EUROPEAN POLICIES TO PROMOTE ENERGY CROPS

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1 EUROPEAN POLICIES TO PROMOTE ENERGY CROPS Hilkka Summa European Commission DG Agriculture and Rural Development Outline 1) EU policy for renewable energy 2) Energy crops production and land use 3) The CAP and energy crops 2 1

2 New EU Directive on renewable energy Commission proposal to be adopted by end January 2008: All 3 sectors: electricity, transport, heating and cooling Legal form to the 20 % overall target and on the binding 10% biofuel target A system for ensuring the sustainability of biofuels - criteria for sources of raw materials - minimum requirement for GHG savings Differentiated national targets for renewable energy National Action Plans and principles of reporting Principles for the calculation of the share of renewable energy sources Part of Energy and Climate package including review of the EU-ETS and effort sharing for greenhouse gas emissions 3 Breakdown of EU-25 gross energy consumption (2005) 4% total energy Nuclear; 15% Coal 18% Hydro 22% Biom ass 66% Oil 37% Gas 24% RES 6% Wind 6% Geotherm 5% Solar 1% 0% 20% 40% 60% 80% 4 2

3 Energy demand for biomass: 20 % scenario for 2020 Maximum biomass contribution needed: 230 Mtoe With 15 % of improts, maximum contribution from EU: 195 Mtoe Maximum contribution from agricultural crops: 63 Mtoe Maximum contribution from other than agricultural biomass 132 Mtoe Biomass sector will grow, but wind, PV, geothermal renewable energy will grow faster European Environment Agency: Maximum biomass potential 235 Mtoe; 96 Mtoe from agricultural crops 5 (Million hectares) On set-aside area, of which Rapeseed With energy crop premium, of which Rapeseed Without specific support (estimated) Total area Agricultural land use for energy in the EU 2004 (EU-25) 0,6 0,5 0,3 0,2 0,5 1, (EU-25) 1,0 0,75 0,7 0,4 0,7-0,9 2,4-2, (EU-25) 1,0 0,7 1,3 0,8 1,4-1,6 3,7-3,9 Energy crops : 3-4% of the EU-25 arable area 6 3

4 Renewable energy: support from Common Agricultural Policy CAP reform (2003) Decoupled income support Non-food (energy) crops on set-aside areas Energy crop premium (45 /ha) Reduced scope for steering production Sugar reform (2005) Sugar beet for ethanol eligible for both regimes and exempt from quotas Rural development policy ( ) Menu of measures to support renewable energies, e.g., biomass supply chains, biofuels processing capacity on/near farm 7 Energy crop premium: total area Area under energy crops premium by year hectares (reduction coefficient) 8 4

5 Energy crop premium: area by Member State 600 Area under energy crops premium by country ( ) hectares hectares Area under energy crops premium by country ( ) France Germany UK Spain Poland France Germany UK Spain Poland Hungary Hungary Romania Romania Lithuania Lithuania Slovakia Slovakia Czech Republic Czech Republic Denmark Denmark Latvia Sweden Latvia Sweden Italy Italy Finland Austria Finland Portugal Austria Estonia Portugal Greece Bulgaria Estonia Belgium Greece Bulgaria Ireland Slovenia The Netherlands Belgium Luxembourg Ireland Cyprus Slovenia Malta The Netherlands Luxembourg Cyprus Malta 9 Renewable energy in Rural Development : axis 1 (competitiveness) Measure Farm modernisation Possible actions Support to: Investments for on-farm production and use of renewable energy (e.g. biogas plants) Plantation of multi-annual energy crops (e.g., herbaceous grasses, short rotation coppice) Investments in manure storage facilities Added value of agricultural and forestry products Improvement of the economic value of forests Support for biofuels processing Small scale processing of wood (chips, pellets; only micro-enterprises) Pre-commercial thinning, pruning, species composition Machinery for forestry 10 5

6 Rural Development : axis 2 (agri-environmental measures) Measure Afforestation of agricultural land Possible actions Afforestation for environmental purposes (protection of environment, natural hazards, climate change mitigation) Does not exclude sustainable use/harvesting of forest materials Plantation costs of afforestation with fast growing trees (< 15 years) can be supported 11 Rural Development : axis 3 (diversification) Measure Diversification into non-agricultural activities Support for business creation (microenterprises) Basic services for the economy and rural population Possible actions Renewable energy production and use on farms / for local energy supply Building installations/infrastructure of renewable energies from agricultural/forest biomass for local energy provision (electricity, heating) Installations of renewable energies for local energy provision 12 6

7 CAP Health Check Communication from the Commission ; legislative proposals mid-2002 Purpose: fine-tune the 2003 reform ( ); contribute to the discussion on future priorities Main policy questions: How to simplify the Single Payment Scheme towards full decoupling How to adjust to new market opportunities? Mandatory set-a-side, dairy quotas How to respond to new challenges? Climate change, renewable energy, water scarcity, risk management Wide ranging 6-month consultation kicked off by the consultation 13 CAP Health Check: meeting new challenges (1) Rural development The best way to finance new measures is through Rural Development programmes Need to increase RD funds Increased modulation: reduction of direct payments and transfer of money to the RD budget Renewable energy and climate change are Community priorities for obligation for Member States to take them into account in their programming 14 7

8 CAP Health Check: meeting new challenges (2) CAP «1st pillar» instruments Examination whether/to what extent production based (coupled) instruments still needed Energy crop scheme Mandatory targets will stimulate demand High prices encourage increased production Supply side measures: low effectiveness Obligatory set-a-side A tool for managing (limiting) supply Original purpose has lost its relevance Environmental benefits must be preserved 15 Summary Renewable energy is a key element of a sustainable future reduction of GHG emissions, security of supply new opportunities for rural economies, the EU has great potential for increased production of biomass Production of biomass is demand-driven Decoupled CAP income support: farmers respond to market signals, CAP health check: further decoupling (even) less market regulation, Rural development: positive incentives for renewable energy development in rural areas Research and technological development: more advanced and more cost-efficient biomass production and transformation technologies 4 technology platforms, 7 Framework Programme; Intelligent Energy Europe 16 8

9 CAP Health Check Useful sites for further information Agricultural Policy Analysis and Perspectives Directorate-General for Transport and Energy 17 Thank you for your attention 9