The effects of tiered-electrical-subsidy policy on biopower development

Biopower development is essential to sustain energy security, but its high development cost and long payback period discourage the willingness of such a development at the beginning stage. Government subsidy is generally necessary to effectively and efficiently utilize energy resources and promote biopower production. This study formulates a sectoral, price endogenous mathematical programming model to investigate the impacts of tiered electricity subsidy policy on biopower production. It examines how such development paths would vary due to fast-changing emission prices. The results show that government subsidies would have a more significant effect on biopower production than the changes in emission price because the economic benefit from energy sales and received subsidies outweigh the benefits from emission trade, thereby preventing the producers from switching to more environmentally friendly biopower processing technologies. However, an increase in emission price would encourage total emission reduction in the cost of declination in biopower production. Under such circumstances, biopower production would decline from 14,400 to 9600 GWh. The study also points out that in the face of budget constraints, approximately 60–70% of the subsidy will be received by producers using energy crops such as sweet potatoes, which have more excellent supply and lower processing costs.