The recent interest in converting biomass to electricity comes not only from its potential as a low-cost, indigenous supply of power, but for its potential environmental and developmental benefits. For example, biomass may be a globally important mitigation option to reduce the rate of CO2 buildup by sequestering carbon and by displacing fossil fuels. Renewably grown biomass contributes only a very small amount of carbon to the atmosphere. Locally, plantations can lessen soil erosion, provide a means to restore degraded lands, offset emissions and local impacts from fossil-fired power generation, and, perhaps, reduce demands on existing forests. In addition to the direct power and environmental benefits, biomass energy systems offer numerous other benefits, especially for developing countries such as Brazil. Some of these benefits include the employment of underutilized labour and the production of co- and by-products, for example, fuelwood. Nearly all of the experiences with biomass for power generation are based on the use of waste and residue fuels (primarily wood/wood wastes and agricultural residues). The production of electric power from plantation-grown wood is an emerging technology with considerable promise. However, actual commercial use of plantation-grown fuels for power generation is limited to a few isolated instances. Wood from plantations is not an inexpensive energy feedstock, and as long as worldwide prices of coal, oil and gas are relatively low, the establishment of plantations dedicated to supplying electric power or other higher forms of energy will occur only where financial subsidies or incentives exist or where other sources of energy are not available. Where biomass plantations are supplying energy on a commercial basis in Brazil, the Philippines and Sweden, it can be shown that a combination of government policies or high conventional energy prices have stimulated the use of short-rotation plantations for energy. Brazil used tax incentives beginning in the mid-1960s to initiate a reforestation program to provide for industrial wood energy and wood product needs. As a consequence of the Brazilian Forestry Code with its favourable tax incentives, the planted forest area in Brazil increased from 470,000hectares to 6.5 millionhectares by 1993. With the discontinuation of the tax incentives in 1988, plantation establishment in Brazil has slowed, although the commercial feasibility of using eucalyptus for energy and other products has been clearly demonstrated.