The Government support the production of biofuels as part of our overall strategy for improving sustainability and reducing the impact of climate change. We are aware of the potential for agriculture and are working closely with farmers and industry to develop markets and promote uptake.
The production and use of biofuels is incentivised by a 20 pence per litre duty rate cut for biodiesel and bioethanol, which has been extended to 2008-09. To further develop the supply of biofuels, a Renewable Transport Fuel Obligation (RTFO) will be introduced in April 2008, which will require five per cent. of fuel sold in the UK to come from a renewable source by 2010.
A number of companies are building, or planning to build, biofuel processing plants in the UK which will use UK-grown crops such as oilseed rape, wheat and sugar beet as feedstocks. The Home-Grown Cereals Authority and the Renewable Energy Association have recently held a series of regional biofuel workshops across England aimed at helping to develop a UK biofuels industry. The workshops covered Government policy, local activities and opportunities for farmers.
Farmers can claim the Single Payment for biofuel crops grown on set-aside land or where the €45 per hectare energy aid payment is claimed for crops on non-set-aside land. The development of second generation biofuels should offer opportunities in the future to use feedstocks such as grasses and woody biomass.
Agricultural land taken out of production is termed set-aside. The European Union (EU) permits the growing of crops on set-aside for industrial uses and energy production. Between 560,000 and 800,000 hectares of land have been set-aside in the UK over the last 10 years. While this may in some cases represent some of the least productive land on farms, it is all capable of supporting arable production. In 2005, 14.5 per cent. of set-aside land was used for industrial crop production, the vast majority of which was for energy end uses. It is anticipated that this figure will grow significantly as the demand for transport biofuels increases.
Farmers growing energy crops on set-aside are entitled to receive the single farm payment. In addition, where crops are grown for energy uses on non set-aside land, growers can claim the EU’s €45 per hectare energy aid payment. From 2007, under the Rural Development Programme for England, the Government have given a commitment to support energy crops.
The development of second generation biofuels should offer greater opportunities to utilise crops such as grasses and woody biomass grown on marginal land.