UK: Agricultural Bulletin - A Briefing For Farmers And Land Agents. Good For The Environment?

Last Updated: 18 March 2008
Article by Susan Shaw


With the start date of the RTFO just around the corner, the environmental impact of biofuels has come under the spotlight.

In April 2008, the Renewable Transport Fuel Obligation (RTFO) kicks into action. It aims to encourage mineral-oil fuel companies to incorporate biofuels into their road fuel sales.

The RTFO's target starts at 2.5% by volume, rising to 5% by volume by 2010/11. However, fuel companies are unlikely to blend this amount of biofuel into their petrol and diesel. As with the renewables obligation in the electricity sector, the closer a company gets to meeting the target, the lower the penalty per litre for missing it. On this basis, fuel companies will probably incorporate 1-2% in the first year.

Should the RTFO reach its 2010/11 target, the total reduction of greenhouse gas emissions from the UK would be less than 0.5%*. This means that for a 10 mile car journey, the impact is equivalent to parking 300 metres from the destination and walking the rest of the way.

Biofuels have provided a price bonanza for arable farmers since harvest and look likely to continue bolstering the grain and oilseed markets for a few years. But UK and European government policies are based on their reputed environmental credentials, not their impact on arable farmers' income.

Various key people and organisations have recently made announcements about the environmental impact of biofuels. None of these is entirely negative, but they all highlight how the credentials of different fuels vary wildly.

The Royal Society, the UK's leading scientific agency, agrees that biofuels can potentially contribute towards tackling the issues of greenhouse gas emissions. However, it noted that some fuels are more effective at this than others. New technologies should be accelerated and the Government should introduce policies that provide direct incentives for investing in the most efficient biofuels.

Stavros Dimas, European environment commissioner, acknowledged that it would be better for the European Union (EU) to miss its targets on the incorporation of biofuels into road transport fuel than to achieve them and harm the environment further. Mr Dimas suggested a clampdown on biodiesel produced from Indonesian palm oil and other areas where forests are being removed in favour of plantations. But the EU should continue to encourage any biofuels that could be proven to reduce environment, either directly or indirectly. This suggests that farmers supplying biofuel facilities would have to complete an audit trail and submit it with their tonnage.

The Commons Environmental Audit Committee made similar comments, stating that biofuels should be employed within an appropriate regulatory framework, using the technology with the best environmental credentials.

Since these announcements, the Renewable Fuels Agency (the Government body set up to implement the RTFO) has published its guidelines on what a biofuel supplier should do to report the sustainability of its fuels. The agency requires information on the origin of the feedstock, the greenhouse gas savings it thinks it makes and the production process of the fuels that enter the UK fuel market. More information is available at

*Source: NFU and HGCA


The growth of the renewable energy sector could provide forward-thinking farmers with ample opportunities.

Around the world, the renewable energy sector is growing in importance. As it develops, like all fledgling sectors, a number of growing pains invariably crop up along the way.

Government policies are becoming more refined and sophisticated to encourage the relevant sectors to meet targets or resolve national or European issues. For example, the European target for the UK to achieve 20% of energy from renewables by 2020 is much higher than the 2% currently achieved. And it is increasingly likely that the majority of this will be for electricity production; the UK will have to generate in excess of a third of its electricity from renewable sources by 2020, up from the present 5%.

In order to cope with target shortfalls, the EU plans to issue member states with credits so that they can trade in renewable energy. Thus, if the UK does not achieve its target but another country does, it can purchase credits from them. In fact, given this option, the UK will more than likely aim to achieve about 15% renewables, and purchase the balance in credits. This sounds like a cop-out, but if other countries are more suited to generate energy cheaply or easily from renewables, it makes sense that they specialise in it.

That said, the UK is blessed with natural resources that could make it a leader in renewables. It has simply lagged behind in exploiting them. Opportunities for UK farmers certainly exist and are likely to continue growing. Those with an ability to glance into the future could reap dividends by investigating the opportunities now.

New Policies For Age-Old Concept

Even though renewable energy has only recently picked up with a vengeance, it has been used on a local basis for many years. Wind has long been harnessed to power mills and wells, while anaerobic digestion tanks have been used to capture methane and sanitise sewage for several generations. Indeed, there is evidence of anaerobic digestion plants used to heat bath water in 10th century BC Assyria. Biofuel technology was even used to fuel military vehicles during the Second World War.


Recent increases in prices and demand threaten to pinch the financial returns of farmers.

Certain farm input costs continue to spiral upwards. This is taking some of the gloss off better prices in the cereals and milk sectors, and adding to the margin pressure in other sectors where there have not been significant price increases.

Animal feed prices are well documented. The uplift in cereals prices since the spring has been a prime factor, but the contribution of protein to animal diets should not be forgotten. As an example, soya prices have risen since last winter.

An oil price of around $100 per barrel directly feeds into higher tractor fuel prices. Duty rises on gas oil haven't helped. The rise in global energy costs is reflected in the price of fertiliser, as gas is a major feedstock for nitrogen production. Supply and demand imbalances are also driving up fertiliser costs. Higher grain prices have seen demand for the product surge, as a greater area is planted and producers chase extra yield. The US ethanol boom has also had an effect; American farmers have switched from growing soyabeans to growing maize, which increases the nitrogen requirement.

Unfortunately, the surge in demand has been met with static supply as there are obviously structural constraints to the speed at which the fertiliser industry can increase production. In fact, capacity has decreased over the past few years, at least in Europe. Although nitrogen prices have fluctuated in line with energy prices, the new factor this time is booming values for potassium and phospherous. Traders report phenomenal demand from China (much of which is being subsidised), as well as competition for petro-chemical feedstocks from the energy sector. Many merchants have been unable to supply fertiliser products until last month (February).

Although prices for cereals and dairy farms are looking much better than they did a year ago, these cost increases will take some of the shine off them. Indeed, many farms' financial returns may not be much better in 2007/08 than they were in 2006/07. Unfortunately, those parts of the industry that have not seen better prices (beef, sheep, pigs and vegetables) are being caught in a cost-price squeeze.


The RDPE has finally been approved. But Defra's changes to the ESS and Energy Crops Scheme could affect growers in various ways.

In December 2007, the EU Commission approved the Rural Development Plan for England (RDPE) for 2007 to 2013. After all the delays, the launch of the programme will be almost exactly one year late. Under the RDPE, approximately £4bn will be available for rural support over the seven-year period. This is more than double the last period's amount, highlighting the Government's commitment to rural development.

However, as a condition of EU approval, the Department for Environment, Food and Rural Affairs (Defra) had to make changes to the Environmental Stewardship Scheme (ESS) and Energy Crops Scheme.

Adapted ESS

In order to secure the RDPE, Defra had to change the ESS in three ways.

  1. Points from the four Entry Level Stewardship (ELS) management plan options (soil, nutrient, manure and crop protection) will no longer count towards the 30 points per hectare target. The EU Commission concluded that land managers were effectively being paid for activities they should have been doing anyway.

    The nutrient and manure plans will soon be a formal requirement under the new Nitrate Vunerable Zone (NVZ) rules. The soil plan was deemed insufficiently different from the Soil Protection Review under cross-compliance, and the Crop Protection plan gave points for something that should be done under good spraying practice.

    It is certainly true that some applicants picked up these points without a great deal of difficulty (although it did force others to think about these issues in more detail). What is likely to anger farmers and their advisers is the retrospective nature of these changes.

    The change in arable prices, coupled with the tightened regulations to achieve the ELS points level, might make the ELS look less inspiring than before.

  2. Defra has incorporated the new NVZ rules into new ELS and Higher Level Stewardship (HLS) agreements.

    The addition of the NVZ rules to ESS agreements only applies to applicants in the current NVZs. Only the 170kg/ha manure limit, crop nitrogen limit, spreading practices and record-keeping provisions apply as, under the NVZ rules, the other parts have a grace period before they come into force. For example, the closed periods (and storage requirements) do not apply until two years after the regulations are enacted. Any new NVZ areas only have one year's grace to comply. Therefore, these parts cannot be applied immediately.

  3. Defra will now review agreements that run beyond 2015 in 2012; a clause to this effect will be included in the agreements.

These ESS rule changes only apply to schemes entered into since the start of the new rural development programme period, which was 1 January 2007. ELS, Organic Entry Level Stewardship and HLS agreements with a start date prior to 1 February 2007 won't be affected.

Energy Crops Scheme

Defra also had to amend the planting grants for Short Rotation Coppice (SRC) and Miscanthus. Unlike the previous scheme, there will not be a fixed per hectare grant rate for each crop. Instead, scheme applicants will have to submit invoices showing their actual costs. Grant aid will be paid at 40% of the actual expenditure.

As part of the application process, growers will need to provide estimates of likely costs. If these estimates are consistent with an independent verification of typical costs, the application will be accepted on a single quote. Where estimated costs are greater than the independent verification, applicants will have to provide written evidence to explain the variation, which may involve getting further quotes. More details are available at

Furthermore, Defra also added some other traditional species, alongside the poplar and willow, to the list of trees eligible for the SRC grant. These are ash, alder, hazel, silver birch, sycamore, sweet chestnut and lime. The rules on distance to the end-user are likely to be amended for 2009 plantings. Rather than being based on a simple distance measure, applications will be judged on a carbon balance calculation.


As well as planting grants, those looking to fund bio-energy projects may be able to tap into capital grant funding from the Regional Development Agencies. Furthermore, two sector-specific national schemes will be launched sometime in early 2008.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions