Select Committee on Innovation, Universities, Science and Skills Written Evidence

Memorandum 31

Submission from the National Farmers' Union of England and Wales (NFU)

  The National Farmers' Union of England and Wales (NFU) represents the interests of some 55,000 members involved in commercial agriculture, horticulture and farmer controlled businesses.

  The NFU welcomes recent Government policy measures that will stimulate the market for a broader range of renewable energy generation technologies. We believe that agriculture and the land-based renewables have an important role to play in the context of climate change and renewable energy targets. It is our aspiration that every farmer should have the opportunity to become a net exporter of low-carbon energy services. We raise a number of specific points below that may impact upon the market opportunities for farmers to provide renewable fuels for power generation, or to engage in on-site renewable generation, for domestic use or for export to the electricity grid.

  1.  The European Union's 2020 targets for renewable energy, agreed by Heads of State in March this year, have added a sense of urgency to the measures announced in May in the 2007 Energy White Paper. Given the likely constraints on renewable transport fuel supply, and the almost total absence of policy support for renewable heat, perhaps as much as 35-40% of UK electricity may need to come from renewable sources by 2020. This represents a huge nine to 10-fold increase from the present modest baseline, assuming smaller proportions for renewable heat (17%) and transport fuels (10%), in order to achieve 20% renewable energy overall.

  2.  Together with offshore wind power, marine energy and tidal power, the twin drivers of climate change response and sustainable energy targets will create opportunities for a diversity of land-based renewables, including smaller-scale decentralised technologies such as anaerobic digestion and biomass-fired mini power stations. The proposed "banding" of the Renewables Obligation (RO) is a key measure that will stimulate "post-demonstration" technologies such as straw-fired or wood-fired power generation (eligible for 1.5 RO certificates), as well as "emerging technologies" such as gasification or anaerobic digestion of biomass, biomass-fired CHP, energy crops for power generation, and photovoltaics (eligible for double RO certificates).

  3.  The NFU notes that enhanced revenue-based support for many of these technologies will create new opportunities for agricultural diversification and rural incomes. In particular, we anticipate new investment in biogas digesters (both single-farm and centralised) producing electricity and heat, small-scale combined heat and power (CHP) units, and the possible use of solar photovoltaics to meet some electricity use in farm buildings. Also significant will be a likely increase in the market (and improved terms of trade) for perennial energy crops as power station feedstock.

  4.  In this brief response, the NFU would like to highlight a number of possible concerns with government energy policy in general, and with some of the details of the consultation on "banding" of the Renewables Obligation (RO). Firstly, it is worrying that the Government's own projections suggest that the banded RO will only just fulfil its original expectations of 15% renewable electricity by 2015, correcting a likely shortfall in the previously unadjusted RO. This is still a long way from the massive deployment required to address the EU targets, to mitigate climate change, and to create opportunities for UK entrepreneurs to export low-carbon technologies to emerging industrial economies.

  5.  While the focus of this submission is on electricity generation, we are also concerned about the lack of attention paid to renewable heat and transport in the recent Energy White Paper (EWP). On the latter subject, the Government has so far failed to establish a stretched target for the Renewable Transport Fuels Obligation beyond 2010, although the obligatory goal for 2020 agreed by EU Heads of State does provide some long-term market signal. Renewable heating appears in the EWP only under the heading of "Distributed Energy". The Government is said to be "still considering" a consultants' report on this subject and "developing its thinking in this area"; and its Biomass Strategy, while a welcome recognition of the potential of bioenergy, offers little beyond what is already obvious—that industrial heating and CHP offer the best-value carbon savings. The NFU believes its members can play an important role in providing renewable heating services or fuels (such as energy crops or woodland thinnings) for low or zero-carbon building developments in rural and urban fringe areas of the country, and that planning as well as energy policy should reflect this.

  6.  The NFU looks forward to the forthcoming establishment of a product standard, exempt from waste management regulation, for the digestate by-product from biogas digesters. This will reduce the regulatory burden upon operators of single-farm anaerobic digesters when land-spreading or selling raw or processed digestate as a fertiliser or a possible fuel. Simplification of regulations to enable movement of digestate between farms, without a waste carrier licence, would also enable smaller livestock farmers to collaboratively operate one digester between several farms.

  7.  The NFU notes that the growing of perennial energy crops, which require low inputs and may therefore have a very positive "carbon balance", will be increasing important for "decarbonising" the economy. These crops also offer improved biodiversity and nutrient management benefits compared to arable crops or grassland. However, the present modest areas of planting (about 0.1% of arable land area) of both short rotation coppice willow and miscanthus have so far failed to establish a working market. Through consultation with growers and contractors, the NFU has established that what they most need is a stable, consistent framework of government support, with announcements and timetables that reflect the seasonality of agricultural decision-making. Past delays in government announcements about the future of support mechanisms have seriously eroded the confidence of farmers, who have seen little evidence of any other public-sector demonstration or commitment to these crops. The grant application process in England is excessively bureaucratic and time-consuming compared to the online, fast-track procedure in Scotland—and there is presently no such support available in Wales.

  8.  Notwithstanding the recent announcement of a new programme of energy crop establishment grants under the draft Rural Development Programme for England 2007-13, the NFU continues to be concerned by Defra's stop-start support for perennial energy crops and the impact this has on the industry. The previous scheme closed in June 2006, and a timetable has yet to be announced for the new establishment grant applications. Most farmers will decide this summer what to plant for next year, so we anticipate a low take-up of this scheme for Spring 2008 planting.

  9.  The NFU is extremely concerned that the definition of "energy crops" has not been clearly established between Defra and DTI (now DBERR). As is evident from the above discussion, the original use of this term applied to new types of crops that offer significant environmental benefits (in terms of reduced inputs, improved carbon balance and enhanced biodiversity) compared to conventional crops. Generally, these characteristics are confined to perennial crops, which avoid the energy costs associated with the land preparation and sowing of annual crops. The EU definition of energy crops, as applied to the Energy Crops Aid payment of 45 euros/hectare, already blurs this definition by including also annual crops grown expressly for energy purposes. The NFU is aware that some stakeholders would like annual crops, or the by-products from processing of biofuel crops (possibly including tropical agricultural residues such as palm kernel shell), included within those "energy crops" feedstocks eligible for double ROCs under the proposed banding of the Renewables Obligation. We do not believe this is consistent with the intention of the RO banding, which is evidently targeted at "emerging technologies" (ie those that would not otherwise find a market).

  10.  The Energy White Paper 2007 does state clearly "there is a case for continuing to support energy crops so as to promote the development of an effective domestic supply chain for this valuable resource" (Paragraph 5.2.42). However, there is only one mention (Box 3.1) where the term is given more explicitly as "perennial energy crops". Together, these occurrences imply that energy crops are grown domestically, and that they are perennials. However, the NFU believes this is a definition which does need to be defined more explicitly in government proposals to incentivise new agricultural supply chains for renewable energy.

July 2007

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