Economic factors influencing potential use of cellulosic crop residues for electricity generation

• Crop residues with higher heat content have greater market opportunities.
• Improvement in crop and residue yields does not have much impact on biopower production.
• Advancement in biopower production technology does not encourage more use of crop residues.
• The main factor that induces biopower production is an increase in future carbon prices.

This study examines cellulosic crop residues for biopower production in the context of (greenhouse gas) GHG emission mitigation. We employ sector modeling to simulate future market potential for biopower production from crop residues. Our findings suggest that in order for crop residues to have any role in electricity generation either the carbon or (carbon dioxide) CO2 equivalent GHG price must rise to about 15 dollars per ton or the price of coal has to increase to about 43 dollars per ton. We find that crop residues with higher heat content have greater opportunities in biopower production than the residues with lower heat content. In addition, our evidence shows that improvements in crop yields do not have much impact on biopower production. However, the energy recovery efficiency does have significant positive impact but only if the CO2 equivalent price rises substantially. Moreover, our analysis indicates the desirability of cofiring biomass as opposed to 100% replacement because this reduces transportation cost and increases the efficiency of heat recovery. In terms of policy implications, imposing carbon emission pricing could be an important step in inducing electric power producers to include biomass feedstocks in their fuel-mix power generation portfolios and achieve GHG emission reductions.