Minister for Finance Brian Cowen today urged farmers to capitalise on opportunities offered by Ireland's commitment to reduce carbon emissions.
Addressing an Irish Farmers' Association (IFA) conference on bioenergy production, Mr Cowen said new markets were emerging for renewable energy such as biofuel and biomass.
"The development of this sector is an opportunity for farmers to diversify and seek new investment opportunities beyond traditional farming outlets," he said.
Ireland must reduce its dependence on fossil fuels for environmental and economic reasons and has made commitments to this effect under the Kyoto Protocol. Motor emissions, power generation and domestic heating are areas in which renewable energy is seen as a vaible alternative to carbon fuels.
Mr Cowen said the Government had set "ambitious" targets for the development of the biofuel market, with penetration of 5.75 per cent by 2010. Half of the 5 per cent target renewable heat sources by 2010 would come from biomass, he added.
A 30 per cent target for co-firing biomass at peat-fired generating stations had also been set.
"The three peat-burning stations in Ireland burn a total of 3 million tonnes of peat and estimates suggest that 30,000 hectares of energy crops could replace 10 per cent of this peat. This initiative alone would significantly stimulate the market for biomass products in Ireland."
An interdepartmental taskforce on bioenergy was also producing "a road map" on the development of bioenergy resources to 2020.
Mr Cowen said there was considerable potential for the production of wood biomass, which is currently the most-used renewable fuel in Ireland, used mainly in the wood processing industry and for domestic heating.
He said existing grants for forestry were "very attractive" and that support for wood energy would continue under the Rural Development Programme (2007-2013) with supports for investment in processing equipment.
Mr Cowen said the food sector would receive strong support through a range of measures costing €7 billion in the new Rural Development Programme covering 2007 to 2013.
He also said he was pleased farming organisations had accepted the new social partnership agreement Towards 2016, saying it would help "deliver a strong, viable and commercial agricultural sector".