Cost Competitiveness

Under current market conditions, except for a few special cases like mill residues, forest biomass in general is still hard to compete with coal and oil for energy production in terms of production cost. Even the relatively economical source of biomass, logging residues, is not yet cost competitive with coal for electricity production. However, electricity generation using logging residues represents an economically viable option for carbon dioxide emission mitigation. With proper incentives provided to producers and/or consumers, forest biomass and bioenergy markets are likely to emerge.

The production costs of delivered logging residues are about $30/dry ton with a transportation distance of less than 100 km, compared to about $50/dry ton for short rotation woody crops and $30-50/dry ton for fuel treatment thinning. The cost of electricity generated from logging residues is estimated at a range from $50/MWh to $80/MWh depending upon the technologies used and the scale of power plants, significantly higher than that of coal-generated electricity. A minimum carbon tax of $25 per ton of carbon dioxide or a 25% reduction in global greenhouse gas emissions would be needed in order to make bioelectricity generated from logging residues competitive.

This section delves into the production costs of forest biomass and bioenergy and their cost competitiveness with similar products on the market. Topics include the costs associated with:

• Feedstock Production: Biomass harvesting, transporting, and processing 
• Electricity Production: Bioelectricity as compared to coal-generated electricity 
• Carbon Displacement: Carbon dioxide emission displacement from bioelectricity relative to other carbon dioxide mitigation options