* European Union has ambitious goals to cut carbon emissions
* UK says could use 4 pct of farmland to grow woody crops
* May supply tiny fraction of heating demand, displace food
By Gerard Wynn
LONDON, Jan 10 (Reuters) - Record high world food prices threaten to limit the use of land for low-carbon energy crops just as British efforts to pioneer growth of the giant grass miscanthus in Europe are poised to gather pace.
Miscanthus giganteus is a 3-metre high Asian elephant grass whose tawny leaves are now at their tallest before harvesting next month.
The grass is being promoted alongside willow, sawdust and straw as biomass for producing heat and power when burned, without causing net emissions of greenhouse gas carbon dioxide.
In the future it may also be a critical feedstock for a new generation of liquid transport fuels made from non-food crops.
Britain is leading trials of the crop in Europe, with harvests growing more than tenfold in the past five years to an area twice the size of Manhattan, government data show.
That could expand quicker as the country tries to meet ambitious European Union targets for renewable energy.
"I applaud it," said Peter Harper, head of research and innovation at the Centre for Alternative Technology in Wales, although adding that achievements so far are still limited.
"It's a drop in the ocean of what we need. We need experience."
Britain told the EU last year it had a "theoretical potential" to plant 7,000 square km (2,703 sq miles) of miscanthus and other woody crops by 2020, about 4 percent of the country's farmed area, to help meet its clean energy goals.
"Crops like miscanthus can certainly play a key role," said a UK energy and climate change ministry spokesman.
Also driving adoption in Europe are rising penalties on emissions of carbon dioxide (CO2) from burning fossil fuels. All west European power generators will have to buy a permit for every tonne of CO2 emissions from 2013.
"We're looking to see how we can increase the amount of biomass that we burn at Drax," said Rob Wood, buyer at Britain's biggest coal plant and carbon emitter. <DRX.L>
"(Since) summer 2009 we've entered into contracts with over 100 growers within a 100-mile radius of Drax power station for the supply of miscanthus."
Drax has the world's biggest coal and biomass co-burning facility, able to use 1.4 million tonnes a year of plant material to drive a steam turbine and generate electricity.
Burning biomass returns to the atmosphere the same carbon dioxide that the plants took up when they were growing, and so can cut net emissions compared with fossil fuels.
Britain is promoting energy crops under a programme to meet a binding EU commitment to get 15 percent of its energy from renewable sources by 2020, compared with about 3 percent now.
Growth may be limited by concerns that it will compete with food crops, however, especially as Britain has limited land.
Last month the United Nations' global food price index reached record levels and the use of crops to produce energy raises questions over competition for land. [ID:nLDE7041BM]. The U.N. food price agency said this week key grains prices could climb yet further as weather patterns give cause for concern.
Drax said it would not contract farmers planning to convert from cereals such as wheat and added that miscanthus was unlikely to be economic on high-grade land, given the elevated grain prices.
"Landowners in more densely populated centres will inevitably find more profitable uses for their land," said Peter Sharratt, at consultancy firm WSP Environment and Energy.
"This makes biomass far less viable and raises some serious sustainability issues as we displace local food production in favour of energy cropping or create a new dependency on large scale biomass imports."
WSP calculated that planting energy crops on a fifth of Britain's arable land would meet just 10 percent of the UK's heating demand.
Similar concerns have been long expressed over the huge market in transport biofuels, produced from food crops including corn, sugar and oilseed. About 40 percent of the U.S. corn crop is currently used to make ethanol to drive cars. [ID:nLDE6AL19E]
Researchers are developing enzymes that break down fibre in grass, wood and waste into sugars, which can be converted to alcohol for an alternative biofuel using non-food feedstocks.
But their use of land could still displace crops.
Experts say new UK planting of miscanthus disappointed last year, reflecting poor awareness among farmers, while big UK producer Bical went bankrupt in 2009, partly due to unpredictable government support.
Planned incentives for small-scale, low-carbon heating in businesses, homes, schools and hospitals would spur the crop, said Lucy Hopwood, land and agriculture manager at the UK-based National Non-Food Crops Centre.
"It's looking more attractive. New planting techniques and varieties are helping," she added.
Better promotion among farmers was also needed, said Mike Cooper, commercial manager at Renewable Energy Crops, which has contracts with about 400 British farmers to grow miscanthus.
"If government only said that they needed perennial energy crops. Farmers understand that there's a demand for food but no-one's making plain that there's a demand for energy crops."
Miscanthus needs little or no manufactured fertiliser, and is harvested annually over a 15 to 20 year period.
"It is a beast of a crop," said one former grower, Ross Dickinson, based in the southwest of England, referring to its prolific output.
"From the farmers' point of view it has its place. After establishment, apart from cutting it down and baling it, there are no input costs." (Reporting by Gerard Wynn, Editing by Anthony Barker)
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