I thank the committee for the opportunity to make a brief introductory statement on the matters to be addressed this morning. I will first address the Special Report chapter on water services, and then deal with chapter 19 of the Comptroller and Auditor General's 2008 annual report in regard to investment in carbon credits.
The report of the Comptroller and Auditor General regarding water schemes recognises that the two main drivers of investment in the 2002 to 2007 period were meeting increased supply requirements and compliance with EU drinking water standards. The period under review also saw the introduction of a number of key legislative and administrative changes aimed at protecting and improving water quality and strengthening the approach to water quality monitoring by the EPA and local authorities. A total of €553 million was provided for major water schemes under the Department's water services investment programme in the period under review, with a further €596 million provided over the period for the rural water programme.
As noted in the report, investment in major supplies between 2002 and 2007 resulted in increased drinking water capacity equivalent to the needs of a population of 400,000. Some 48 major water schemes were completed in this period, with further increases in supply facilitated through the serviced land initiative and schemes also advanced in the area of water conservation. Taking the decade as a whole, some 83 major schemes were completed in the period to the end of 2008 and 60 of the 150 schemes in progress are water supply schemes.
Following the judgment of the European Court of Justice against Ireland in 2002 in regard to implementation of the drinking water directive, the Department embarked on a major programme of investment to address drinking water quality problems in over 1,600 public and group water supplies. For the public water supplies covered by the judgment, extensive infrastructural investment has been provided to address inadequate treatment facilities and, in addition, chlorine monitors and alarms are being installed on each of these schemes. Over 500 public supplies have now been brought into compliance, with the remaining 125 schemes to be addressed before the end of 2009. The problem of non-compliant group water schemes has also been substantially resolved, with the remaining 83 schemes covered by the judgment to be addressed over the next 12 months. These arrangements were complemented by the greater enforcement powers given to the Environmental Protection Agency under the European Communities (Drinking Water) (No. 2) Regulations 2007.
In its annual reports on drinking water quality, the EPA reported steady improvements in rates of compliance with the mandatory drinking water standards, and substantial increases in the number of water quality tests being conducted by local authorities.
It might be helpful to highlight some of the key findings. Compliance with microbiological parameters has improved steadily for public water supplies from 97.7% in 2003 to 99.3% in 2007. There were further reductions in the number of water supplies where e.coli was detected in 2007 — the number of public supplies was down from 77 to 52 while group supplies went from 246 to 184. Approximately 240,000 tests were carried out on drinking water in 2007, an 8.1% increase on the number of tests carried out in 2006.
The EPA has also demonstrated its readiness to use the enforcement powers it has been given and it has reported on the legally-binding directions it has issued and the prosecutions it has taken. In recent years a multi-agency approach, involving my Department, the EPA, the HSE and the local authorities, has been put in place to deal with the identification of water supplies which might be at risk and the determination and implementation of the appropriate remedial actions required to eliminate risks. These arrangements were enhanced in 2008 through the establishment by the EPA of its remedial action list, RAL, with significant resources committed to addressing the most at-risk supplies. My Department and the agency have put in place quarterly monitoring arrangements to track progress on the implementation of remedial actions on the supplies on the list.
The protection of drinking water sources needs to be complemented by robust systems to deal with any incident of contamination that might occur. Earlier this year, the Department issued instructions to local authorities to prepare drinking water incident response plans for drinking water supply in their areas. My Department has also instructed local authorities to publish on their websites the results of their drinking water monitoring activities.
The combination of targeted investment and more intensive supervision of water supplies and enforcement, together with the multi-agency approach to identifying and addressing at-risk supplies are clear evidence of the improvements in the procedures and practices to monitor the effectiveness of water services that were highlighted in the Comptroller and Auditor General's report.
I will turn now to the issue of investment in carbon credits. It should first be acknowledged that the Kyoto Protocol presented a formidable challenge for all participating states. Equally, the advanced position taken by the EU in combating climate change presented its own challenges; the cap and trade scheme under the EU directive on emissions trading established the largest such scheme in the world. The fundamental elements of Ireland's strategy for meeting our target involve domestic emission reductions across the economy, participation of in excess of 100 Irish installations in the EU emissions trading scheme, and the purchase of a limited number of carbon credits in accordance with the flexible mechanisms provided in the Kyoto Protocol.
Both the initial national climate change strategy, published in 2000, and the National Climate Change Strategy 2007-2012 signalled the possibility of supplementing greenhouse gas emission reductions by the purchase of carbon credits on the international market. In particular, the latter strategy set out the national policy framework for the purchase of those credits for purposes of compliance during the Kyoto commitment period 2008 to 2012. The purchase of credits is a valid option under, and an integral part of, the Kyoto Protocol. It should, however, be stressed that, under Kyoto, the role of purchasing credits is supplementary to domestic action to reduce greenhouse gas emissions in the individual state. It is not a substitute for such action, and therefore the strategy indicated that purchase of credits would account for approximately 20% of the necessary emissions reductions.
In March 2006, the Government decided to purchase up to approximately 18 million credits in the first Kyoto commitment period 2008 to 2012, approximately 3.6 million per annum. A total of €270 million was designated under the National Development Plan 2007-2013 for the purchase of those credits, based on an estimate of €15 per credit. In addition, a once-off provision of €20 million was provided in the Vote of the Department in 2006 for the purpose of commencing the purchase of carbon allowances on behalf of the State through investment in the multilateral carbon credit fund offered by the European Bank for Reconstruction and Development, EBRD. The agreement with the EBRD was entered into in December 2006 prior to the designation of the National Treasury Management Agency as purchasing agent.
In budget 2006, the Minister for Finance announced the establishment of a carbon fund and the designation of the National Treasury Management Agency as purchasing agent on behalf of the State. In January 2007, some €10 million each was committed to the Carbon Fund for Europe and the BioCarbon Fund operated by the World Bank following the approval in December 2006 by the Dáil.
Ireland notified its national allocation plan for the emissions trading sector in the Kyoto commitment period, 2008 to 2012, to the European Commission on 13 July 2006. National policy underpinning the plan had been approved by Government in March 2006, and responsibility for the design and implementation of the plan was assigned to the Environmental Protection Agency. The plan provides the framework for participation by some 109 Irish installations in the EU emissions trading scheme. It identifies the proportion of national emissions assigned to emissions trading, and the distribution of these emissions among the participating installations.
In terms of context, the national allocation plan does not stand in isolation and must be viewed as one of three fundamental elements of Ireland's overall response to its greenhouse gas emissions reduction target for the purposes of the Kyoto Protocol; the other two elements are emission reductions generally throughout the economy through domestic action, and the purchase of carbon credits in lieu of domestic reductions. The extent to which Ireland was progressing all three elements was a key factor in obtaining Commission approval for the plan. Securing investment with the EBRD and the World Bank represented a significant first step towards purchasing carbon credits. That was important in demonstrating progress towards national compliance with the Kyoto Protocol and in meeting the Commission's concerns around the balance of action across the three elements of emissions reduction.
The recent economic downturn has significant implications in the short term for national emissions reduction activity, including the purchasing programme. Policy and progress are informed by greenhouse gas emissions inventories and projections compiled by the Environmental Protection Agency in collaboration with a range of State and other expert bodies, including energy data compiled by Sustainable Energy Ireland. Earlier this year, in light of the ESRI's Economic Shock scenario, the EPA was asked to prepare an emissions sensitivity analysis to reflect the changed economic situation.
In that analysis, in March last, the EPA has projected that, with full implementation of all of the emission reduction measures that have already been announced, the "distance to target" for Kyoto compliance will now be between 1.3 and 1.8 million tonnes per annum over the 2008 to 2012 period, approximately 3 million tonnes below the original target set in March 2006. The "distance to target" is the gap which must be bridged by further measures, or by Government purchase of credits under the flexible mechanisms of the Kyoto Protocol.
It is clear that deterioration in the short-term macroeconomic outlook has an immediate effect on greenhouse gas emissions projections. Economic and emissions data this year have underlined the reduced need for the purchase of credits. Hence, it was considered prudent in those circumstances to instruct the NTMA to put its carbon purchasing programme on hold for the foreseeable future. This will remain the position pending analysis of emissions data for 2008 which the Environmental Protection Agency will finalise later this year. Further purchases in the short term may prove unnecessary. Those already committed to will be used to count towards compliance in the Kyoto commitment period or may be banked for use against the more stringent emissions reduction target Ireland will face in the commitment period to 2020.
Looking to the future, there will always be uncertainty in dealing with markets and economic projections. I agree with the conclusion in the Comptroller and Auditor General's report that the carbon credits purchasing programme needs to be kept under ongoing review. That is so in light of both the current economic situation and in the context of the current negotiations on a successor to the Kyoto Protocol. Thank you, Chairman.