Biomass-energy systems are considered to be environmentally superior to traditional ones from the viewpoints of the CO2 mitigation and the effective utilization of resources. However, the energy cost of these systems tends to be higher than that of conventional fossil-fuel systems. Furthermore, the establishment of environmental business models is expected in the near future. In this paper, the environmental improvement and the economics of a biomass-energy system in a sawmill are analyzed by a comparison of a gasification-cogeneration system with a direct-combustion system using scrap-wood material as feedstock fuel. Especially, the breakeven point for marketability of the business taking the surplus electric-power into consideration is estimated under the assumption of a renewable-energy purchase system, such as the renewable portfolio standard (RPS) implemented in Japan. Consequently, when biomass-related subsidies are applied, the break-even point of the purchase price of the electric power from the gasification cogeneration becomes 7.7-->35.7 yen/kW h. Furthermore, if the construction cost decreases by 10%, the break-even point of the purchase price will be cheaper by about 7.4 yen/kW h. (C) 2004 Elsevier Ltd. All rights reserved.