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The Warsaw Voice » Law » September 16, 2009
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Biogas: New Income Opportunities in Rural Areas
September 16, 2009   
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The Ministry of Economy has recently unveiled a program entitled "Innovative Power-Energy Agriculture." The main objective is to create the right conditions to encourage the development of installations producing agricultural biogas. This in turn will be used to generate heat and electricity.

So what exactly is biogas? In simple terms, it is a family of gas fuels made from agricultural by-products (animal and organic waste).

The government program assumes that by 2020 there will be an average of at least one agricultural biogas works using agricultural biomass in every Polish district.

The initiative falls within the framework of Poland's international commitments arising from EU Directive 2009/28/EC on promoting the use of energy from renewable sources.

The directive on renewables set ambitious targets for Poland: 15 percent of energy from renewable sources by 2020 and a 10 percent share of renewable energy specifically in the transport sector.

Under the directive, the use of agricultural material such as animal and organic waste for biogas production has, in view of the high greenhouse gas emission saving potential, significant environmental advantages in terms of heat and power production and its use as biofuel. Thanks to their very localized nature and the regional investment structure, biogas installations have the potential to contribute significantly to sustainable development in rural areas and offer farmers new income opportunities. Moreover, agricultural by-products and animal waste are frequently stored/disposed of at farms in a way that is contrary to legal requirements.

The significant energy potential of Polish agriculture offers chances for the development of biogas in Poland. It may be possible to generate annually 5-6 billion cubic meters of biogas fulfilling the parameters of high-methane natural gas.

The capital expenditures needed to build a biogas plant to produce about 3.5-3.8 million cu m of agricultural biogas annually, which is equivalent to approximately 2.5 million cu m of high-methane quality natural gas, are estimated at 2.5 million euros. To this end, subsidies will become available for investments in agricultural biogas works under the Program for the Development of Rural Areas and programs delivered by the National Fund for Environmental Protection and Water Management.

The "Innovative Power-Energy Agriculture" program also encompasses a number of legislative changes, including amendments to the 1997 Energy Law. These deal mainly with certificates of origin, quality issues and a range of technical and legal matters.

The first draft of legislative changes has already been presented in parliament. It aims to create a legal basis for connecting biogas works to low-pressure gas pipelines, whether already existing or under construction as part of local initiatives. This is to enable deliveries to consumers in rural areas, especially areas where the supply of natural gas is not feasible. The proposed approach for supporting biogas is based on a system of transferable certificates of origin for agricultural biogas. From the positive experience in the existing system of supporting energy generated from other renewables, the proposed certification scheme for biogas system would involve certificates of origin for electricity generated from renewable sources of energy (so-called green certificates).

A certificate of origin confirms that electricity has been generated by the given energy company from renewable sources. It is issued by the Chairman of the Energy Regulatory Office. Every year distributors and sellers of power to end users have an obligation to purchase and present green certificates to the Chairman of the Energy Regulatory Office for redemption or to pay substitute fees.

Plans are under way to introduce preferential taxation for energy produced from renewables and tax breaks for investments in biogas works and users of biogas.

To aid construction and development, amendments will be made to planning regulations to categorize agricultural biogas works as public-purpose investment projects.

This is a brave new world we are entering into, in more ways than one. Agricultural biogas works might be a part of it. To take best advantage of the opportunities available, greater funding is also needed for Poland's science institutions such as the Warsaw University of Technology. Many public and private institutions are following developments closely and around 30 companies have registered for lobbying purposes in respect of this legislation.

Bartosz Clemenz, counsel at Salans law firm
Piotr Czembor, associate at Salans law firm
Paweł Krzykowski, associate at Salans law firm
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