Feed-In-Tariff Is Key to Japan’s Current Biomass Power’s Viability, Even with Environmental Externalities

Abstract

Bioenergy is increasingly recognized as an effective tool for removing carbon dioxide from the atmosphere. However, its economic feasibility remains underexplored, particularly when accounting for environmental impacts. This study proposes a quantitative assessment framework to calculate the cost-benefit ratio of biomass power generation and to assess the sustainability of its supporting policy tools, such as feed-in-tariffs (FIT). The framework accounts for benefits through electricity generation and environmental externalities, namely emissions from feedstock production and procurement, such as the transportation of biomass materials. This allows for quantification and a detailed discussion of multiple environmental burdens of biomass energy and economic costs. As a case study, this framework was applied to a hypothetical biomass plant in Japan, which has the fifth-largest biomass market globally. We prepare several scenarios to consider diverse conditions within the Japanese biomass industry, including the types of biomass materials used (pellets vs. chips), their sources (domestic vs. international), and the biomass technologies employed. The results show that using pellets, predominantly imported, significantly increases biomass energy costs. The increase in cost is directly proportional to the quantity of utilized pellets and their transportation distances. However, pellet production location —whether in Vietnam or Canada—doesn't significantly change the overall cost calculations in our study. Our result is consistent across various biomass technologies, showing that the high selling price under the feed-in-tariff system, rather than material type, supply origin, or transportation mode, plays the most critical role in economic feasibility, even when accounting for environmental externalities. Thus, decision-makers must reevaluate the efficacy of FIT policies for wood biomass powers, where fuel costs share a substantial portion. We also discuss its synergies with local industries and trade-offs with other land-use objectives.