Externalities of bio-energy in Dutch and British regions - A preliminary analysis

Abstract

This paper addresses a number of externalities associated with bio-energy systems and the possible methods of assessing them. Three situations are examined: (a) electricity production from biomass compared with coal based power generation in the Netherlands, (b) comparison of some external costs of SRC-Willow production for electricity generation with harvesting biomass residues for heat generation at farm level in the U.K., and (c) comparison of a wood fired and oil fired heating system heating system at farm level in the U.K.. The approach taken uses generic data from other studies for the valuation of environmental externalities (air emissions, agrochemical use and nitrogen leaching). Direct and indirect economic effects (GDP increment and employment benefits) are also taken into account. Calculations show economic benefits of biomass compared to coal which can assist in overcoming a significant difference in production costs between the two. Comparing residue use for small scale heat production with advanced bio-energy systems (BIG/CC) shows that the external costs of both systems are similar. However, under particular conditions small scale heat production may result in greater direct employment benefits and, generally, advanced bio-energy systems will result in higher environmental costs because of the influence of agrochemical and fertiliser use. Consideration of external costs, damages from CO2 emissions in particular, could make wood heating systems more competitive with respect to oil fired systems. Quantitative outcomes shown here should not be considered as the external costs of the fuel cycles considered. Many impacts have not been valued and large uncertainties persist e.g. with respect to the costs of climate change and numerous dose-response relations. Hence, present state-of-the-art knowledge on external costs is far from allowing optimal resource allocation through market forces. However, the present insights already obtained provide a rationale for greater support for bio-energy.