The production and utilisation of agricultural products for energy purposes can only be sustained in the longer term if biofuels generate a more favourable return than traditional market outlets. I am confident that the extension in the last Budget of excise relief of €205m which, when fully operational, will support the use and production of 163 million litres of biofuels annually, will help drive additional demand for the production of energy crops. The importance of biofuels and bioenergy is recognised in the AGRI Vision 2015 ACTION Plan and I will continue to work closely with my colleague the Minister for Communications Marine and Natural Resources to ensure that agriculture contributes to the development of biofuels as part of a coherent energy policy.
Support to farmers for the growing of energy crops may only be granted in accordance with EU regulations. Currently, such support is provided by way of the Energy Crops Scheme which was introduced under the reform of the CAP and which is administered by my Department. Under this scheme, energy crops may qualify for aid of €45 per hectare provided they are intended primarily for use in the production of biofuels and electric and thermal energy produced from biomass. In 2005, a total of 136 farmers participated in the scheme and, apart from a small area of short rotation coppice, the only crop grown was oilseed rape. In addition to this scheme, set aside land can be used for a variety of non-food uses including the growing of crops for energy purpose and will therefore qualify to activate set-aside entitlements under the Single Payment Scheme. The total area sown to oilseed rape in 2005 was 3,800 hectares and this is expected to increase substantially in 2006 due in part to the demand for the crop resulting from the excise duty relief introduced in 2005. I accept that the aid of €45 per hectare currently available under the Energy Crops Scheme has not proven to be sufficiently attractive in itself to stimulate the growing of such crops. For this reason at the February Council of Agriculture Ministers meeting I called for a review of the premium and I am pleased to say that the EU Commission has undertaken to review the operation of the scheme.
I should also mention that Teagasc, the State provider of research, advisory and training services to the farming community, is in a position to advise on the economics of cultivating energy crops. To complement the research work being done by Teagasc and others, my Department is now providing direct funding, on a competitive basis, to support priority research projects in relation to biofuels. This funding is channelled through the Department's Research Stimulus Fund Programme. Three of the projects selected under the 2005 call for proposals directly relate to biofuels and energy crops and received total grant assistance of some €0.9m. The funding available under the Programme has now been substantially increased and a further call for projects was issued earlier this year.
