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"Optimal" use of biomass for energy in Europe: Consideration based upon the value of biomass for CO₂ emission reduction, Oleksandr Khokhotva, The International Institute for Industrial Environmental Economics (2004), 68 pp.

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Executive Summary

The majority of energy consumed in Europe has fossil origins and the environmental impact of energy sector is large. In addition to the pollutants that fossil fuels emit when burning, they release also CO₂, which is a green house gas, thus contributing to climate change. Another issue related to fossils fuel consumption is security of energy supply. The import of fossil fuels in Europe is large and is increasing over time. There are two main reasons for importing fuels: oil and natural gas are imported because of a European resource deficit; coal is imported because import prices are lower compared to the costs of coal extraction from the European coal mines.

EU has committed itself to reduce its CO₂ emissions by 8% by 2010 compared to the level of 1990. One important pathway is to utilise biomass. Contribution of biomass to CO₂ emission reductions and security of energy supply in Europe is discussed in the study. There are three basic markets for biomass application: heat, electricity and automotive fuel. They all have different potential to influence CO₂ emission reduction. The actual effect depends on a combination of the energy crop chosen, the conversion technology or the conversion pathway. The policy measures are discussed for the most desirable, from carbon dioxide emission reduction point of view, biomass allocation option.

A number of biomass conversion pathways are available according to the feedstock used. Among the varieties of biomass, dedicated energy crops are worth a special attention, though crops traditionally used for other than energy purposes can also be adapted for energy production. Because of competition for land, which can be used for a wide range of goals, parameters such as high yield and significant overweighing of the energy output over energy input are probably the main ones that justify the use of land for growing of energy crops. Crops with ratio output/input lower than 2 (oil and ethanol crops, excluding sugar beet) most likely cannot be considered as viable energy crops. For the crops that are not usually associated with bioenergy, such as for food, in the most cases, outputs are low. Crops with low output are valid for other (food, forage, fibres) but not energy purposes. The fact that output/input ratios for crops that are used as solid biofuel are much higher than for liquid biofuels indicates that from an environmental point of view, solid biofuel has much higher benefits than liquid biofuels.

The conversion pathways of biomass into heat, power and automotive fuels are also considered in this thesis. Direct biomass combustion, including co-firing with fossil fuel, and the gasification are utilised for heat and electricity generation. Electricity generation from biomass via combustion and steam cycle is a well established technology. Co-firing of biomass with fossil fuel (generally coal) in thermoelectric power stations is a simple and efficient method of energy generation.

The gasification route is applied in several market segments of which Integrated Gasification and Combined Cycle (IGCC) for Power is the most interesting. It is a combination of gasification process with heat and power co-generation. Gasification is flexible in the fuels used and in combination with CHP can generate almost as much as twice more electricity compared to boiler systems. Estimated efficiency is around 44-50%. The energy ratio output/input of a biomass fuel chain ending in IGCC with gas and steam turbines is calculated to be 8 for just electricity production and 15 if case of combined heat and power generation.

The use of biomass as a substitute for coal provides direct carbon emission reduction 0.5-0.6 tonne of C per each of biomass used or 0.8 tonne of coal substituted. Assuming annual yield of biomass feedstock from dedicated plantations at 10 dry tonne per hectare, each hectare can save 5-6 tonne of carbon (18-22 tonne of CO₂). In such instances, net CO₂ emission of biomass-to-power chain constitutes around 5% of coal-to-power chain.

Several pathways for automotive fuel production are available, however, only a few are technologically developed and are on commercial scale at the present time. They are the etherification of vegetable oil for biodiesel production and fermentation of sugar/starch containing crops for ethanol production.

Net renewable energy content of biodiesel (RME) in the final product is 65-70%. The use of 1 tonne of biodiesel instead of fossil diesel results in around 2-2.5 tonne of CO₂ emissions avoidance. Net renewable content of ethanol from wheat is just on 20-40% depending on system efficiency.

So, considering carbon emission reduction, the most beneficial use of biomass energy with current available conversion technologies is heat and power generation. This conversion pathway offers the best route for carbon dioxide emission reduction. Combined heat and power generation gives the most complex and efficient use of biomass resources. If Europe is serious about aiming for a 8% CO₂ emission reduction by 2010 compared to 1990, then a rapid reduction of fossil fuel use is required. Co-firing is a solution for the fast expansion of biomass-derived power through existing coal-fired plants.

However, under a scenario of maximization of carbon emission reduction, biomass will be used as a solid fuel in power plants and will substitute coal, reserves of which in Europe are abundant. Thus, when contributing to CO₂ emission reduction, biomass in this way will not significantly affect security of energy supply.

If Europe is most concerned about establishing security of energy supply, priorities of biomass application should be changed towards production of biofuel for the transport sector in order to replace oil and reduce its import into EU. However, this biomass allocation option is not cost-effective in short term due to the high production costs of biofuels. If the region attempted to reduce carbon emission by only automotive fuel substitution, Europe most likely will not be able to reach its target by 2010 because it will not be possible to introduce such a significant amount of liquid biofuels into the market in short term due to higher production cost of biofuel compared to fossil petrol and diesel.

Bioelectricity, as well as electricity from other renewable energy sources, requires legislative and financial support. Taxation of carbon emissions, GHGs emission trading can improve the economics of bioenergy production. Financial measures like aids, tax deduction and financial support would promote rather ambitious EU€s targets regarding share of biomass in particular and renewables in general in energy generation. The very promising mechanism to help EU Member States to fulfil their obligations of renewable energy consumption is a combination of targeting with international renewable electricity trading. The extent to which renewable energy is exploited is likely to be determined by cumulative effect of supportive measures.

There exist EU directives with targets for renewable electricity and automotive fuels. With carbon emission quota system, it is not difficult to create policy measures for efficient CO₂ emission reduction. However, it is much more difficult to design policy measures to influence security of energy supply.