Scottish Biofuels (SBF), part of the Scottish Resources Group that produces more than 3.5 million tonnes of coal annually, is failing to recruit farmers to grow willow as short rotation coppice.
SBF is investing in excess of £100m in a processing plant at Westfield in Fife adjacent to a proposed power station to be fuelled by wood.
The new plant will process willow and forestry waste for that power station as well as producing wood pellets for the domestic heating markets and is planned to be in production by 2010.
The market is being driven by legislation that makes it a requirement that 25% of any wood fuel must come from an energy crop by 2009 in order to get a renewable obligation certificate for coal fired electricity generators. That requirement rises to 75% by 2011.
According to consultant Brian Simpson, who is attempting to drive the enterprise forward: "There is a clear market failure in the recruitment of farms to biomass production despite the best efforts of SBF to promote the advantages through demonstration plots, advertising, PR and direct meetings with farmers."
He reckons the government needs to make a significant investment to encourage farmers to play their part in the delivery of our renewable targets.
Notwithstanding the considerable fiscal incentives for this embryonic industry and a planting grant of £1000 per hectare, Simpson believes there should be additional assistance through the rural development programme that is still being finalised. He wants the Scottish Executive's Environment and Rural Affairs Department to declare a policy of establishing short rotation coppice on arable and grassland with an initial target planting area of 10,000 hectares per year for the next five years.
To reduce transport costs for the processor, he wants to limit the area to be assisted initially to within 90 miles of a processing facility. In addition, he wants to introduce a conversion scheme, similar to the existing organic aid scheme that acknowledges that income is lower during the conversion, or establishment period.
Simpson reckons the appropriate figure for such an energy crop establishment scheme should be based on the figures indicated in an SAC/Cambridge report at a flat rate of £193 per hectare for four years and the same amount paid to both arable and grassland. That could utilise nearly £10m of the new rural development programme budget.
Such a plea looks set to fall on deaf ears. The reality is that farmers have yet to be convinced there are adequate returns from this new crop that requires a long-term commitment and can damage expensive land drainage systems.
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