sector and market," Mr Dempsey said.
The Government is separately working on a plan to offer capital grants to spur the development of biofuel filling stations, and other required services, which will be rolled out in coming months.
Companies offering the 5 per cent biofuel/diesel blend, which can be used in most existing cars without modification, must be able to supply 10 million litres and more.
Bioethanol suppliers will equally have to be able to supply 10 million litres of a 5 per cent blended ethanol/diesel mix that, again, can be used in most cars without modification, to qualify.
Those seeking to supply an 85 per cent ethanol/diesel mixture, which can only be used in specially converted so-called "flexible fuel vehicles" - can qualify with much smaller quantities.