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The case of co-firing: The market level effects of subsidizing biomass co-combustion


  • Lintunen, Jussi
  • Kangas, Hanna-Liisa


Biomass combustion in co-firing power plants has been treated differently in renewable electricity promoting policy schemes. Some policy schemes subsidize biomass co-combustion while some do not. In this study, we analyze the impacts of a policy choice on the fuel uses, investment decisions, CO2 emissions, and on the values of renewable electricity promoting policy instruments. In particular, we look at the impacts of feed-in tariff and a subsidy to renewable energy, both together with CO2 emissions price. We present an electricity and heat market model, where all the solid fossil fuel power plants are able to co-fire biomass and fossil fuel. In the numerical application, the model is used to analyze the differences caused by the policy instruments. The results show that subsidizing biomass combustion in a co-firing power plant decreases the investments in pure renewable technology. However, the use of solid fossil fuels is not increased significantly. Also, the CO2 intensity levels of electricity production are nearly equal whether biomass co-combustion is subsidized or not.

Suggested Citation

  • Lintunen, Jussi & Kangas, Hanna-Liisa, 2010. "The case of co-firing: The market level effects of subsidizing biomass co-combustion," Energy Economics, Elsevier, vol. 32(3), pages 694-701, May.
  • Handle: RePEc:eee:eneeco:v:32:y:2010:i:3:p:694-701

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    References listed on IDEAS

    1. Menanteau, Philippe & Finon, Dominique & Lamy, Marie-Laure, 2003. "Prices versus quantities: choosing policies for promoting the development of renewable energy," Energy Policy, Elsevier, vol. 31(8), pages 799-812, June.
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    3. Amundsen, E.S. & Mortensen, J.B., 2001. "The Danish Green Certificate System: Some Simple Analytical Results," Norway; Department of Economics, University of Bergen 226, Department of Economics, University of Bergen.
    4. Kangas, Hanna-Liisa & Lintunen, Jussi & Uusivuori, Jussi, 2009. "The cofiring problem of a power plant under policy regulations," Energy Policy, Elsevier, vol. 37(5), pages 1898-1904, May.
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    7. Hansson, Julia & Berndes, Gran & Johnsson, Filip & Kjrstad, Jan, 2009. "Co-firing biomass with coal for electricity generation--An assessment of the potential in EU27," Energy Policy, Elsevier, vol. 37(4), pages 1444-1455, April.
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    Cited by:

    1. Mäkelä, Matti & Lintunen, Jussi & Kangas, Hanna-Liisa & Uusivuori, Jussi, 2011. "Pellet promotion in the Finnish sawmilling industry: The cost-effectiveness of different policy instruments," Journal of Forest Economics, Elsevier, vol. 17(2), pages 185-196, April.
    2. Vincent Bertrand & Sylvain Caurla & Elodie Le Cadre & Philippe Delacote, 2017. "Heat or power: how to increase the use of energy wood at the lowest costs?," Working Papers 2017-12, CRESE.
    3. Kangas, Hanna-Liisa & Lintunen, Jussi & Pohjola, Johanna & Hetemäki, Lauri & Uusivuori, Jussi, 2011. "Investments into forest biorefineries under different price and policy structures," Energy Economics, Elsevier, vol. 33(6), pages 1165-1176.
    4. Aatola, Piia & Ollikainen, Markku & Toppinen, Anne, 2013. "Impact of the carbon price on the integrating European electricity market," Energy Policy, Elsevier, vol. 61(C), pages 1236-1251.
    5. Lüschen, Andreas & Madlener, Reinhard, 2010. "Economics of Biomass Co-Firing in New Hard Coal Power Plants in Germany," FCN Working Papers 23/2010, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
    6. Moiseyev, Alexander & Solberg, Birger & Kallio, A. Maarit I., 2014. "The impact of subsidies and carbon pricing on the wood biomass use for energy in the EU," Energy, Elsevier, vol. 76(C), pages 161-167.
    7. P. Mathiou & Stelios Rozakis & Rafal Pudelko & A. Faber, 2012. "Economic and spatial modelling for estimating supply of perennial crops’ biomass in Poland," Working Papers 2012-2, Agricultural University of Athens, Department Of Agricultural Economics.
    8. P. Mathiou & Stelios Rozakis & Rafal Pudelko & A. Faber & A. Petsakos, 2014. "Utility maximising supply response: the case of perennial biomass plantations in Poland," Working Papers 2014-3, Agricultural University of Athens, Department Of Agricultural Economics.
    9. Devlin, Ger & Talbot, Bruce, 2014. "Deriving cooperative biomass resource transport supply strategies in meeting co-firing energy regulations: A case for peat and wood fibre in Ireland," Applied Energy, Elsevier, vol. 113(C), pages 1700-1709.
    10. Aravena, Claudia & Hutchinson, W. George & Longo, Alberto, 2012. "Environmental pricing of externalities from different sources of electricity generation in Chile," Energy Economics, Elsevier, vol. 34(4), pages 1214-1225.


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