Should China subsidize cofiring to meet its 2020 bioenergy target? A spatio‐techno‐economic analysis

Abstract China has developed ambitious bioenergy installation targets as part of its broader goals to increase its renewable energy‐generating capacity and decarbonize its economy. A key target feedstock for bioenergy is the 800 million tonnes of agricultural residues that China produces each year. At present, the main financial incentive to support bioenergy generation from agricultural residues is a feed‐in‐tariff provided for bioenergy that is produced by units that take 80% or more of their feedstock energy from biomass. Although this policy has catalysed the construction of many bioenergy units, there are reports that these projects are experiencing serious financial and technical problems, leading to low operational efficiency and even closure. An alternative option for China's agricultural residues is cofiring with coal in existing power stations. However, this is currently unprofitable for power station operators, as cofiring is not eligible for financial assistance through the bioenergy feed‐in‐tariff. In the light of China's ambitious target to install 30 GW of bioenergy generation capacity by 2020, this study investigates the extent to which extension of the bioenergy feed‐in‐tariff to include cofiring could contribute towards this goal. The results suggest that 39% of China's straw energy resources are located within 50 km of a power station. Assuming cofiring ratios of up to 10% coal energy replacement, an annual 89–117 TW h of electricity could be generated by cofiring agricultural residues collected within 50 km radii of power stations. If China extends its bioenergy subsidies to include cofiring, an annual 62–92 TW h can be produced at an internal rate of return of 8% or more. This equates to 42–62% of the bioenergy generation that China might expect if it met its 2020 target of installing 30 GW of bioenergy capacity. Overall, this indicates a strong case for the Chinese government to extend its existing bioenergy feed‐in‐tariff to include cofiring at low energy replacement ratios.