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This paper analyses the effect of recognizing co-firing coal with biomass as renewable electricity. We provide simulations for the French and German electricity mix. Results indicate that, if co-firing is recognized as a renewable, coal may crowd-out traditional renewables with increased generation and additional investments. Regarding CO2 emissions, we find surges when co-firing is recognized as a renewable. The rise is more significant in Germany due to greater coal capacity. In France, the magnitude depends on the share of nuclear with a lower increase when old nuclear plants are prolonged. Finally, we find that recognizing co-firing as a renewable reduces the overall costs for electricity. We balance the cost saving with the increased social cost from higher CO2 emissions. Results show that the cost saving is lower than the increased carbon cost for society with carbon valuation around 100 Euros/tCO2, except in France when old nuclear plants are not decommissioned. [ABSTRACT FROM AUTHOR]

Background: In order to achieve the German greenhouse gas reduction targets, in particular, CO2 emissions of coal-fired power plants must be reduced. The co-incineration of biomass-based substitutes, here referred to as co-firing, is regarded as a highly cost-effective and short-term method of reducing CO2 emissions in the electricity sector. Another advantage of co-firing is its ability to meet base load demands and offer controllability. In this paper, we, therefore, evaluate the effectiveness of co-firing as a CO2 mitigation strategy in the German electricity sector by 2020. Methods: We consider the co-firing of three different substitutes: wood chips, industry pellets and torrefied biomass. Likewise, a comparison with three alternative mitigation strategies is part of the evaluation. We use seven sustainability indicators covering social, ecological and economic aspects as the basis for the evaluation. These sustainability indicators are determined by means of a merit order model, which enables us to simulate the electricity market in 2020 on an hourly basis and adjust it based on the assumption of widespread implementation of co-firing or one of the alternative mitigation strategies. Results: Our results show that all mitigation strategies have a significant potential to reduce the CO2 emissions of the electricity sector. Compared with the alternative mitigation strategies, co-firing is characterised on the one hand by rather low mitigation potentials and on the other hand by low CO2 mitigation costs. The co-firing of industry pellets appears to have the most advantageous combination of mitigation potential and mitigation costs. Conclusions: The widespread implementation of co-firing with industry pellets until 2020 would have led to 21% reduction in CO2 emissions on average. Nevertheless, it cannot be implemented immediately because time is needed for political decisions to be taken and, afterwards, for the technical retrofitting of power plants. Co-firing will, therefore, not be available to contribute to the achievement of the greenhouse gas reduction targets for the year 2020. However, our approach can be used to assess the contribution of the various CO2 mitigation strategies to the ambitious mitigation targets for the year 2030. [ABSTRACT FROM AUTHOR]