Is Energy Aid worth the effort?

Questions are being raised over the real-world efficacy of the EU’s Energy Aid scheme.

According to the NFU, growers should take the time to work out whether applying for the EU Energy Aid scheme is worth their while before they send off their forms.

The complicated nature of the system, which often sees traders charge up to half of the aid in administrative costs, coupled with the scheme’s inclusion in England’s voluntary modulation, means growing the crops is becoming less financially attractive in 2007 than previous years. It can also affect farmers’ SPS payments if there are any problems during the application process.

“The scheme is a good idea in theory but in practice it isn’t working,” warned the NFU’s Ian Backhouse. “It is flagged up as an example of how Government is supporting the bioenergy industry and €45 (around £30) a hectare sounds impressive. But it doesn’t work because it’s too complicated and farmers only get a fraction of the money.

“English farmers lose out further because of the effect of modulation on the money they receive. I have decided not to make an application this year because the combined effect of these various elements mean it’s not worth doing.”

The scheme was started in 2004 and enables aid to be claimed in respect of crops which are grown to be used for the production of energy for heat, electricity and transport fuels on land which has not been set-aside.

The payments stand at €45 (around £30) per hectare at the moment. Last year, after the payment to traders was removed, it frequently left farmers with around €22 (around £15) per ha. But this year’s rise in modulation to 17 percent means farmers will receive only around €15 (around £10) per ha.

The scheme is limited to two million hectares across the EU. Once that area is exceeded, the aid will be scaled back on a pro rata basis, meaning English growers would receive even less money.