Europe Carbon Trade Would Gain Extra $1.1 Billion From Biomass

European carbon trading will probably bring in as much as an extra 1 billion euros ($1.1 billion) a year to combat climate change if wood-burning power stations are included in the system for limiting greenhouse-gas emissions.

The assumption that burning wood doesn’t mean more carbon because greenhouse gases are sucked up by growing trees ignores the effect of changes in land use, emissions from transporting the so-called biomass and unsustainable operations, said a report from the Transport & Environment campaign group, BirdLife Europe and the European Environmental Bureau.

The 7 percent of all emissions in the system from biomass are now assumed to be carbon neutral, meaning the amount of carbon released equals the amount absorbed, according to the authors. Changing that may bring in 630 million euros to 1 billion euros into the system, while at least half of that would be reinvested in climate-related measures, they said.

“Giving biomass a zero-rating in the ETS is like signing a blank check,” said Carlos Calvo Ambel, an energy policy analyst at T&E. “We’ve seen many examples of where a lack of both sustainability criteria and full carbon accounting for biomass led to more carbon emissions.”

The European Commission is reviewing its Emissions Trading System, which gives emitters allowances to release greenhouse gases and lets them trade those that they don’t use, to extend the program to 2030. Of the 3.6 billion euros the system made in 2013, 3 billion euros was used for climate and energy measures.

Biomass demand is forecast to rise 40 percent by 2020 and at least 15 percent will have to be imported, the report said, citing figures from the commission. Moreover, the time lag from the release of carbon dioxide from burning to its being absorbed by plant growth can be from zero to 500 years.

European Union member states are turning to biomass as it produces cleaner power and heat while still producing energy around-the-clock unlike renewables such as solar and wind. Renewables represent about 24.2 percent of total electricity generation in the EU, with 18.7 percent of that from biomass, according to a report from the European Biomass Association.

Before it's here, it's on the Bloomberg Terminal.