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Seeking Consensus on the Externalized Cost of Bioenergy

What is meant by “externalized costs”?

Externalized costs are real costs that are not quantified within the levelized cost calculations presented in the internalized cost articles. These costs are directly or indirectly paid by various sectors of the economy in forms such as pollution-related health costs, grid integration costs of intermittent renewables, and a reduction in the free services rendered by the biosphere.

Externalized costs of bioenergy

Assessing the environmental impacts of bioenergy is complex due to issues such as land use impacts, soil carbon changes and avoided environmental burdens of residual biomass. The trend regarding new capacity expansion is definitely a move away from first-generation biofuels from crops due to the limited (if any) environmental benefit relative to oil. This article will therefore only focus on biomass that does not compete with food production.

Electricity and heat

Biomass combustion for electricity and heat offer a simple use for fibrous biomass and biomass waste that is more challenging to turn into biofuels. For this reason, environmental impacts of electricity and heat from biomass is generally quite mild.

A fairly recent review of bioenergy literature resulted in the following summary graphs for global warming potential, acidification potential and eutrophication potential.

The median global warming impact of 137 gCO2/kWh is about 6 times lower than an equivalent coal plant. SO2 emissions at 6.3 gSO2/kWh, however, are much higher than that of a modern coal plant (<1 g/kWh). The same for eutrophication potential. However, another review paper shows significantly lower SOx and NOx emissions from biomass power plants compared to coal plants. Given this conflicting data, it seems reasonable to assume the same pollution external cost assigned to coal plants: $23/MWh.

We will assume a 50/50 split between deployment in developed and developing nations, yielding a CO2 cost of $36/ton. When assuming the value of local pollution at $23/MWh for developed nations and zero for developing nations, the total externality amounts to $16/MWh. For perspective, the internalized cost of electricity from biomass was estimated as $101/MWh.

The pollution impacts of using biomass directly for heat in the above graphs are much lower. Under the same assumptions, the external cost amounts to $0.7/GJ. Internalized costs amounted to $7/GJ.

The combined electricity and heat estimates are drawn from a small sample size, so it will be ignored here.


Results from a review of advanced biofuel CO2 emissions is shown below. G3 refers to third generation biofuels from algae, while G2 represents second generation conversion of cellulosic biomass. BtL stands for biomass-to-liquids (biodiesel).

The graph shows an interesting statistically significant difference between studies completed in North America and Europe. The authors could not explain this difference, so we will simply take the average in this case. Also, G3 (algal) biofuels are not yet commercially available, so it will be ignored.

Averaging the four values for G2 biofuels in the graph above yields a CO2 intensity of 17.2 gCO2/MJ. Using a CO2 price of $36/ton, this results in a CO2 cost of $4/barrel. Adding the $3/barrel for pollution costs of oil combustion yields $7/barrel ($0.05/litre or $0.17/gal). The internalized cost of biofuels was estimated at $0.7/litre.


If you have a number that differs significantly from the estimates given above, please add it in the comments section below together with an explanation and a reference. 

Schalk Cloete's picture

Thank Schalk for the Post!

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Schalk Cloete's picture
Schalk Cloete on February 26, 2018

DATA: Externalized cost of electricity and heat from biomass: $16/MWh and $0.7/GJ respectively according to the sources and calculations in the article.

Schalk Cloete's picture
Schalk Cloete on February 26, 2018

DATA: Externalized cost of biofuels: $0.05/litre or $0.17/gal according to the sources and calculations in the article.

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