In future, new biomass technologies can gain significant importance in the Swiss energy sector. Therefore, this paper assesses the economic conditions under which new biomass technologies become competitive. The focus of this assessment is on the production of synthetic natural gas (bio-SNG) from wood in a methanation plant. The assessment is conducted with the cost-optimization model SWISS-MARKAL (MARKet ALlocation). SWISS-MARKAL projects future technology investments and provides an integrated analysis of primary, secondary, final and end-use energy in Switzerland. In addition to a reference scenario, the effects of increasing oil and gas prices, the effects of allocating subsidies to the methanation plant and the effects of competition between the methanation plant and a biomass-based Fischer-Tropsch (FT) synthesis are evaluated. Moreover, a sensitivity analysis is performed by varying investment costs of the methanation plant. The results are in favour of bio-SNG in the transportation sector where the synergetic use of bio-SNG and natural gas reduces the dependence on oil imports and the level Of CO2 emissions. (c) 2007 Elsevier Ltd. All rights reserved.