CRUDE oil prices are on the increase, as concerns mount that escalating violence in Iraq could disrupt supplies from the second-largest producer in the Organisation of the Petroleum Exporting Countries.
The jittery oil markets, growing tension and increasing political volatility across the Middle East has again focused attention in Ireland on alternative energy sources to reduce processing costs for industry.
Iraq is one of the world’s key oil producers, and until recently its increasing crude exports had helped to keep global petrol prices from rising too high.
However, the continuing insurgency which saw fierce fighting in the past week around the country’s biggest oil refinery, has led to fresh fears of disrupted supplies and soaring prices.
Iraq was recently producing an estimated 3.3m barrels per day — equal to about 4% of global supply – and there are worries that any disruption to that oil flow would have a major impact on the world economy.
Against that background of potential instability, the installation by Aurivo, the multi-purpose co-operative in the West of Ireland, of a wood-fuelled energy system that will dramatically cut the usage of heavy fuel oil is worthy of examination.
It is the first large-scale milk processor in the country to switch to biomass as a source of energy and the move is being hailed as an example for other processing sectors to follow.
The €400m turnover co-op has 10,000 members, and more than 1,000 dairy farmers, who supply 350m gallons of milk annually.
Aurivo employs more than 700 people and exports to 47 countries, from Afghanistan to Britain.
The €5.25m biomass energy system installed at its dairy ingredients plant in Ballaghaderreen, Co Roscommon, will cut heavy fuel oil consumption by over 70% and carbon emissions by 50%.
It will use 30,000 tonnes of woodchip each year, sourced from Aurivo’s subsidiary company ECC Teoranta in Corr na Mona, Co Galway, and will result in the annual displacement of 5m litres of heavy fuel oil.
The facility will recoup the equivalent of its set up costs in energy savings within five years. And it will be ultimately developed into a major combined heat and power plant.
By 2016, Aurivo plans to sell energy to the national grid.
Chief executive Aaron Forde describes the project as a prime example of innovation at work, to support the group’s ambitions for growth and its export plans in the post-milk quota era.
“With the heavy burden of energy costs impacting business performance across Ireland, the facility greatly helps Aurivo on its path to sustained international growth,” said Mr Forde.
Taoiseach Enda Kenny, who officially opened the plant, said it is a very significant and welcome development. Energy is the lifeblood of the economy and is a sector that is evolving at a dramatic rate.
“Our dependency on imported fossil fuels underlines the immediate and long-term imperatives of enhancing energy security, reducing price volatility and ensuring energy sustainability at competitive prices for both individuals and businesses,” said Mr Kenny. “How we do so is critical.”
He said renewable energy will play a key role in shaping Ireland’s long term energy future.
“A successful bio-energy sector also presents enterprise development opportunities, can support jobs, contribute to rural development and will have a positive impact on the environment,” he said.
“Critically, though, it is an energy source that we have the capacity to develop here and one where we have exceptional natural advantages.
“We have a suitable climate for forestry and for growing energy crops and we have a large amount of suitable agricultural land available for new forests or for conversion to energy crops.
“It is, however, a complex sector which demands coherence across a range of policy areas and actors.”
The Taoiseach also said the forthcoming bio-energy strategy will set out the actions required to better support this growing sector.
The Aurivo plant is an example of the tangible benefits that moving to bio-energy can bring, said the Taoiseach, and includes helping to protect jobs through enhanced competitiveness, creating a demand for biomass that can act as a stimulus for local farmers and foresters, and sustaining and reinforcing existing rural enterprises.
Since the Taoiseach formally opened the biomass plant, the insurgency in Iraq, and the impact it is likely to have on oil prices and supplies, is a further sign of the growing importance of alternative energy sources.