Since the key attraction of biomass energy is the ability to provide a low carbon fuel then the energy ratio of the biomass product, and maximum fossil substitution, should be important factors in determining the most attractive market sectors.

This would be the case if energy was not subject to excise, and other forms of duty/taxation, which distort energy investment decisions. The ongoing privatisation of energy markets has further encouraged Governments to introduce relatively complex market based instruments to support renewable energy. Biomass energy may be encouraged into the grid electricity and liquid biofuel markets, where it has limited natural advantages, and perform poorly in more favourable CHP and heat applications.

The anticipated future development of refinery approach to biomass processing is likely to blur the distinction between these markets. As with crude oil, raw biomass will become an intermediate, not an end product, and introduce new market structures.