Bioenergy from wood is the oldest energy source but at the same time there are new opportunities for wood energy to make substantial contributions to climate mitigation while also helping to improve the quality of energy services and contribute to development and energy security objectives.

The potential for wood fuels for climate mitigation in the near-term are probably concentrated in the area of biomass co-firing with coal, due to the low cost and the major growth in coal-fired generation in countries such as China. There are also options for climate mitigation in the traditional biomass sector, through improved stoves and through more efficient charcoal production. Other options include substitution for coal in steel-making.

The socio-economic implications are somewhat complex compared to other energy sources, since they relate closely to rural development but also create new allied industries, such as the wood pellets industry. Financial aspects in terms of carbon finance can be distinguished by the relatively straightforward case of larger-scale substitution projects vs. the complex small projects that are more difficult to measure and monitor.

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