How Much Does Biomass Cost Compared To Fossil Fuels?

Biomass and fossil fuels are both energy sources used for heat, electricity, and transportation fuels. Biomass refers to organic material from plants and animals, including wood, agricultural crops, wood waste, and animal manure. It contains stored energy from the sun. When burned, the chemical energy in biomass is released as heat. Fossil fuels like coal, oil, and natural gas, on the other hand, are formed from decayed organic material that has been subject to intense heat and pressure over millions of years. They contain high amounts of carbon.

Comparing the costs of biomass and fossil fuels provides insight into their economic viability as energy sources. Factors like fuel prices, infrastructure costs, government incentives, and environmental externalities all contribute to the bottom line. As the world looks to transition to low-carbon energy systems, understanding these costs is essential to setting sound policy and investment priorities. This analysis aims to break down the costs and shed light on how biomass stacks up against fossil fuels in different contexts.

Table of Contents

Cost Breakdown of Fossil Fuels

The three main types of fossil fuels are coal, oil (petroleum), and natural gas. According to Statista, in 2022 the average cost of fossil fuels for electricity generation in the U.S. was $5.22 per million British thermal units (Btu) [1]. The costs ranged from $2.36/million Btu for natural gas to $3.07/million Btu for coal and $15.66/million Btu for petroleum liquids.

There are several key factors that impact the costs of fossil fuels [2]:

Global supply and demand – Costs fluctuate based on availability and global energy needs.
Extraction/production costs – More difficult extraction of coal, drilling for oil, etc. increases costs.

Processing and transportation – Refining, pipelines, shipping/tankers all add to costs.
Environmental regulations – Rules on emissions cause increased production expenses.
Taxes and subsidies – Government incentives/penalties affect consumer prices.

Cost Breakdown of Biomass

The cost of biomass depends on the type of feedstock used. The main categories of feedstocks include:

Agricultural residues like corn stover, wheat straw, rice straw – Cost range of $40-60 per ton (NREL)
Forest residues like logging slash, thinnings – Cost range of $30-50 per ton (NREL)

Energy crops like switchgrass, miscanthus – Cost range of $50-100 per ton (Statista)

The costs are impacted by factors like:

Transportation and logistics – biomass has lower energy density than fossil fuels (ResearchGate)

Processing required – some feedstocks require pre-treatment
Supply and demand – higher demand can increase prices

Direct Cost Comparison

Comparing the costs of biomass and fossil fuels directly is challenging due to significant variability based on region and specific generation technologies. According to the National Renewable Energy Laboratory (Mann 2004), biomass power generated via direct combustion has estimated costs of 8-9¢/kWh, while coal has a range of 4-6¢/kWh. Natural gas combined cycle plants can generate power for 3-5¢/kWh (Wikipedia).

However, these costs don’t account for all factors. Biomass Magazine (2011) notes challenges in direct comparison including variability in feedstock costs, difference in capacity factors, and dispatchability of different technologies. While fossil fuels may have lower direct costs, biomass can provide advantages in energy security, reduced price volatility, and environmental benefits.

Overall, head-to-head comparisons of levelized costs are difficult given the many variables involved. Regional factors, subsidies, technological maturity and other externalities must be considered for a true apples-to-apples comparison of biomass and fossil fuel economics.

Externality Costs

Fossil fuels like coal and natural gas have significant negative externalities that are not reflected in their market prices. These externality costs include the environmental and health damages caused by pollution from burning fossil fuels. According to a 2021 study published in ScienceDirect, the external costs of coal-fired electricity are estimated to be over $60 per MWh, while natural gas ranges from $13-32 per MWh (Sovacool, 2021). Biomass energy has lower externality costs of around $4-6 per MWh.

The environmental impact costs related to air pollution and climate change make up a significant portion of the external costs for fossil fuels. A 2020 study in the National Center for Biotechnology Information found coal has over $30/MWh in climate change costs alone (Lu et al., 2020). Biomass has lower air pollution impacts since it is carbon neutral when done sustainably.

Government subsidies also factor into the real costs. Fossil fuels receive billions in global subsidies each year, artificially lowering their market prices. Renewables receive fewer direct production subsidies but benefit from subsidies for investment costs. Accounting for subsidies can make renewables more cost competitive with fossils.

Future Cost Projections

The costs of both fossil fuels and biomass are projected to change in the coming years.

Fossil fuel costs are expected to increase over time as reserves deplete and extraction becomes more difficult and expensive. According to the International Energy Agency (IEA), the costs of coal, oil, and natural gas are projected to rise steadily through 2040 [1].

In contrast, the costs of biomass energy are projected to decrease. According to the National Renewable Energy Laboratory (NREL), biomass technology costs could fall by 16-30% by 2030 as efficiency improves, supply chains mature, and production scales up [2]. The levelized cost of biomass electricity is projected to drop from $97-115/MWh in 2020 to $82-109/MWh in 2030.

Therefore, while fossil fuels are expected to become more expensive over time, biomass costs are likely to decline. This could make biomass power increasingly cost-competitive with traditional fossil fuel sources.

Regional Variations

The cost of biomass varies regionally due to differing economics and transportation costs. Areas with abundant forestry byproducts, such as the Southeast and Midwest, can source lower-cost biomass feedstocks locally. According to the EIA, densified biomass fuel prices in 2019 averaged $175/ton in the Midwest, but $200/ton in New England where less biomass is available (source). The West Coast also faces higher average biomass prices of $200-225/ton. Transporting biomass more than 50-100 miles becomes cost prohibitive.

Transportation costs are a major factor driving regional price variations. Bulky, low-energy density biomass has high freight costs relative to fossil fuels. Trucking biomass more than 50 miles can double delivered feedstock costs. Rail transport is more efficient for longer distances, but limited rail infrastructure constrains supply logistics. Regions with high local biomass availability avoid these transportation cost adders.

Non-Cost Factors

When comparing biomass and fossil fuels, there are important non-cost factors to consider beyond just economic costs. These include reliability, scalability, and sustainability.

In terms of reliability, biomass can provide a stable and consistent fuel source as long as crops are properly managed and supply chains maintained. Fossil fuels face more volatility and unpredictability in pricing and availability. However, infrastructure for fossil fuels is more established currently.^[1]

For scalability, both biomass and fossil fuels can be scaled to meet different energy demands. However, biomass crops require more land and resources to scale up compared to established fossil fuel infrastructure. The scalability of biomass depends on available agricultural land and advancements in crop management.^[2]

Regarding sustainability, biomass is considered carbon neutral or low carbon if crops are replanted at the same rate as harvested. Fossil fuels, conversely, release centuries of stored carbon. However, some forms of biomass carry sustainability concerns like deforestation. Sustainability depends on specific biomass sources and oversight.^[3]

In summary, biomass offers advantages in stability and carbon footprint but requires more oversight for scalability and sustainability compared to fossil fuels.

^{[1] https://www.nationalgeographic.org/encyclopedia/biomass-energy/}
^{[2] https://wood-energy.extension.org/the-economics-of-forest-biomass-production-and-use/}
^{[3] https://www.nrel.gov/docs/fy04osti/32575.pdf}

Conclusions

In summary, biomass tends to be more expensive than fossil fuels per unit of energy generated, with costs ranging from $4-10 per MMBtu compared to $2-5 for natural gas and coal (Mann, 2004). However, when accounting for externalities like environmental and health costs, biomass becomes far more cost-competitive. One analysis found biomass electricity costs $0.05-0.07 per kWh with externalities, versus $0.055-0.27 for fossil fuel electricity (IEA, 2013).

The future cost outlook is uncertain. Biomass costs may decline slightly as supply chains improve, but remain higher than cheap fossil fuels like coal (Wood-Energy.extension.org, 2019). Meanwhile, increasing carbon taxes and emissions regulations could raise fossil fuel costs. Overall, non-cost factors like sustainability and energy security suggest continued policy support for biomass despite higher direct costs.

There are limitations to these cost comparisons. Regional biomass feedstock and infrastructure availability create wide cost variations. Fossil fuel costs also fluctuate significantly. More research is needed on full life cycle costs and benefits of both energy sources.

References

[1] Davis, Lee. “The True Cost of Fossil Fuels.” Scientific American, vol. 12, no. 3, 2019, pp. 34-55.

[2] Hanson, Amy. Renewable Energy Systems. 2nd ed., Wiley, 2021.

[3] EIA. “Levelized Cost and Levelized Avoided Cost of New Generation Resources.” Annual Energy Outlook 2021. U.S. Energy Information Administration, 2021.

[4] REN21. “Renewables 2022 Global Status Report.” REN21 Secretariat, Paris, 2022.

[5] IRENA. “Renewable Power Generation Costs in 2020.” International Renewable Energy Agency, Abu Dhabi, 2021.