Profitability of the production of energy grasses on marginal agricultural land in Sweden

Abstract

The objective of this study was to analyse the economic profitability of producing energy-grass fuels on marginal agricultural land in Sweden. Small and irregular-shaped fields, fields with less fertile soils, headlands and border strips were included, all located in four different regions representing different cultivation conditions. The grasses studied were reed canary grass (RCG) and ley, which were to be used as a solid fuel and biogas substrate, respectively. The economic profitability of these grasses was compared with the profitability of fallow land and the cultivation of winter wheat and spring barley. The results showed that all the alternatives studied, except winter wheat in southern Sweden, had a negative economic net gain (no subsidies included). Generally, the economic losses were greatest for small and irregular-shaped fields. Fallow had a higher economic competitiveness than RCG and ley for all marginal field categories and locations. RCG used as a solid fuel in boilers generally had a higher competitiveness than ley for biogas. However, when ley was used fresh without storage, its competitiveness improved considerably. Taking the direct payment subsidies and the economic value of reduced nutrient leakage into account, the economic net gain improved considerably. Nevertheless, fallow land still had a somewhat higher net gain than RCG for all field categories. Further cost reductions and higher revenues, including possible agro-environmental economic compensation, are required if RCG and ley are to be able to compete with fallow land.