The impact of different energy policy options on feedstock price and land demand for maize silage: the case of biogas in Lombardy

The growing demand of maize silage for biogas production in Northern Italy has triggered an intense debate concerning land rents, maize prices and their possible negative consequences on important agri-food chains. The aim of this work is to quantify the extent to which the rapid spread of biogas raised the maize price at regional level, increasing the demand of land for energy crops. For this purpose we applied a partial-equilibrium framework simulating the agricultural sector and the biogas industry in Lombardy, under two alternative schemes of subsidization policy. Results show that policy measures implemented in 2013 – reducing the average subsidy per kWh – may contribute to enforce the complementarity of the sector with agri-food chains, decreasing the competition between energy and non-energy uses. Compared to the old scheme, maize demand for biogas would decrease , lessening the market clearing price (as well as feed opportunity cost for livestock sector) and reducing land demand for energy purposes.