The UK has ambitious greenhouse gas emissions reduction targets, that is, 20 per cent reduction by 2010 compared to 1990 levels. When it comes to the role of renewable energy, the target is 10 per cent renewable energy generation by 2010. The government has been introducing a number of policies aimed at fulfilling these targets, such as the Renewables Obligation and Green Fuels Challenge.

The government’s renewable energy target is ambitious. Approximately one-third of the renewable energy is expected to come from biomass, which may require up to 125 000 ha of energy crops for power generation. The Non-Fossil Fuel Obligation has contributed to stimulating the market for renewables somewhat, particularly for wind power, but there has generally been little incentive for developing renewable energy sources. The main policy pushing for renewable electricity is expected to be the Renewables Obligation, which forces electricity suppliers to provide a fraction of their electricity from renewables.

However, the proposed buy-out price of 3.5 pence/kWh (5.5 €cent/kWh) is not likely to promote significant investments in bioenergy schemes other than those using low-cost biomass waste as fuel, unless other policies are adopted. Recently, the government has allocated an additional £100 million (€160 million) to the development of renewable energy, a significant part of which shall be destined to heat and power from biomass.

Under the Green Fuels Challenge, biodiesel will qualify for a 20 pence per liter fuel duty rebate from 2002. Unfortunately, the tax reduction proposed is unlikely to

make biodiesel competitive with diesel, except if produced from recycled vegetable oils. Much discussion has surrounded this tax reduction issue, with biodiesel supporters asking for a significantly higher reduction and government claiming that it would not be justifiable on environmental grounds. From January 2005, bioethanol will also qualify for a 20 pence per liter fuel duty rebate. The UK government is now in the process of setting UK targets under the EU biofuels directive, and additional mechanisms may be required to assist in meeting the targets.

The UK Department of Environment, Food and Rural Affairs (DEFRA) has allocated £30 million for the introduction of energy crops (SRC and Miscanthus). The area-based incentives will cover part of the set-up costs and should lead to the establishment of approximately 6000 ha of energy crops. The SRC also have access to support from the Forestry Commission’s Woodland Grant Scheme. The produc­tion of oilseed rape for nonfood purposes benefits from subsidy payments under the current EU CAP set-aside policy which is aimed at reducing arable land area dedicated to food production. There is no other specific incentive for its cultivation for biodiesel production in the UK.

A UK Emissions Trading Scheme for greenhouse gases (GHG) has been in place since 2002 and has acted as a precursor to the EU-wide trading scheme to begin in 2005. The GHG trading schemes could support biomass for energy, but how the carbon substitution and carbon sink benefits from biomass energy will be treated by these schemes remains unclear. There are also opportunities for funding demon­stration schemes through funds derived from the Climate Change Levy.

There appears to be an increasing, albeit limited, number of initiatives dedicated to the development of bioenergy in the context of energy, agriculture and climate change policies in the UK. However, there is no clear integrated strategy for the promotion of bioenergy based on short — to long-term considerations. Such consi­derations should include analyses of environmental and socioeconomic impacts of different pathways on both the energy and the agricultural sector, as well as on regional development.