Address by Minister for Trade and Commerce Mr. John McGuinness TD on Private Members motion “That Seanad Éireann recognises the importance of the development of green technology for economic growth in Ireland”

Wednesday 5^th November 2008

Cathaoirleach,

I am very pleased to contribute on today’s motion that Seanad Eireann recognises the importance of the development of green technology for economic growth in Ireland.

The World faces many environmental challenges as we all seek to reduce our carbon footprint and to adopt more sustainable ways of developing our economies. These challenges can open doors to new business opportunities for companies in Ireland. In facing difficult economic times, as we are at present, it is more important than ever that we focus on areas of potential where Ireland is well placed to compete and can win new markets.

The Green Technology industry is comprised of a wide and diverse range of companies. They provide modern solutions for large-scale environmental infrastructural and services projects, but also for a growing number of niche and specialised markets which have developed within the industry. While Green Technology was previously a sector which offered a small range of vital yet basic goods and services such as drinking water supply, wastewater treatment and waste management, the sector has experienced massive growth in recent years. It now encompasses newer industries at the leading edge of technological innovation, such as renewable energy and environmental monitoring. The sector has also seen the evolution, re-invention and innovation of its traditional services. This is exemplified by the development of the recycling industry which has evolved from the traditional waste industry model of collection and disposal.

The development of green technology goes hand-in-hand with a transition from an energy-supply system based on fossil fuels, to a more sustainable energy delivery system. This transition is necessary on economic as well as on environmental grounds. As traditional sources of fuel, such as oil, steadily diminish in quantity and increase in price, the economic need to develop alternative and sustainable energy sources becomes ever more pressing.

Climate change, our reliance on fossil fuels and a decline in the abundance of natural resources are just some of the major issues facing the global community. Demand for solutions to these problems has driven the rapid development of the global environmental goods and services industry. Over the coming years, fuelled by stricter environmental regulations and a growing demand in developing regions for essential services, the sector is anticipated to continue its strong rate of growth.

The Programme for Government includes a commitment to support the development of environmental technologies in Ireland in order to achieve a win/win situation of improved competitiveness and environmental performance.

In the programmes funded through my own Department, the development and production of environmental goods and services is supported by the mainstream industrial development programmes of the State Agencies, notably Enterprise Ireland, IDA Ireland and Science Foundation Ireland.

In their mainstream programmes, which focus on R&D and training as well as on production, Enterprise Ireland and IDA work closely with individual companies and sectoral groups, offering a range of financial and non-financial supports. They aim to assist companies to increase employment, profitability, competitiveness and export growth. These supports are available to companies in the Environmental Goods and Services sector.

In addition, Enterprise Ireland administers direct financial support schemes that help Irish SMEs to increase awareness of and promote eco-efficiency in their operations. As well as financial support schemes, Enterprise Ireland provides a range of “soft” supports to those companies it is mandated to assist including:

• the Envirocentre website which provides up to date information on a range of environmental issues relevant to industry.
• Regional Industrial Environmental Fora aimed at the SME sector, and,
• technical advice to client companies from a range of in-house experts in various environmental fields.

IDA is working closely with Sustainable Energy Ireland (SEI), on a number of fronts, to help FDI clients identify ways to improve their energy efficiency and explore the possibilities of adopting a growing range of renewable energy technologies. IDA also recently launched a study to examine the options to increase the energy efficiency and sustainability of industrial estates and business parks.

While these supports have been available, our industrial performance in the Environmental Goods and Services sector has not matched our success in sectors such as Biotechnology and Information and Communications Technology. It is felt that more can be achieved with renewed effort.

Both IDA and Enterprise Ireland have recently established an internal team to identify enterprise opportunities for Ireland in the newly emerging clean /green sectors.

Enterprise Ireland has established its Environmental Goods and Services Departmentto support an expanding portfolio of companies covering the Waste, Water, Energy and Services sub-sectors.  This dedicated team is being resourced to address the needs and challenges of the sector and includes key sectoral, international market and technical experience.  Enterprise Ireland currently has over 130 clients in the sector. It is encouraging strong start-up activity, with 1 or 2 new clients being registered on a weekly basis. Between 2005 and 2007, indigenous exports grew by about 250%. Enterprise Ireland feels that, by 2020, its clients in the sector have the potential to deliver exports in the region of €650m and employment of around 10,000 people. 

IDA’s analysis shows that in 2007 global investment in the green energy industry reached 148billion US dollars, an increase of 60% from 2006. By 2012 investment levels are expected to reach $450 billion a year and $600 billion a year in 2020. Wind and solar have shown the strongest growth, but other technologies such as ocean and second generation biofuels are significant sectors.

So far, IDA’s work on securing additional foreign direct investment in this rapidly expanding sector has primarily focused on the renewable energy, energy efficiency and the enabling technologies sub-sectors. IDA’s vision is for Ireland to become a leading global location for the design, development and delivery of green energy industry technology, products and services. It is focusing on winning investments from multinational companies, growing an innovative industry cluster with a supporting ecosystem, and developing world class research groups and educational institutes.

Since May of this year, Science Foundation Ireland, another agency under the aegis of my Department, has had its remit extended to sustainable energy and energy-efficient technologies. This change implements a Programme for Government Commitment. It formally - and fittingly - recognises the increasing importance of energy in strategic Government policy. The extension effectively adds a third pillar to its existing remit in Biotechnology and ICT. It will ensure that the opportunities and challenges in the energy field are underpinned by the knowledge, understanding and the human capital that investment in world-class research can provide.

Energy – its availability, its uses and the potential it offers – is a vital element of our competitiveness and economic development. A significant increase in the numbers of researchers in the energy sphere –facilitated by this development of SFI’s remit –means that Ireland will be well-placed to play a key role in what is, at once, both a domestic and international opportunity.

Prioritising the field of energy at a research level means that we are giving ourselves the best possible chance to strategically plan for the medium and long-term future, tapping into expertise in this field, and striving to unearth as yet undiscovered possibilities.

I know that SFI is already supporting a number of projects in the sustainable energy and energy-efficient technologies sectors. I look forward with confidence to seeing the number and nature of these research activities expand.

To further encourage the development of environmental technologies and services, the Department of Enterprise, Trade and Employment has worked with the relevant agencies to complete an All-island Study to identify further enterprise opportunities in the global Environmental Goods and Services sector.

The report of the Study was published last week by Forfás and InterTradeIreland. It reports that, due to factors including rising energy costs, a more environmentally conscious consumer and increased environmental regulation, the market for environmental goods and services will experience strong growth in the coming years.

Some of the reports significant findings are that:

• The value of this sector to the island of Ireland is growing and is currently estimated at €3.6 billion.
• At World level, it has been estimated that the value of the sector was in excess of $600 billion worldwide in 2005. It is likely to exceed $700 billion by 2010 and $800 billion by 2015.
• A small number of major players exist in this market on the island of Ireland. The market also has a high proportion of small and medium sized enterprises who have established a substantial business presence over the past ten years.
• With some notable exceptions, the island has so far displayed low levels of R&D investment in the EGS sector. Nevertheless, a growing number of companies have been successful in developing business models which have commercialised R&D-intensive technologies.
• While a large proportion of EGS companies are trading locally, some companies have moved to realise opportunities in emerging international markets. Increased participation by indigenous EGS companies in international activity is considered a priority.
• In relation to Foreign Direct Investment, our strong ICT base, green credentials and past experience in attracting FDI should be to our advantage in attracting investment in this sector. A targeted approach will need to be taken focusing on niche areas with the highest potential.
• While a wide range of enterprise opportunities are expected to arise in the growing EGS sector, the sub-sectors which the report sees as having the greatest potential are:
  • Renewable Energies,
  • Efficient energy use and management, including eco-construction,
  • Waste management, recovery and recycling,
  • Water and wastewater treatment,
  • Environmental consultancy and services

The Report includes a number of policy recommendations, which are particularly relevant to today’s Seanad Debate:

• Public procurement is seen as having an important role to play in fostering and promoting the development and adoption of new environmental goods and services.
• The development of skills through the education and training systems will be central to assisting the future growth of the EGS sector. Environmental engineering is considered a critical skill, and programmes promoting engineering as a career should be cognisant of the opportunities offered in the environmental engineering discipline.
• Environmental research is central to the growth of the EGS sector. Given that the island of Ireland is starting from a lower base than a number of competitor countries, EGS-related and applied research targeted at specific areas of opportunity should continue to be prioritised for public investment.
• There should be continued implementation of environmental legislation which will provide the regulatory certainty needed for enterprises to invest in the sector.
• There is an ongoing role for incentives in developing the EGS sector.
• The EGS market includes a significant number of specialised start-ups and small companies. These firms face difficulties in accessing start-up and growth financecommon to all small firms. Measures to improve seedcorn financing and remove market failures in access to finance for these firms will continue to be important.
• Building scale in companies in the EGS sector has been identified as an issue. Collaborative business networks organised on an all-island basis can play a role in assisting companies to build up scale and capacity. Networks could prove important also in helping indigenous companies to internationalise.

The Government clearly recognises that Ireland has an opportunity to play a leading role in developing a green economy. The Government’s Cabinet Sub-Committee on Climate Change and Energy Security is examining how the green economy might best be fostered.

Some years ago we harnessed the State’s industrial, educational, enterprise and development resources to develop the Biotechnology and ICT sectors in Ireland, leading to significant inward investment and highly productive employment. As indicated in the recent Carbon Budget, the Government intends to take a similar approach to the development of the green technology sector. We have already made significant steps towards embracing this growth area but, to be effective, we must take a ‘whole-of-Government’ approach.

In the coming weeks a number of Government Ministers who have responsibility in the relevant areas will collectively announce the establishment of a high-levelAction Group to advise on the development of Ireland’s Green Economy. The Group will report to Government within four months, setting out an Action Plan for developing green enterprise in Ireland with a view to contributing to economic growth and providing new, quality employment opportunities in this growing sector.

The Government is determined to guide our economic development and well-being onto a sustainable and low-carbon path. The Action Plan will build on steps which have already been taken, and on the report of the Study which I have just now outlined.

If we are to develop green technology for economic growth in Ireland, we must above all recognise that the task requires a co-ordinated approach across a number of Departments and agencies. We must ensure synergy, in particular, between Energy, Environment and Enterprise policy in this sector. I am confident that, with a strong ‘Whole of Government’ approach, we can look forward to the development of the sector and its contribution to economic growth in Ireland.

Cathaoirleach, Members of Seanad Eireann, thank you all very much.