Farmers will be able to obtain funding to set up small anaerobic digestion (AD) plants under a government-funded loan scheme which opens today.

The technology turns waste into energy, reduces greenhouse gas emissions and produces a renewable source of bio-fertiliser.

The £3million initiative, announced by Environment Secretary Owen Paterson today, will allow farmers to apply for up to £400,000 from the AD Loan Fund to help them finance on-site AD technology.

The technology will save farmers money on energy costs and even boost their income if they export electricity to the grid. They will also be entitled to government incentives for producing renewable energy.

In addition, they can use the bio-fertiliser produced by the AD process to replace some of the artificial fertilisers they would otherwise have to buy.

The use of this form of technology on farms is an essential part of the government’s plans to invest in infrastructures to help businesses grow and boost the rural economy.

Environment Secretary Owen Paterson said, "Dealing with waste and recycling properly is good for the environment and can boost economic growth and create jobs.

"This funding provides an opportunity for farmers across the country to consider whether AD technology is right for their farms, in order to cut waste, reduce greenhouse gas emissions and recycle valuable nutrients back to the land.

"Farmers who would have otherwise struggled to get finance to set up a small scale AD plant will be able to apply for a loan for up to 50 per cent the cost."

Liz Goodwin, CEO of WRAP, said, "The use of small-scale anaerobic digestion on farms to treat manures and slurries has a number of economic and environmental benefits and is an excellent example of the circular economy in action.

"However, access to finance for on-farm AD has been difficult, especially for small scale operations. Currently there is no targeted financial support available to increase this capacity. The On Farm AD Fund has been designed to both attract funding into the sector, and to provide support and materials for farmers to help them access finance in the future."

The fund, which will be administered by WRAP, is split into two phases. Farmers can apply for funding to develop a business case to find out if anaerobic digestion is the right solution for them in dealing with waste. They can then apply for a loan of up to £400,000 to fund up to 50 per cent of the overall costs of the AD plant.

To find out more about the application process visit here