In 2007, the Department launched a bioenergy scheme on a pilot basis to encourage farmers to grow willow and miscanthus as a renewable source of energy up to the end of 2009. The legal basis for the scheme was Council Regulation 1782/2003 establishing common rules for direct support schemes under the Common Agriculture Policy. This regulation authorised member states to grant aid the production of miscanthus and willow on areas declared by farmers under the EU energy crops scheme in their single payment scheme application.
In accordance with the regulation, member states were authorised to grant aid 50% of the associated costs of establishment, and this was, therefore, the maximum level of aid permitted to establish willow and miscanthus crops. The Commission made this decision on the basis that both willow and miscanthus crops are classed as agriculture crops, not afforestation, which is longer term and where higher aid rates could be justified.
Under the bioenergy scheme, farmers were paid a one-off capital grant of up to €1,450 per hectare to cover 50% of establishment costs. Eligible costs included ground preparation operations, vegetation management, planting and the purchase of planting stock. Aid was paid in two instalments, namely, a maximum of 75% of the grant — €1,088 — in the first instalment following establishment of the crop, and the remaining 25% — €362 — in the year after establishment, provided the applicant had adequately established and maintained the crop. The pilot scheme generated considerable interest from farmers in growing miscanthus. Overall, 2,100 hectares of miscanthus were grant aided.
Drawing on the experience of the pilot scheme, the Department launched a new bioenergy scheme in February 2010 to grant aid miscanthus and willow planting to the end of 2012. A total of €1 million is available to support the planting of a further 1,000 hectares in 2010. The legal basis for the scheme has changed to Council Regulation (EC) No 1698/2005, on support for rural development by the European Agricultural Fund for Rural Development. Accordingly, the new bioenergy scheme will now be funded under the Department's revised rural development programme. The new scheme will follow a similar format to the pilot scheme in terms of the application, pre-planting approval and payment process.
Approved costs will be grant aided up to 50%, subject to a maximum grant of €1,300 per hectare for both crops. The Department is precluded from increasing the 50% ceiling to grant aid establishment costs. The maximum payment per hectare has been reduced by €150 per hectare on the pilot scheme, to take account of lower establishment costs in 2010 and to comply with EU requirements that aid is based on the actual costs of establishment. The Department will continue to monitor the level of establishment grant over the lifetime of the scheme.
Additional information not given on the floor of the House.
In addition to establishment grants, areas planted with willow and miscanthus continue to qualify for the single farm payment and for payments under REPS and the disadvantaged areas scheme, subject to some restrictions on the areas planted.
It was evident from the response to the pilot bioenergy scheme that there is considerable interest in growing miscanthus. Ireland's climatic and soil conditions are very suitable for growing miscanthus and the sector has the potential to offer a new rural activity and provide farmers with added income streams. Miscanthus can also deliver positive outcomes in terms of reduced CO2 emissions and contribute an increased supply of biomass to meet Government targets on bioenergy. My Department will continue to work closely with industry stakeholders to ensure the development of the sector.