Torrefied pellets have fuel properties superior to those of conventional wood pellets and potentially allow greater rates of co-firing and thus larger reductions in net CO2 emissions. Despite the growing amount of scientific output on torrefaction, the economic feasibility of torrefied pellet production is still a topic of considerable uncertainty. This is an obstacle for decision makers looking to implement sustainable energy policies. This paper compares the economics of torrefied pellets to conventional wood pellets. Working backwards from demonstrated pellet properties, this work attempts to answer the following question: Based on state-of-the-art torrefied pellets, what would be the maximum capital investment required for a torrefied pellet plant so that production is economically viable? Herein, the production costs of torrefied pellets are calculated based on inputs in production. The market value of the produced pellets is estimated and a cash-flow analysis is carried out. Three economic indicators are calculated and compared for a torrefied and conventional pellet production scenario. A sensitivity analysis is carried out for selected process inputs and the cost of CO2 through co-firing pellets is estimated. The results indicate that state-of-the-art torrefied pellet production cannot compete with conventional pellets even with transatlantic product transport distances. A high capital investment cost and a low heating value are the main barriers to economic feasibility of state-of-the-art torrefied pellets. (C) 2016 Elsevier Ltd. All rights reserved.