The AGROBIOGAS project will provide significant benefits for the following SME sectors:

- Farmers and farmers co-operatives (stockbreeding, agriculture)

- Manufactures of biogas technology (engineers and designers of biogas plants, heat and power generation plants, developers of vehicles running with biogas fuels)

Relevance to the agricultural sector:

Farmers and Farmers co-operatives as the main target group of the AGROBIOGAS project will be able to have at their disposal effective guidelines to treat their organic waste, including the best management and operation for biogas plants under regional conditions together with a strong compilation of quality standards to control the waste co-digested and also the quality of

biogas and the digestate produced. By providing farmers with adequate biogas knowledge and information, the required breakthrough will be made to raise the efficiency of those farmers who already have applied the technology of the AD, allowing others who have not used it so far to obtain new sources of income while treating their agricultural residues in a sustainable way.

The economic situation for European farmers deteriorated constantly during the last decade because of increasing cost pressures on agricultural products. In 2003 the agricultural sector again was suffering from a 20% reduced income so an increasing number of farmers had serious economic problems or even must abandon their business. The foreseen decoupling of subsidies from fixed production rates will lead to further price deteriorations especially for food products and will aggravate the difficult situation for agricultural SMEs. By including the 10 new Member States this development concerns for

more than 11.9 million agrarian enterprises in the EU25 (most of them SMEs).

Instead of price stability future EU subsidies are meant to strengthen farmers’ role in rural development and fulfilment of quality standards for environment, animal protection and food security. To be competitive, farmers throughout the EU are obliged to adapt their business activities in terms of alternative products and general quality requirements.

Economic viability. Agricultural AD systems for production of biogas or electricity and heat can be a very attractive new source of income for farmers in order to improve the overall the income situation. The Economic viability of AD for farmers can be estimated from the following example in Germany. Just the proper treatment of anyway available residues from cattle breeding (i.e. no costs for raw materials) can already lead noteworthy annual profits. A

smaller AD plant for digestion of cow manure (150 animals) for example can create an additional income of about 2500 € per year, in case the electricity generated from the biogas can be delivered into a public grid and the heat could be used on site (FNR 2004). If it is considered that the gas production rate and the revenues for generated electricity for other organic substrates (e.g. corn silage 402 kWh/t raw material, vegetable wastes 122 kWh/t raw

material, grass silage 256 kWh/t raw material, etc.) are several times higher than those for cow manure (47 kWh/t raw material), (all data: Weiland 2004).

Agricultural energy crops like special maize or rye species offer the potential of further increases in the revenues from agricultural AD plants. The feasibility of AD depends strongly however on three main factors, the price for

electricity, the measures adopted by the member states to foster the implementation of biogas plants and the local demand for the heating surplus of the biogas generating company (the selling of the residual thermal energy for district heating or other purposes increases significantly the profitability for the biogas producers).

There are currently in the EU a range of different support systems operational that can be broadly classified into three main groups:

feed-in tariffs, green certificates and tax incentives.

- Feed-in tariffs exist in most of the Member States. These systems are characterised by a specific price, normally set for a period of around several years, that must be paid by electricity companies, usually distributors, to domestic producers of green electricity. The additional costs of these schemes are paid by suppliers in proportion to their sales volume and are passed through to the power consumers by way of a premium on the kWh enduser price. These schemes have the advantages of investment security, the possibility of fine tuning and the promotion of mid- and long-term technologies. A variant of the feed-in tariff scheme is the fixed-premium mechanism currently implemented in Denmark and partially in Spain. Under this system, the government sets a fixed premium or an environmental bonus, paid above the normal or spot electricity price to generators.

- Under the green certificate system, currently existing in SE, UK, IT, BE and PL, renewable source electricity (RES-E) is sold at conventional power-market prices. In order to finance the additional cost of producing green electricity, and to ensure that the desired green electricity is generated, all consumers (or in some countries producers) are obliged to purchase a certain number of green certificates from RES-E producers according to a fixed percentage, or quota, of their total electricity consumption/production. Penalty payments for non-compliance are transferred either to a renewables research, development and demonstration (RD&D) fund or to the general government budget. Since producers/consumers wish to buy these certificates as cheaply as possible, a secondary market of certificates develops where RES-E producers compete

with one another to sell green certificates. Therefore, green certificates are market-based instruments, which have the theoretical potential, if functioning well, of ensuring best value for investment. These systems could work well in a single European market and have in theory a lower risk of over-funding. However, green certificates may pose a higher risk for investors and long-term, currently high cost technologies are not easily developed under such schemes. These systems present higher administrative costs.

- Systems based only on tax incentives are applied in Malta and Finland. In most cases (e.g. Cyprus, UK and the Czech Republic), however, this instrument is used as an additional policy tool. The above categorisation into four groups is a fairly simple presentation of the situation. There are several systems that have mixed elements, especially in combination with tax

incentives. The level of promotion of biogas production is different among the EU. The promotion in France and Sweden appears to be insufficient when compared to long-run marginal generation costs. Finland clearly does not specifically promote this technology. For Greece, Ireland, and Portugal, the support level is at the lower end of the cost range. In Austria, the tariff are

relatively high with policy aiming to support small-scale agricultural applications (average range of 70-100 kW) as compared to large centralised plants. Germany also promotes smallscale installations with a high effectiveness. UK has a rather high support (tax exemption), resulting in a high effectiveness. Denmark has a medium support with a fairly high

profitability. The Danish support scheme prioritises large central power plants.

The Swedish and Finnish tax rebates have been unable to trigger relevant investment in biogas plants. Similarly, the Irish tender rounds seem to have ignored biogas as an option for increasing RES-E generation capacity. It should be noted here that the high growth in Italy and the UK has been based mainly on the expansion of landfill gas capacity, whereas in Austria,

Denmark, and Germany agricultural biogas has had a significant share in the observed growth.

Concerning the price of electricity, i.e. the other factor of influence on the feasibility of AD, this differs notably within the EU. The highest prices are found in the central European market, where Belgium tops the list, followed by the Portugal. In these countries AD, presents a grater potential in terms of feasibility. The prices in some countries are lower (like Slovakia or Sweden) due to the presence of relatively cheap generation technologies and a limited

ability to export to other countries. In any case, given the rise in the price of oil and its future scarcity, the electricity tariff is expected to increase in general terms.

Relevance to the manufacturing sector

Apart from farmers, a wide range of SMEs biogas technology manufactures will take advantage from the development of this technology as there is an urgent need to develop lowcost, reliable and simple technological solutions, designers and engineers of biogas plants associated with heat and power generation or companies devoted to the development of vehicles running with biogas fuels will benefit from the development of AD of agricultural

waste.

For technology and service providing SMEs a the market prospects are very promising. In Europe about 3000 biogas plants are in operation, of which approx. 1800 are established in Germany. Among these 1800 biogas plants about 800 are agricultural AD plants. Considering 100.000.000 t/a separately collectable biowastes per year in EU 25 (which is far less than the existing amount of biowastes), of which actually 3.500.000 t/a are treated by means of AD there is a huge potential of new AD plants all over Europe (data: F. Amlinger 2005). Again, AD plants digesting agricultural energy crops are not considered.

Relevance to the energy sector

At present the world is just about to enter an economic crisis of large extent. This economic crisis is directly connected to an energy crisis, since the present economic systems are based on conventional fuels, which have an impact on the environment and which availability will drastically decrease in the case of military conflicts. Although renewable energies are available in large quantities, their use is due to various reasons restricted. The following table2 presents the estimated potential of energy produced on biogas for the year 2020 (EU 15), considering biomass data and a minimum gas yield of 25 Nm 3 biogas per ton biomass (approx. the expected gas production for digestion of cow manure).