Could the biomass fund pave the way to a secure market for farmers?

Lovewell Blake

Last year the Prime Minister laid out a ten-point plan for a “green industrial revolution” to aid the UK Government’s Net Zero greenhouse gas emissions target by 2050.

Whilst the Chair of the Business, Energy and Industrial Strategy (BEIS) Committee, Darren Jones, commented “the budget appears to signal a rejection by the Chancellor of the Prime Minister’s Ten Point Plan”, there are still opportunities that have arisen following the recent budget for farmers willing to diversify and also look into growing crops outside of their usual cycle in the future.

As part of a £92 million investment plan set out by the government in the recent budget, a £4 million fund has been set up for a biomass feedstocks programme, along with finance support from the UK Infrastructure Bank. The aim is to encourage new innovations which, in turn, will kick-start growth in biomass production and green energy crops. Furthermore, a new biomass strategy is expected to be published in 2022 with a progress update later this year, which will only increase awareness and demand of biomass energy production.

Biomass crops such as Miscanthus will, therefore, be in greater demand than ever along with by-products such as straw also being in demand for biomass use in future. An article published by Farming Online in October 2020 focused on the production of Miscanthus; its secure return, available due to long contracts and secure markets, reduces future risk, whilst also noting rising market demand even before the recent government announcement. The article which can be found here also discusses crop profitability along with comments from Miscanthus specialists, Terravesta.

Whilst the initial investment for establishment of energy crops has previously deterred farmers from growing these crops, the limited disease and pest problems on top of the sometimes decade long contracts and secure markets in the current times of uncertainty will likely appeal to more and more. The Climate Change Committee’s assumptions state that in 2020 that energy crops amounted to 10,000 hectares in 2020, which would rise to 720,000 hectares by 2050 under the new programme.

This Biomass Feedstock Innovation (BFI) Programme introduced by the government focuses on innovations in the production of biomass feedstocks including all those activities associated with the production process, such as planting, cultivating and harvesting as well as on site storage. More details about the programme along with items which are within the scope of the programme can be found within the programme’s guidance notes.

Applications for the programme opened on the 3 March 2021 and close on 7 May 2021.

Also with the recent budget announcement of increased tax reliefs available on new plant and machinery such as the ‘super deduction’, along with the potential for research and development tax relief on some costs dependant on the project (more details can be found here), there are various tax savings which could and should be considered. These are things our specialist tax consultants can advise on throughout the process.

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