Agro Fossil Free - Economic potential of perennial energy crops in Poland

General Description

Poland is committed to satisfy 15% of its energy needs from renewable sources by the year 2020. Biomass should make an important contribution to that, with perennial energy crops production potential of 1.59 million ha of arable land. However, the area of perennial plantations reached only 10,000 ha and started decreasing. Low competitiveness compared to traditional agriculture and high risk related to biomass production seems to be the main reason for that. On the basis of agricultural census data for 314 regions, biomass prices assuring the same profitability as traditional agricultural enterprises should carry out medians of 3.0-4.2 € GJ-1. In practice, such prices are not attractive for farmers, therefore, risk premiums were calculated in order to enhance farmers to change from current production to biomass. Stochastic Efficiency with Respect to a Function (SERF) was applied to estimate risk premiums between 2.5 and 5.1 € GJ-1 dependent on the predominant type of production in a farm and the energy crop. The total median prices including risk premiums are in the range of 5.7-6.4 € GJ-1. This is close to biomass price offered by the energy sector in Poland, which is currently at the level of 6 € GJ-1. These prices in combination with areas suitable for energy crops were used to estimate economic potential of biomass, which amounted to 0.45 million ha of agricultural land. This accounts for 28% of technical biomass production potential with the capacity to produce 4.3 million t of biomass.