Co-firing biomass with coal is being increasingly seen in the EU region as an option that could contribute not only towards reaching the Kyoto targets on greenhouse gas emissions but also towards compliance with the EU directives on renewable energy and large combustion plants. Perennial grasses, short rotation coppice, seasonal agricultural residues and waste forestry wood are all considered as viable alternatives. However, although the use of biomass for electricity generation could help reduce direct emissions of pollutants generated during combustion of coal, including carbon dioxide, sulphur dioxide and nitrogen oxides, the whole life cycle implications of using biomass are less clear. This paper uses a life cycle approach to evaluate the environmental impacts and economic costs of co-firing with coal three types of biomass: Miscanthus, willow and waste forest wood. Both direct combustion and gasification of biomass are considered. The results of life cycle assessment indicate that all biomass options lead to a substantial reduction in the environmental impacts compared to the coal-only power generation. Overall, use of waste wood appears to be environmentally the most sustainable option. In comparison to direct combustion, biomass gasification has higher global warming potential due to the higher consumption of biomass and energy for gasification. The results of the life cycle economic costing show that electricity from biomass is economically less attractive than from coal. Direct firing is two times more expensive than coal and gasification up to three times. Therefore, while attractive from the environmental point of view, biomass appears currently to be less sustainable economically. © Springer Science+Business Media B.V. 2010.