Brussels, 25/09/2006 (Agence Europe) - On 22 September, the European Commission proposed improvements to the energy crop premium, with effect from 2007. This would involve extending the scheme to the new EU Member States and allowing Member States to grant national aid to encourage the establishment of multi-annual crops, for biomass production. The adoption of this proposal comes after the Commission's presentation in February of the Community strategy to encourage biofuel production (see EUROPE 9127). The aid for energy crops, up to a limit of 1.5 million hectares, introduced to encourage farmers to produce the raw materials for biofuels, stands at €45/hectare. The main strands of the Commission's proposal:
A single scheme for all. Only two of the ten countries which joined the EU in 2004, Slovenia and Malta, chose to adhere, like the other EU countries, to the single payment per farm scheme introduced in June 2003 with the reform of the Common Agricultural Policy (CAP). The eight other new Member States opted for the Single Area Payment Scheme (SAPS) during accession negotiations. SAPS, however, does not currently allow aid to be granted for the production of energy crops, hence the proposal to extend the energy crop premium to all EU Member States, including those using SAPS, with effect from 2007. The Commission would also have to increase the maximum area which can benefit from the aid from 1.5 to 2 million hectares. This size of area will be reviewed during the CAP “health check” in 2008.
National complement. The Commission also proposes allowing Member States to grant national aid of up to 50% of the costs of establishing multi-annual crops for biomass production (on areas on which an application for the energy crop aid has been made). This would allow the level of aid to be increased without additional CAP expenditure.
Direct payments. The Commission proposes a two-year extension to allow the new Member States using SAPS to continue to do so until the end of the year 2010, instead of 2008. From the start of 2009, farmers in the countries opting to continue SAPS would, as in other Member States, have to comply under “cross compliance” with the statutory requirements in the areas of environment, public, animal and plant healthy and animal welfare to receive full payments under direct payment schemes and certain rural development measures.
Strong increase in demand. Energy crop aid, which was introduced in 2004, was paid for only 306,000 hectares in 2004 (20% of maximum area) and 561,000 hectares in 2005 (38%), chiefly in Germany, France and the United Kingdom. The Commission has noted a strong increase in demand: the area for which direct payment for energy crops was claimed in 2006 was of the order of 1.2 million hectares, close to the 1.5 million hectare limit. Bioethanol production capacity is expected to quadruple between 2005 and 2008, with France, Germany and Spain leading the way. In 2008, there could be 42 bioethanol factories operating in the EU, compared with 13 in 2005, and bio-diesel production capacity could practically double between 2005 and 2008, with substantial investment in Germany, France and Spain.