The new Renewable Heat Incentive (RHI) scheme has been welcomed by the farm organisations but some observers cautioned that a lack of ambition could limit its effectiveness.

Fears of a repeat of the 'cash-for-ash' debacle which toppled the North's power sharing executive has "spancelled" the scheme, industry sources maintained.

A reduction in the RHI support from 5.66c/kWh to 3.02c/kWh after 10mW, and back to 0.5c/kWh after a further 10mW, meant the scheme will be most suitable to small and medium-sized energy users.

However, these reservations did not detract from the importance of the RHI scheme's establishment, and the farm organisations welcomed the initiative's introduction by the Minister for Communications, Climate Action and the Environment, Denis Naughten.

But the IFA's James Murphy warned that the scheme must be operational by early 2018, and be adequately funded.

Mr Murphy claimed that a budget of €100 million was required for the Support Scheme for Renewable Heat (SSRH) element of the package.

"Increased uptake of renewable energy offers enormous economic and environmental potential for Ireland and has been shown to positively impact regional competitiveness, innovation and diversification of economic activity in rural areas," said Mr Murphy.

Heat energy accounts for 45pc of all primary energy usage in Ireland and 33pc of the country's CO2 emissions.

The SSRH aims to increase the energy generated from renewable sources in the heat sector by approximately 3pc, this is equivalent to 200,000 tonnes of oil equivalent.

Biomethane

ICSA president Patrick Kent said the RHI scheme was a positive first step but he expressed disappointment that biomethane injection from anaerobic digesters is not included in Phase 1 of the programme.

However, he said that ICSA was hopeful that following a meeting with Minister Naughten that this would change in later phases.

Mr Kent said anaerobic digesters had the potential to provide a win/win solution in terms of climate change, improved farm revenues and more efficient farming systems.

"ICSA is anxious that biogas opportunities are progressed as early as possible in the New Year and we expect that the consultation process will be expedited," said Mr Kent.

Meanwhile, Paddy O'Toole of Quinns of Baltinglass said the RHI scheme's introduction was "a very positive development".

He predicted that farmers would react positively to the initiative which he said had now put a framework in place to facilitate the production and use of biomass crops.

"I am delighted with the news that the scheme is now finally in place," Mr O'Toole said.

Indo Farming