The U.S. biomass resource can be used several ways that provide domestic, renewable energy to users. Understanding the capacity of the biomass resource, its potential in energy markets, and the most economic utilization of biomass is important in policy development and project selection. This study analyzed the potential for biomass within markets and the competition between them. The study found that biomass has the potential to compete well in the jet fuel and gasoline markets, penetration of biomass in markets is likely to be limited by the size of the resource, and that biomass is most cost effectively used for fuels instead of power in mature markets unless carbon capture and sequestration is available and the cost of carbon is around $80/metric ton CO2e.
 
Biomass Utilization Issues
Biomass is a limited resource with many competing uses. Its allocation for fuel, power, and products depends upon characteristics of each of these markets, their interactions, and policies affecting these markets. In order to better understand competition for biomass among markets and the potential for biofuel as a market-scale alternative to petroleum-based fuels, the Transportation Energy Futures (TEF) study created a unique modeling tool to analyze the impact of these multiple demand areas.
 
There are compelling reasons for use of biomass in each of these three markets:
• Fuel: Biomass is the primary renewable resource that can be used to generate liquid fuels for today’s vehicles and infrastructure.
• Power: Technology is currently available to enable co-firing with coal, reducing the carbon intensity of baseload electricity and providing one of the few renewable dispatchable options.
• Products: Mixtures of chemicals with carbon-hydrogen-oxygen bonds such as those found in biomass are too valuable to burn.
 
Federal policy and activities have supported both biofuels and biopower. Relevant policies include the renewable fuels standard, the renewables portfolio standard, the clean energy standard, and many state and regional greenhouse gas (GHG) policies. Goals for biofuel policies include reduction in petroleum and, especially, petroleum imports to increase energy security. Other goals for biofuel policies focus on environmental and economic concerns, GHG emissions reduction, and diversification of agricultural products. Goals for biopower policies include displacement of coal for environmental concerns and GHG reduction. In the past two decades, the U.S. Department of Energy’s research and development (R&D)

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