Effect of greenhouse gas emissions trading on investment decisions for biomass-to-energy production

Abstract

Despite the significant boost that some renewable energy sources have undergone lately, partly promoted by the favourable EU legislation, biomass seems to face difficulties in realising its expected share in energy production. Some major reasons for this are the complexity of a bioenergy system and its related fuel supply chain, the wide variety of available technologies and most importantly the low and uncertain financial yield of bioenergy projects. This paper utilizes an innovative generic methodology for performing investment analysis in parallel with optimization of the location and the key characteristics of the biomass-to-energy project. This methodology may serve as a decision support tool for potential investors and may assist in promoting relevant investment decisions. The model developed focuses on the holistic optimization of the design and operational characteristics of a biomass energy conversion facility, including the discrete phases of biomass logistics, energy conversion and final energy products supply. The innovative ideas of using multiple biomass sources as well as employing tri-generation for district energy applications aim at proposing a more cost-effective system layout for biomass energy exploitation. In addition to these ideas, the recent issue of emissions trading and its potential impact on a bioenergy project is investigated in this paper. The analysis performed concludes that emissions trading is of extremely high importance for biomass-to-energy projects, as it may prove to be a major revenue stream.