Globally, increase in emission rates of greenhouse gases, e. g., CO2, present a threat to the world climate. As an estimate in the year 2000, over 20 million metric tons of CO2 were expected to be released in the atmosphere every year (Saxena et al., in press). If this trend continues, some extreme natural calamities are expected such as excessive rainfall and consequent floods, droughts, and local imbalances. Biomass is a carbon neutral resource in its life cycle and the primary contributor of greenhouse effect. Biomass is the fourth largest source of energy in the world after coal, petroleum, and natural gas, providing about 14% of the world’s primary energy consumption (Saxena et al., in press). Biomass is being considered as an important energy resource all over the world.

In order to reduce greenhouse gas emissions from energy consumption, several policy alternatives such as emission taxes and tradable emission permits have been proposed. These mitigation policies are likely to enhance the competitive advantage of biomass energy over fossil fuels as the former can displace CO2 emissions from the latter. However, it is well understood that the conversion of biomass to bioenergy requires additional energy inputs, most often provided in some form of fossil fuel. The life cycle energy balance of a biomass compared to conventional fossil fuel should be positive, but depending on the processing choices, the cumulative fossil energy demand might, at times, only be marginally lower or even higher than that of liquid fossil fuels. Bioenergy systems should be compared to conventional fuel ones from a point of view of a life cycle basis, or using LCA.