Economic instruments for overcoming barriers for bioenergy


Carbon taxes imposed on a society would increase the cost of fossil fuels and therefore make biomass more competitive since, being carbon neutral, it would be exempt.
Climate change levies on electricity sales would also have the potential both to provide revenue and to create awareness if the revenue were used to encourage the use of biomass. For example, in the UK a climate change levy was imposed on consumer electricity purchases by business from April 2001. Special discounts were made available to the large energy users. Renewable energy projects were exempted and this, together with the growing interest in selling 'green energy', created demand for more bioenergy capacity.
Carbon trading is also an incentive where renewable energy projects can be shown to displace fossil fuel use. Although trading has begun informally between organisations, it is not yet known whether carbon emissions trading will proceed internationally.
Long-term feed-in tariffs are used in Germany to stimulate the renewable energy market, but elsewhere may need government-supported contracts to be attractive. Other grants and subsidies offered by governments could encourage further uptake of bioenergy projects, but these would need careful consideration as to the long-term reliance on them and how future removal would affect the industry.
Increased depreciation rates on plant and equipment for tax purposes would reduce the investment payback period and hence help to alleviate the capital investment and long payback period barriers that bioenergy plants currently face. Reduced excise taxes, especially if benefits can be shown to offset the loss in government revenue, may be applied to the use of fuels with a biofuel component, as for biodiesel in Austria and ethanol in France.

Green taxes on energy in Denmark		E-85 (ethanol) fuel pump (DOE/NREL)
After thinning, residues often remain in the forest due to high cost of their removal