Bioenergy projects must be economically viable for the different actors in the value chain. Forest biomass used for energy
purposes must be able to compete with other uses of the biomass, and at the same time the energy produced from biomass must
be as cheap as or cheaper than energy produced from competing energy systems. The costs in these calculations are changing
all the time; in particular the cost of fossil fuels shows large variations. As the risk is high and the economic margins
in many cases are low, there is a tendency that investors are reluctant to invest in bioenergy projects. On the other hand,
prices of wood based fuels have been rising modestly compared with e.g. oil and gas, which reduces the economic risk when
investing in a bioenergy project (Metla 2006, Kåberger 1997). In addition, there are many socioeconomic benefits to bioenergy
projects that in many cases are not accounted for in the market prices, which is a strong argument for economic support of
bionenergy projects.
Bioenergy projects contribute to many important elements of national and regional economic development: economic growth through
production and business expansion (earnings), employment, import substitution (direct and indirect on the trade balance),
security and diversificaton of energy supply (distributed energy) (see e.g. Hillring 2002). Other benefits include strengthening
of traditional industries and rural communities (Borsboom et al. 2002).