(2)

In Part 3, the following point shall be inserted: ‘3.4a. Addressing the new challenges Community strategic guideline Climate change, renewable energy, water management, biodiversity (including related support for innovation) and dairy restructuring are crucial challenges for Europe's rural areas, agriculture and forestry. As part of the EU global climate change strategy, agriculture and forestry will be called upon to make a greater contribution to curbing greenhouse gas emissions and increasing carbon sequestration. Increasing production of renewable energy from agriculture and forestry biomass should also help to meet the new EU targets for total fuel and energy consumption by 2020. More sustainable water management practices in agriculture will be essential to ensure sufficient quantity and quality of water for the future, and to adapt to the projected climate change impacts on water resources. Furthermore, halting biodiversity decline remains a major challenge. Support for innovation related to the above-mentioned new challenges may facilitate the implementation of these priorities. In view of the expiry of the dairy quota regime, the need for restructuring in agriculture will increase. In this context, rural development measures will be an important accompaniment to the reforms in the dairy sector. The additional resources which will be made available as of 2010 by an increase in compulsory modulation should be devoted to reinforcing the Community action in the fields of climate change, renewable energy, water management, biodiversity and dairy restructuring. In order to meet these priorities, Member States are encouraged to focus support on key actions. Such key actions may include the following types of operations: (i) In particular, investment support under axis 1 can be targeted towards energy, water and other input saving machinery and equipment as well as to the production of renewable energy for on farm use. In the agriculture and food sector and in the forestry sector, investment support should help to develop innovative and more sustainable ways of biofuel processing. (ii) Under axis 2, the agri-environment measures and forestry measures can be used in particular to enhance biodiversity by conserving species-rich vegetation types and protecting and maintaining grassland and extensive forms of agricultural production. Specific actions under axis 2, such as agri-environment measures or afforestation, can also help to improve the capacity to better manage the available water resources in terms of quantity and protect them in terms of quality. Furthermore, certain agri-environmental and forestry actions contribute to curbing emissions of nitrous oxide (N2O) and methane (CH4) and help to promote carbon sequestration. (iii) Under axis 3 and 4, local scale projects and cooperation for renewable energy projects can be supported as well as diversification of farmers into bioenergy production. Conservation of natural heritage can help in protecting high-nature-value habitats and high-value water bodies. (iv) As all rural areas are being confronted with the climate change and renewable energy issues, Member States can encourage the local action groups under axis 4 (Leader) to pick up these issues in their local development strategies as a cross-cutting theme. The groups are well placed to contribute to climate change adaptation and renewable energy solutions tailored to the local situation. (v) Innovation has the potential to achieve particularly positive effects in meeting the new challenges of climate change, the production of renewable energies, more sustainable water management practices and halting biodiversity decline. Support for innovation in these areas could take the form of encouraging the development, take-up and application of relevant technologies, products and processes. (vi) As a general principle, support shall be targeted on types of operations which are coherent with the objectives and provisions established in Regulation (EC) No 1698/2005 and which contribute to generating positive potential effects in view of the new challenges such as those specified in Annex II to that Regulation.’.