Farm Ireland

Wednesday 25 April 2018

Economic view: Potential of bioenergy not exploited

The Government had promised to come forward this year with a Renewable Heat Incentive.
The Government had promised to come forward this year with a Renewable Heat Incentive.

Alan Matthews

For all farmers, energy prices are an important determinant of their input costs, particularly through the prices they pay for fertiliser.

The recent fall in natural gas prices, helped by the collapse in world market oil prices, should mean cheaper fertiliser, although much of the potential benefit in 2016 will be offset by the falling value of the euro.

For a smaller number of farmers, energy prices have another side because they are producers of renewable energy.

This can take the form of forestry thinnings from recently planted forestry, energy crops such as willow or miscanthus, or even biogas from the handful of anaerobic digesters that are operating on Irish farms.

Ireland has an EU target to ensure a 16pc share of renewable energy in overall energy consumption by 2020.

This is broken down into 40pc of electricity coming from renewable electricity, mainly wind, but with some wood fuel.

A further 10pc of transport fuels coming from renewable fuels, mainly biofuels, and 12pc of heat coming from renewable energy sources, primarily wood.

There was an additional commitment to achieve a co-firing target using 30pc biomass with peat by 2015 for the Bord na Móna peat stations.

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Bord na Móna planned to meet this 30pc target at its Edenderry plant last year requiring 300,000 tonnes of biomass, increasing this to 500,000 tonnes by 2020.

The draft Bioenergy Plan produced by the Department of Communications, Energy and Natural Resources in 2014 recognised that meeting our 2020 renewable energy targets will be difficult, particularly in the areas of heat and transport.

It recognised the critical role that bioenergy has in meeting these targets.

This role becomes even more important looking further into the future given the national transition objective of decarbonising the energy system by 2050.

At the same time, with greater uncertainty around the future of agricultural commodity prices now compared to a few years ago, bioenergy has the potential to provide an additional remunerative income stream on many farms.

However, the establishment of a profitable and effective biomass supply chain linking farmers to end users has been slow to take off. Grants for the establishment of energy crops were available from the department, but many new entrants were disappointed by low yields, along with the failure of the many promised markets to emerge.

There is the potential to increase the current 3,000ha under energy crops to 67,000ha to supply almost 40pc of the required renewable heat by 2020 according to the Teagasc Tillage Sectoral Energy Crop Development Group.

Its 2014 report identified some of the measures which need to be put in place if this expansion were to be realised.

A key requirement is to underpin the confidence of those willing to install biomass boilers that there is a secure supply of high-quality biomass, as well as the confidence of those farmers willing to invest in energy crops that there will be a secure market when their crops mature.

At local level, institutions such as schools, hospitals and nursing homes can help to generate a local demand.

But to create a broader market there is a need for biomass wholesale centres which can help to mobilise biomass and possibly add value by drying, chipping or pelleting.

These could be created by co-operative efforts or by private initiative and would complement Coillte's regional supply hubs which supply biomass to industrial users.

The previous Renewable Energy Feed-in Tariff scheme for biomass technologies (REFIT 3) which helped to underpin the provision of a stable demand for biomass has now closed.

The Government had promised to come forward this year with a Renewable Heat Incentive targeted at the industrial heat sector which would stimulate further demand for woody biomass, but the necessary public consultations and approval process from Brussels for a state aid scheme will take time.

There is some scepticism in the industry that the scheme will indeed be rolled out in 2016.

Much will depend on the priorities of the incoming government following the election.

In the meantime, the Irish bioenergy sector slowly expands but is far from fulfilling its potential.

Alan Matthews is Professor Emeritus of European Agricultural Policy at Trinity College Dublin

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