Supply chain costs of biomass cofiring, CCC/286

ABSTRACT

In order for cofiring to continue to play a long-term role in a greenhouse gas emissions reduction strategy it must be competitive with other emission reduction technologies. The recent decrease in the cost of competing renewable technologies and the increasingly stringent requirements regarding the sustainability criteria associated with biomass utilisation have the potential to impact negatively the attractiveness of cofiring. In this report, the supply chain costs and emissions associated with the production, transportation and utilisation of wood pellets, the preferred type of biomass used in electricity production, are assessed. This analysis was then used to estimate the levelised cost of electricity and the cost of CO2 abatement which are compared to solar and wind generation to determine the competitiveness of cofiring. At the current time cofiring can be competitive with other renewable technologies. The future competitiveness of cofiring is uncertain as it is dependent on a number of market and policy factors. The most important factor is the future demand for biomass in emerging markets and its implication for internationally traded wood pellet prices and future government policy, in particular the introduction of more stringent sustainability criteria. It is suggested that cofiring can still play a role in a long-term emission reduction strategy especially in areas where the supply is located close to demand.