Biogas production has been earmarked as a key way to help fortify the EU’s struggling farm sector against burgeoning energy costs, according to a draft of the European Commission’s communication on energy prices due to be published next month.
The draft communication, obtained by EURACTIV, paints a grim picture of high and unstable energy prices continuing in the coming years. This will have serious consequences for a range of sectors, not least of which agriculture.
Fertiliser prices have increased by 142% over the last year, the draft document notes, pointing out that energy and fertilisers account for 20% of farmers’ production costs.
And this situation could deteriorate further if higher energy prices continue to push fertiliser prices up, with a risk of lower plantings, lower yields, and thus even greater pressures on farmers’ incomes and food prices, it adds.
This will put the farming sector at a “competitive disadvantage compared to competitors from third countries”.
LEAK: Energy prices will ‘remain high and volatile until at least 2023’, EU Commission says
Gas and electricity prices will “remain high and volatile until at least 2023” according to long term forecasts quoted in a draft of the European Commission’s communication on energy prices due to be published next month.
In a bid to bolster the sector against rising energy prices, the European Commission places an emphasis on the creation and storage of biogas.
Biogas is a renewable fuel produced by the breakdown of organic matter, such as food scraps and animal waste.
“With squeezed incomes for farmers, the use of biogas can provide an opportunity for additional and diversified revenue streams for farmers, in line with the European Green Deal,” the communication reads, stating that biogas is a “clean, renewable, and reliable source of energy” as well as a new source of income for farmers.
The use of stored biogas reduces methane emissions, it can be used as a source of peak power and reduce the dependence on fossil fuels, while also helping the green transition of the agricultural sector.
The EU executive will therefore propose to set an EU-level ambition to produce 35 billion cubic metres of biogas by 2030, according to the communication.
Meanwhile, member states should adopt renewable gas strategies, fully aligned with this target, it sets out.
To help upscale biogas production, the Commission will also encourage member states to maximise opportunities of the reformed Common Agricultural Policy (CAP) to incentivise its development via their national strategic plans (see below for background).
The CAP direct payments, meanwhile, will continue to be an “important safety net” for farmers’ incomes.
Moreover, the Commission proposes to put public consultation increases support possibilities for farmers in the ongoing review of the state aid rules to allow for investment aid in sustainable energy.
This would, for example, offer the possibility to grant aid for the use of less conventional fertilisers that are currently highly affected by increased gas prices.
In the long term, the draft communication also sets out that the EU executive will map out the risks and vulnerabilities, including structural issues, of the EU food supply chain and its critical infrastructures.
This will then be assessed within the Food Contingency expert group with member states and stakeholders, who will look at the different ways to address or mitigate such risks and vulnerabilities to “reinforce our degree of open strategic autonomy when it comes to food supply and food security”.
A dedicated communication on agriculture and food and feed prices will be presented in March 2022, the draft adds.