Thursday 8^th January 2007

Press Release

For Immediate Publication

Loss of Competitiveness Linked to Energy Costs in Ireland

The Food and Drink Export Ireland Council of the Irish Exporters Association has identified the need to remain competitive and reduce the spiralling costs of energy as the main challenges currently facing the Irish food and drink industry. Mr Pat Higgins, Chairman of the Council, said that there is a definite link between loss of competitiveness and energy costs in Ireland.

According to Mr Higgins there is a significant risk that many companies, especially small labour intensive ones with high energy inputs, may not survive unless they improve their productivity and find some way to reduce their use of high cost energy. Mr Higgins said that the cost of energy is increasing rapidly in Ireland and figures released by the National Competitiveness Council show that ten years ago the cost of electricity in Ireland was 15% below the EU average. “Today, we are 13% above the EU average – a competitive disadvantage that adds to the difficulties that Irish firms face in international trade.” He noted that the cost of electricity per kilowatt hour for medium-sized enterprises in Ireland is €10.47 compared to €6.96 in London and €4.00 in Boston.

Mr Higgins emphasised that the need for Ireland to recognise that traditional energy sources will continue to decline and that oil and gas are becoming scarce commodities. “The International Energy Agency says that the global demand for energy will grow by more than half in the next 25 years,” said Mr Higgins. He added that OPEC countries expect their output will peak in about ten years and the inevitable declining availability will add to further and greater increases in costs.”

In order to remain competitive in that sort of international marketplace Irish companies will need to find more efficient ways of using energy as well as finding new sources of energy. Mr Higgins said that non-renewable energy sources currently account for some 95% of Ireland’s energy requirements. “We must, as a matter of urgency, seek to increase the 5% of energy from renewable sources to a much higher figure. To achieve the level of increase that is required, government policy must be geared towards research in developing new sources to ensure that Irish exports remain competitive on world markets,” said Mr Higgins

Mr Higgins urged Irish companies in the food and drinks sector to take the lead in finding new energy sources and developing new methods and processes to improve their efficiency in the use of the sources that they are now using. “Being ‘green’ is not enough – we must find new and better ways to produce our products.” Mr Higgins urged the government to look at how national policies can assist companies to research and develop new energy sources and to use the ones they have more efficiently. He suggested, for a start, that incentives and programmes introduced by government agencies supporting trade be transparent and easily implemented. He noted that the National Competitiveness Council is calling for a determined plan to reduce the growing electricity price differential between Ireland and the countries we compete with and is urging government to provide National Development Plan funds to support the security of the national supply of electricity.

He concluded: “It is essential we provide the Food and Drink sector with a supply of electricity and gas that is at least as competitive as our major trading partners. There is clear evidence that the international bulk oil and gas prices have returned to mid 2004 levels. Hence the Energy Regulator must ensure that the Electricity Supply Board (ESB) and Bord Gáis prices must also return to mid 2004 levels, at which industry had a competitive supply.”

ENDS

For further Information Contact: Mr John Whelan, CEO, Irish Exporters Association Tel: 087 9271243