World crude oil prices have almost doubled in the past 12 months, driven by both strong global demand and production constraints. In the medium to long term, supply issues are likely to lead to increasing prices. Farmers will have to respond to the increased price of fuel, and energy, by looking to increase energy use efficiency.
Determining future price levels is difficult but it is clear that prices are likely to have to remain significantly above the lower levels seen two to three years ago. The agriculture sector will not be alone in having to adapt to higher energy prices for at least the medium term.
The UFU has recently submitted its response to a consultation on the Utility Regulators role in sustainable development. Northern Ireland is almost totally reliant on imports of fuel. There is an urgent need to broaden the energy supply base. Farmers have an important role in providing this broad supply base. Animal waste, energy crops and wind are all sources of renewable fuels and farmers have the required skills base to supply these.
The Regulator recognises the current unsustainable energy supply but details a number of problems with the existing transmission network in the accommodation of variable embedded generation. The UFU are adamant that immediate action is taken to find solutions to these problems. An excessively bureaucratic planning system is yet another obstacle that farmers have to scale when trying to establish renewable technologies; the UFU will be working with Government departments as part of a renewables stakeholder group to ensure that these problems are rectified.
Possibly the most important factor preventing significant growth in the renewable energy sector is the price received for renewable electricity. If the UK is to meet the EU 2020 target for renewable energy, careful thought will need to be given as to what is the most appropriate financial incentive for renewable generators.
The UFU recently supported Government proposals for the banding of Renewable Energy Certificates or ROCs (the UK's primary support method for renewable technology). Anaerobic digesters and micro-generators for example should receive double ROCs as a result of these proposals. Other EU member states use feed-in tariffs to incentivise renewable energy production and the UFU will be considering the possible benefits of such a system in Northern Ireland in its response to the BERR (Department for Business Enterprise and Regulatory Reform) consultation on the UK Renewable Energy Strategy.
The UFU will continue to ensure that if farmers choose renewable technologies as a way to increase energy efficiency; unnecessary barriers are not placed in their way.