Biomass for electricity in the EU-27: Potential demand, CO₂ abatements and breakeven prices for co-firing

This paper analyses the potential of biomass-based electricity in the EU-27 countries, and interactions with climate policy and the EU ETS. We estimate the potential biomass demand from the existing power plants, and we match our estimates with the potential biomass supply in Europe. Furthermore, we compute the CO2 abatement associated with the co-firing opportunities in European coal plants. We find that the biomass demand from the power sector may be very high compared with potential supply. We also identify that co-firing can produce high volumes of CO₂ abatements, which may be two times larger than that of the coal-to-gas fuel switching. We also compute biomass and CO2 breakeven prices for co-firing. Results indicate that biomass-based electricity remains profitable with high biomass prices, when the carbon price is high: a Euros 16–24 (25–35, respectively) biomass price (per MWh_prim) for a Euros 20 (50, respectively) carbon price. Hence, the carbon price appears as an important driver, which can make profitable a high share of the potential biomass demand from the power sector, even with high biomass prices. This aims to gain insights on how biomass market may be impacted by the EU ETS and others climate policies. - Highlights: • Technical potential of biomass (demand and CO₂ abatement) in European electricity. • Calculation for co-firing and biomass power plants; comparison with potential biomass supply in EU-27 countries. • Calculation of biomass and CO₂ breakeven prices for co-firing. • Potential demand is 8–148% of potential supply (up to 80% of demand from co-firing). • High potential abatement from co-firing (up to 365 Mt/yr); Profitable co-firing with €16-24 (25–35) biomass price for €20 (50) CO₂ price