Investigating potential contract models to stimulate commercial production of energy crops

Perception of risks and related costs associated with energy crop cultivation pose a barrier to expansion of production, and therefore economies-of-scale are not achieved and investments in new infrastructure harder to justify. In this study, the risk perceptions for agro-biofuel production in Sweden, France and Finland are delineated and a new contractual arrangement to reduce such risk perceptions proposed based on 55 in-depth interviews conducted with agro-biofuel producers and users. The proposed contract model is based on three factors; degree of duration (number of years), degree of flexibility (number of price negotiations per year or per contract duration, and possibility to cancel the contract if circumstances change) and degree of cost control (the producers’ level of integration into the production chain). It was found that the degree of duration preferably is medium-long, about 5 years, and the flexibility high, whereas the degree of cost control might vary between farmers depending on their activity level and possession of machinery and negotiation skills. Entrepreneurial farmers with machinery and high negotiation skills want a high degree of cost control, in particular if the energy crop is a large share of their income. Active farmers prefer a medium high degree of cost control, assisting during harvest with own machinery (such as driving a side-wagon next to the harvester) and inactive farmers a low degree of cost control because they value the low labour-input. The price of the agro-biofuel product is linked to the price of conventional biofuels (such as wood chips from forestry), but with shared risk of increased prices for transport fuel via a partial indexation of the price to the diesel price. “Windfall profits” from for example subsidies or the COemission trading scheme are suggested to be allocated to the producer as an incentive for production. 2 The active farmers were found to be the least satisfied with the decision to grow an energy crop, in part because they to a larger extent have substituted cereal production with energy crop production, and the grain prices rose dramatically in the beginning of 2008, and in part because they have difficulties to be as profitable as the entrepreneurial farmers (who can harvest themselves and negotiate contracts directly with the fuel-users, thus avoiding costly middlehands) and have higher demand on profitability than the inactive farmers (who have retired or work outside the farm)

Decentralised energy systems based on biomass

Replacing fossil fuels with renewable energy sources is recognised as an important measure to mitigate climate change. Residual biomass from agriculture and forestry and short-rotation coppice grown on unused land can be converted to heat, power and fuel without directly compromising production of edible crops. As biomass is mainly produced in rural areas, increased use of biomass-based energy could contribute to job creation and rural economic development. This thesis investigated whether farmers can generate energy from their own on-farm agricultural and forestry residues for energy self-sufficiency on the farm or for commercial production of district heating or combined heat and power production, with reduced greenhouse gas emissions compared with fossil alternatives. Consequential life cycle assessment methodology was used, with the focus on greenhouse gas emissions and energy balance. The results showed that arable and dairy organic farms in Sweden can both become self-sufficient in energy by using on-farm biomass residues. Furthermore, decentralised bioenergy systems proved superior to central production based on fossil fuels or large-scale biomass in terms of both greenhouse gas emissions and production costs. The results also revealed large variations (9-97%) in greenhouse gas emissions reduction potential compared with fossil fuels. This variation is partly due to the impact on soil carbon content in soil management systems, where crop residue removal has a negative effect and willow coppice production a positive effect. The input energy requirement for biomass systems is generally higher than for fossil systems, but is typically generated from renewable energy

Energy and greenhouse gas balance of decentralized energy supply systems based on organic agricultural biomass

More and more farms apply organic production methods to reduce their environmental impact, but currently even organic farms are mainly using fossil fuels. Technologies available today or in the near future make it possible to produce heat, electricity and fuels from agricultural residues or woody biomass. The agricultural sector can thereby contribute to the fulfillment of climate goals and energy security without reducing the output of food products. The thesis describes and assesses possible energy supply systems based on biomass from an organic arable farm, using life cycle assessment (LCA) methodology. The impact categories used are energy balance, resource use and greenhouse gas (GHG) emissions. Technical systems are described for the supply of heat and power to a village near the farm, and for energy self-sufficiency at the farm. The systems utilize ley used as green manure, Salix and/or straw as the substrate for energy production, and are compared with a reference system based on fossil fuels. The emission calculations included field operations, processing and soil emissions, with a special model developed for estimating the impact on soil C concentration. The results show that it is possible to supply the village or the farm with energy through the systems described without competing with food production. Ley-based scenarios require higher energy input than scenarios based on Salix, but lower than the scenario based on straw. In the self-sufficient farm system, ley-based scenarios give the highest reduction in GHG, 33% compared with the reference scenario whereas the corresponding reduction from a completely straw-based energy system is 9%. In the village energy supply system, the ley-based system give the highest reduction in GHG with a total of -19 Mg CO2-eq./FU compared with 351 Mg CO2-eq./FU in the reference system. The Salix-based systems give 42 and 60 Mg CO2-eq./FU respectively