Eucalyptus plantations for electricity generation: the cost of carbon dioxide abatement in Thailand

Abstract

Short-rotation plantations are expected to play an important role in the transition towards renewable energy, in particular in many developing countries. At present, developing countries do not have any carbon dioxide (CO2 ) abatement targets under the Kyoto Protocol, but CO2 mitigating projects might nevertheless be carried out through the Clean Development Mechanism (CDM). The purpose of this paper is to analyse: i) the economics of eucalyptus production in the east and northeast of Thailand and ii) the cost of substituting eucalyptus wood for fossil fuels for electricity production. The productivity of eucalyptus plantations is estimated at 7–11 dry ton/hectare(ha)/year over a rotation period of 3 to 5 years. The levelised cost of eucalyptus wood delivered to the factory gate is estimated at 13–18 USD/fresh ton (1.2–1.7 USD/GJ). If eucalyptus wood is used for electricity generation, the cost of electricity generation would be 6.2 US cents/kWh, and consequently the cost of substituting a wood-fired plant for a coal-fired plant and a gas-fired plant would be 107 and 196 USD/ton-C, respectively. The extent to which eucalyptus plantations could offer economically attractive options for electricity generation and CO2 abatement depends, among other things, on the cost of reducing CO2 emissions in the Annex 1 countries and CO2 mitigation options in developing countries. In addition, it depends on the economics of eucalyptus production as seen by farmers. There are also several other factors that affect an increased establishment of eucalyptus plantations in Thailand. The potential land-use change impact as well as the social and environmental impact associated with establishing mono-culture eucalyptus plantations as a CO2 abatement strategy are, however, not analysed in this paper and should be further investigated.