Biofuels

Energy Crops Offer New Opportunities For Rural Economy

Wilson launches £66 million capital grants for biomass projects

A £66 million support scheme for bio-energy projects was launched today by Energy Minister, Brian Wilson. The money will support the establishment of up to six power stations to produce electricity from burning fast growing crops such as straw, willow or miscamphus (elephant grass), and up to a hundred smaller power and heat plants.

The Bioenergy Capital Grants Scheme, jointly funded by DTI and New Opportunities Fund, will support power generation and combined heat and power projects using energy crops and other biomass. It is expected to lever in approximately £200 million of private sector investment.

Speaking in Edinburgh today, Mr Wilson emphasised the potential benefits to the rural economy of crops-for-energy.

Brian Wilson said:

"Biomass projects up to now in the UK have been mainly small. This scheme, the first initiative of its kind, will stimulate this technology.

"Rural communities have much to gain from the growth of this industry, in terms of jobs and farm incomes. Harvesting and transport will provide employment throughout the difficult winter months - when most energy crops-management takes place.

"A key reason for DTI funding of this programme is to bring forward advanced technologies - such as pyrolysis and gasification and to develop supply chain networks.

"We have also recognised within the Renewables Obligation, the supporting role co-fired power stations can play in helping to develop biomass and energy crops, and in delivering renewable energy capacity quickly and at relatively low cost. We have consulted widely to ensure that the scheme meets the industry's needs and commercial requirements as well as the Government's policy objectives.

"At the same time, the Government has already put in place support for the establishment of energy crops through DEFRA's Energy Crop Scheme, worth an additional £29 million over the next 6 years.

"It is the role of Government to ensure secure, diverse and sustainable supplies of energy at competitive prices, now and in the future. Renewable energy, from a range of sources, clearly contributes to all three - security, sustainability and diversity.

"Together these schemes will help the growing number of technologists, developers, investors and planners interested in this ecologically-strong industry to establish a firm foothold in our future energy markets. They serves a fundamental Government goal - to establish renewable energy as a key player in meeting the UK's future energy needs."

1. Projects will be assessed for quality against published criteria. The money will go towards the capital costs of new projects - application packs and guidance notes are available from www.dti.gov.uk/renew/eoi.htm.

2. The Renewables Obligation requires electricity suppliers to provide a specified proportion of their electricity from renewable sources. This became law on 1 April in England and Wales as did a corresponding Order in Scotland. These two Orders are the single most important measures by Government to enable industry to meet the 10% renewables electricity by 2010 target. Biomass and energy crops are eligible renewable sources under the Obligation.

3. Other measures include an allocation of over #260m over 3 years mainly for capital grants for early demonstration projects in offshore wind, energy crops (see main text for details) and solar photovoltaics and an enhanced R&D programme to help bring forward the next generation of renewable energy technologies such as wave energy and tidal stream.

4. Renewables electricity has also been exempted from the Climate Change Levy.

5. Regional planning strategies are currently being revised to incorporate policy planning guidance on renewables (PPG 22).