Farmers will be able to obtain funding to set up small anaerobic digestion (AD) plants under a Government-funded loan scheme.
The £3 million initiative will allow farmers to apply for up to £400,000 from the AD Loan Fund to help them finance on-site technology.
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 of the cost.”
The fund is administered by WRAP and is split into two phases. Farmers can apply for funding to develop a business case to find out if AD 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.
WRAP chief executive Liz Goodwin 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.”
