Energy crop production costs in the EU

The objective of this study was to calculate indicative ranges of production costs and assess the main sources of cost for a number of energy crops, both annual and perennial, on a regional level in Europe. The production costs were calculated in terms of the economic compensation required by the farmer in order to grow the crop, and therefore include not only the cost of cultivation, but also the costs of land and risk, which are often omitted in production cost calculations. The cost of land was calculated as the opportunity cost based on the production of cereals. Thus, higher food prices lead to higher land costs, which in turn lead to higher energy crop production costs. The analysis was performed for three cases with different assumptions concerning yields and production cost reductions resulting from scale (total cultivation area in the region), and learning effects. The calculated energy crop production costs were found to be consistently lowest for short-rotation coppice (SRC) crops and highest for annual straw crops. The production costs of SRC crops were calculated to be about 4-5 EUR GJ-1 under present conditions and 3-4 EUR GJ-1 under improved future conditions. The production costs for perennial grasses were calculated to be about 6-7 EUR GJ-1 and 5-6 EUR GJ-1 under present and improved future conditions, respectively. The production costs for annual straw crops were estimated to be 6-8 EUR GJ-1 under present conditions with small potential for cost reductions in the future. (author)