The publication of the Geothermal Energy Development Bill 2010 has moved Ireland a step closer towards a comprehensive and coherent regulatory structure that will support the exploitation of the State’s geothermal energy resources.

It is well known that Ireland’s renewable energy targets under the EU Directive on the Promotion of the Use of Energy from Renewable Sources (2009/28/EC) require that 16% of gross energy consumption in Ireland should come from renewable sources by 2020.

A corresponding target of 12% exists in relation to Ireland’s consumption of heat. The production of heat in Ireland consumes almost one third of the primary energy supplied to the country, and is at present highly dependent on fossil fuels, which means that the exploitation of renewable sources of heat is of particular urgency if Ireland’ heat-related renewable energy target is to be met.

Geothermal energy – which may be defined as “energy stored in the form of heat beneath the surface of the solid earth” – represents one of the most promising alternatives to fossil fuels for use in direct heating. Geothermal sources range from those at low temperature near the earth’s surface to high temperature resources that lie several kilometres below ground. These resources can be utilised in a number of ways, ranging from the provision of heating for individual buildings, to the fuelling of substantial power stations which exploit high temperature resources.

While Ireland is understood to have considerable geothermal potential (by way of example, it has been estimated that the heating needs of 50,000 houses in a trial area in Newcastle, Co Dublin can be met from a pilot geothermal source), exploitation of the resource has been hampered by the lack of a comprehensive legal and regulatory framework that provides for the allocation of ownership interests and ancillary rights in the resource, and protects third party interests in a systematic manner. Absent these safeguards, the uncertainty surrounding the rights associated with geothermal exploration and exploitation has been one of the factors deterring the development of any significant geothermal projects in Ireland.

On 1 September 2010 the Department of Communications, Energy and Natural Resources published the Heads of a Bill that is intended to establish a comprehensive scheme of regulation, with a view to supporting the exploitation of Ireland’s geothermal energy resources. In particular, the Geothermal Energy Development Bill 2010 will assist the development of the geothermal energy sector in Ireland by establishing a licensing framework for geothermal explorers and developers.

The Bill is the culmination of a stakeholder consultation process that began in 2008, and which has included the publication of a detailed Regulatory Impact Analysis that recommended the passage of stand-along Bill relating specifically to the regulation of exploration for geothermal energy.

The proposed Bill will provide for the State to grant licences to companies to explore for and develop deep geothermal energy resources. The General Scheme of the Bill, available on the Department’s website, shows that it will contain detailed provisions for the licensing of exploration and development. The Bill will, once enacted, regulate ownership of resources, ancillary rights and the protection of third party interests. In addition it contains provisions for regulation of the industry and enforcement mechanisms.

The publication of the Geothermal Energy Development Bill 2010 is a promising step for the nascent Irish geothermal industry, and will hopefully pave the way for the development of the resource.