The scheme is open to producer groups and businesses which qualify as small or medium-sized enterprises (SMEs). It applies to the following crops short rotation coppice (willow, poplar, alder, ash, hazel, lime, silver birch, sweet chestnut and sycamore), miscanthus, switch grass, reed canary grass, prairie cord grass, rye grass, straw, woodfuel from forestry, arboricultural tree management and primary processing plus other energy crops at Defra's discretion.
Grants can cover administrative set-up costs, the purchase or rental of specialist capital items and training.
Environment minister Phil Woolas said: 'We have to rethink our energy mix. We know biomass has the potential to considerably reduce our dependence on fossil fuels and cut our carbon emissions.
“UK producers are setting the standard and have shown production can be sustainable and our investment will support their commitment to this emerging industry.
'The fund will inject cash at the point of production. By investing in the biomass industry we are helping farmers, foresters and other producers to diversify and become part of the environmental industry sector which is currently worth more than £25 billion and growing.'
All projects must be based in England and must supply the biomass to end-users in Great Britain.
The deadline for business applications is 5 August with the deadline for producer groups is 5 September.