Assessing the environmental externalities for biomass- and coal-fired electricity generation in China: A supply chain perspective

Abstract

Biomass power in China is usually regarded as less economically competitive than coal power, partially because the external costs of power generation technologies' effects on human health and the environment are always neglected. To understand the real economic performance of biomass- and coal-fired power in China, a hybrid life cycle inventory modeling approach was developed to estimate the fuel-to-electricity environmental emissions and complete (direct and external) economic costs of the two fuel options. The results show that the direct economic cost of biomass power is 0.44 Chinese yuan (CNY) per kilowatt-hour, about 25%-37% higher than that of coal power. However, because of the significant emissions of greenhouse gas and PM_2.5 pollutants during power generation, the external cost of coal-fired power is estimated at 0.17 CNY/kWh on average, substantially higher than that of biomass power (0.06 CNY/kWh). Thus, the economic situations of biomass power reverse when environmental externalities are considered. Specially, wood residue-fired electricity has the lowest complete economic cost (0.48 CNY/kWh), approximately 2%-14% less than that of coal power. Therefore, a reasonable and comprehensive cost accounting mechanism is crucial for the development of the biomass power sector in China. Additionally, win-win policies could be developed to improve the environmental and economic performance of the country's power generation industry.

Keywords: Biomass power; Coal power; Environmental externality; Life cycle assessment; Supply chain.