International price trend of biomass
Prices of agricultural products rose substantially in 2006-2007 as a result of a number of coinciding factors, such as lower grain harvest, increasing food demand from among others China and India, and to a certain extent a rising application of crops for the production of biofuel. Grain stocks are the lowest in many years, which in itself has raised the risk of price increases. Prices of most agricultural products are generally expected to remain at a higher level in the years ahead. There are, however, several factors that may lead to changes in either direction, and for example the production of biofuel may have a certain effect. Demand for especially animal foods, and thus for animal feed areas, may cause food prices to rise further. High oil prices will make biofuel production and other types of energy relatively more attractive and cause crop prices to rise.
However, only to a certain extent as increasing prices of the crops that are used for bioethanol and biodiesel will also reduce the profitability of the production of these biofuels. Similarly, the maintenance of or further tightening of requirements for the admixture of biofuels to the transport sector’s fuels will keep prices at an “artificially” high level. By contrast, trade liberalisation and reductions in national subsidies, particularly in the area of bioethanol, will result in more efficient production, leading to falling prices. Today’s tariff protection of bioethanol contributes to protecting the less efficient production of bioethanol in the USA and the EU. Another factor that may contribute to dampening price increases is productivity developments in both primary agricultural production and in biomass energy conversion.
A shift in technology regarding the production of bioethanol from first generation to second generation will, other things being equal, reduce the pressure on land and, consequently, also indirectly reduce the prices of crops. From an economic point of view, biofuels in the EU and in the USA remain an expensive alternative to fossil fuels. Without state aid and tariff protection, the production of bioethanol and biodiesel would hardly be able to compete with the production from Brazil and other third-world countries. Nor does the biofuel production of the USA and the EU based on first-generation technology seem to have any major positive impact on the environment. If the wish was to reduce CO2 emissions, it could be achieved far more inexpensively either by importing sugar cane - produced ethanol or by increasing the production of renewable energy through the use of residual products at CHP plants, which is traditional practice in Denmark.
It means that it would be possible to reduce the role of, for example, coal in energy production. Price trends of agricultural products are sensitive as a result of the above-mentioned conditions, and political regulation – especially regarding biofuel production – has a considerable impact on the future prices of animal feed, foods and biofuels.

Environmental impacts
Biomass utilisation has a high impact on the condition of land, water and the atmosphere. With regard to the traditional production of agricultural crops in, for example, the EU, environmental impacts are well known and generally well regulated.
The question of using biomass for bioenergy production is an issue that is complex and not so thoroughly examined. In order to calculate the best resource application, it is necessary to consider the entire production chain from raw materials to end products. Energy efficiency and total environmental impacts may differ considerably depending on how biomass is produced and used. Furthermore, energy balance and the individual environmental impacts do not necessarily go together but may run counter to each other. With respect to greenhouse gas emissions, analyses show that the application of bioenergy has a positive effect compared with the use of fossil fuels. There are, however, crucial differences as the net effect from using first-generation technology based on maize, wheat and vegetable oils is modest compared with ethanol produced on the basis of sugar cane or ligno-cellulose (second-generation technology). On condition, however, that the use of sugar cane for ethanol production does not lead to rainforest deforestation.
The production of bioenergy on the basis of residual products such as straw, slurry, animal fat, grass and perennial crops provides a better energy balance and environmental effect when used in direct combustion, biogas or thermal gasification. Increasing the production of biomass involves a risk of growing pressure on biodiversity and of increased leaching of nutrients unless there is sufficiently effective environmental regulation of this, for example in the form of demands for extensive land cultivation. It is indicated in the report that it is possible to raise the Danish production of biomass and even achieve positive environmental effects from it. Better exploitation of straw, slurry, and animal fat as well as increased production of perennial crops and the utilisation of grass from low-lying areas will contribute to the Kyoto Agreement and the national Aquatic Environment Plan.
However, increased removal of straw from farm land and a halt to the spreading of slurry will have a negative impact on the carbon balance of the soil. This may be compensated for by demands for increased application of catch crops.