The cofiring problem of a power plant under policy regulations

Cofiring of fossil and renewable fuels can contribute to reaching tightening climate and renewable energy goals. The increase in biomass share in cofiring decreases the use of fossil fuel and increases renewable energy production. We study how energy and climate policies promote that increase. First...

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Bibliographic Details
Published in:Energy policy 2009-05, Vol.37 (5), p.1898-1904
Main Authors: Kangas, Hanna-Liisa, Lintunen, Jussi, Uusivuori, Jussi
Format: Article
Language:English
Subjects:
Alternative energy sources
Applied sciences
Biomass
Climate
Cofiring
Cofiring Emission trading Feed-in laws
Economic data
Electric energy
Electric power generation
Electric power plants
Electricity
Emission analysis
Emission trading
Emissions trading
Energy
Energy economics
Energy policy
Environmental policy
Europe
Exact sciences and technology
Feed-in laws
Fossil fuels
Fuels
General, economic and professional studies
Industrial plant emissions
Natural energy
Policies
Power plants
Profit maximization
Regulation
Renewable energy
Renewable resources
Studies
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Summary:Cofiring of fossil and renewable fuels can contribute to reaching tightening climate and renewable energy goals. The increase in biomass share in cofiring decreases the use of fossil fuel and increases renewable energy production. We study how energy and climate policies promote that increase. First, we present and solve an electricity producer's profit-maximization problem with detailed technical description of cofiring. We then study the effectiveness of policy instruments (e.g. feed-in laws and emission trading) on biomass utilization in cofiring. The study offers a novel approach to explore the cofiring problem, because of the endogenous fuel choice combined with the policy analysis. We study two different power plants that are located in two different European electricity market areas. Our analysis shows that both feed-in tariff and feed-in premium can have unexpected weaknesses, when they are introduced together with emission trading. Therefore decision-makers should be well informed and cautious when introducing these policies.
ISSN:0301-4215
1873-6777
DOI:10.1016/j.enpol.2009.01.028