Economics of co-firing rice straw in coal power plants in Vietnam

As governments forced electricity producers to use more renewable energy sources, over a hundred thermal power plants in high-income countries turned to biomass as a partial or complete replacement for coal. Is the co-firing technology appropriate for Vietnam? To assess the technology we build an integrated model simulating the economics, environmental and social implications of blending 5% of rice straw in two existing coal power plants in Vietnam. The business value of co-firing is positive –straw is cheaper than coal– but not large enough to motivate the stakeholders. The external social benefit of co-firing –reduced air-borne pollution– are several times larger than the business value. Within that external benefit, the social value of avoided PM2.5 and NOx emissions dominates the social value of avoided CO2 emissions. The net job creation effect is positive: collecting straw creates more employment than using less coal destroys. This is the first technology assessment of co-firing biomass in coal power plants in Vietnam and one of the first for a subtropical middle-income country. The study only considers rice straw, and it does not address the role of government nor the biomass market functioning. The price of coal is the primary determinant of co-firing business value. There is an empirical economic justification for a public intervention to promote co-firing biomass in Vietnam, mainly as a way to reduce open-field straw burning. Local air quality goals, rather than greenhouse gas reduction policy, can justify such regulations.