Good evening ladies and gentlemen. I am delighted to have the opportunity to address this important event in the Irish energy calendar especially as this is my first opportunity since my appointment to the Department of Communications, Marine & Natural Resources to speak publicly on energy issues. In order not to risk spoiling the cuisine I will be brief and confine myself to commenting on a small number of what I consider to be the main policy challenges facing the Government and the energy sector as a whole.
Corrib
I have no doubt an issue of particular importance for many of you here tonight is the recent determination by An Bord Pleanála on the gas terminal for the Corrib Gas Field.
I very much welcome this decision. I believe that the Corrib Gas Field will benefit the country by having an indigenous and secure supply of gas at a time of price volatility and falling supplies in North West Europe. Irelands current supply from the Kinsale Head Gas Field is depleting, and the onset of the Corrib gas could not be more timely. The gas will mean that Ireland can provide about 60% of its gas requirement from indigenous supplies.
The exploitation of this field will allow for the installation of an important increment to our national gas transmission infrastructure and will undoubtedly provide opportunities for industrial and other developments in terms of energy, investment and employment in the adjacent area.
Gas
As the subject of electricity liberalisation has been well-aired in public many times recently, tonight I will deal with developments in the gas market. The Government remains strongly committed to full market opening of the gas market by next year and I am confident this target will be met.
Following on from the work already done in this area, I fully intend to come to quick conclusions on unbundling of BGE and also on issues such as extending third party access rights, for example, to storage. I also hope to publish proposals for a register of natural gas installers to ensure the safety of all domestic users of natural gas. Well-known safety incidents relating to gas make this an issue of public concern.
International oil and gas prices
I do not think it would be possible to speak to you tonight without making some observations about the current state of fuel prices. Ireland is heavily dependent on imports of oil, gas and coal for power generation. These products are internationally tradable commodities and we have witnessed significant price increases in all three over the last year or so.
There are mixed views whether this represents a step-change in the supply/demand fundamentals or whether the current geopolitical uncertainties will abate and see prices returning to levels previously regarded as the norm. Only time will tell.
While these effects are making their presence felt in consumer pricing, their impact on the economy as a whole is probably less serious than might have been the case twenty years ago. The energy intensity of our economy has been falling steadily in recent times. Between 1990 and 2002 the value added of industry grew by 223%, while industrial energy consumption grew by only 28%. About half of this can be attributed to structural change towards less energy intensive manufacturing in the economy; the other half is due to increased energy efficiency.
Renewable Energy
The area of renewable and sustainable energy is increasingly important, as we face into the commencement of the pilot phase of Emissions Trading.
My Department launched a consultation document Options for Future Renewable Energy Policy, Targets and Programmes last year. In tandem with this initiative, a Bio-energy Strategy Group and CHP Policy Group were established, which are representative of Government and industry interests.
In May of this year a Renewable Energy Development Group, chaired by my Department, was established. The Group comprises relevant experts from the administrative, industrial and scientific sector. The Group will advise on future options on policies, targets, programmes and support measures to develop the increased use of renewable energy to 2010 and beyond, and will consider the outcome of the renewables consultation process, and the findings of the Bio-energy and CHP Strategy Groups. This Groups report is due before the end of this year and will inform future policy development.
I wish to take this opportunity to state very clearly my strong personal wish to see the maximisation of deployment of renewable energy, taking account of technical issues, consumers and overall economic competitiveness.
North/South Energy Cooperation
Many in this evenings audience will be aware of the proposals for the development of an all-island energy market. I expect also that some of you will have attended the North-South Energy Forum that was organised by my Department and the Department of Enterprise, Trade and Investment in Belfast, for wider stakeholders and held in Drogheda earlier this year.
The draft Framework document, which I intend to publish this month, basically sets out the blueprint for the achievement of an all-island market. Much work has already been done by my Department, the Northern Ireland Department of Enterprise, Trade & Investment and the offices of the two regulators, north and south, in developing a programme of priorities that, when delivered, will make this a reality. The consultation process that I mentioned a moment ago did much to inform this process, in particular regarding the areas of priority that should be pursued.
The finalised document will contain a work programme designed to facilitate the achievement of these key priorities, including addressing any infrastructure deficiencies; developing integrated trading arrangements; and, ultimately, putting in place a unified structure for transmission system operators coupled with a single regulatory authority for the island. The work programme will also deal with delivering the sustainable agenda by concentrating on the gains to be made through energy efficiency strategies, CHP and the development of new renewable energy technologies.
Exploration opportunities
There has been a rejuvenation of interest and exploration in the Celtic Sea and Irish Sea since June of last year with a large number of blocks being taken up under licensing options. Since late 2002 the Porcupine Basin has been available for exploration licensing through the Porcupine Licensing Initiative. The 4th and final tranche of the Initiative which closed on 15th October resulted in a further application encompassing two separate areas in the Basin. You will be aware that John Browne, Minister of State formerly at my Department, announced details of a licensing round for the North East Rockall on 27th July, with a closing date for applications of 31st March 2005. I am aware of interest in the area by the industry, even before the recent increases in oil prices, and we hope to see a good response.
Our strong policy to promote active exploration in other Atlantic Margin areas with potential was also announced in July and, in this context, I will shortly be giving consideration to further licensing in the region.
Conclusion:
As I said at the outset, I wanted to focus on just a small number of areas in what is a very wide-ranging and complex sector. I look forward to working with the various stakeholders and players in meeting the many challenges that confront us all at present in terms of achieving our goals of maintaining secure energy supplies, supporting economic growth and competitiveness and ensuring that energy supply and use is environmentally sustainable.
Thank you for all for your attention and enjoy the rest of the evening.