This paper investigates new possibilities and synergy effects for an oxy-fuel fired polygeneration scheme (transportation fuel and electricity) with carbon capture and co-firing of biomass. The proposed process has the potential to make the oxy-fuel process more effective through a sub-stoichiometric combustion in-between normal combustion and gasification, which lowers the need for oxygen within the process. The sub-stoichiometric combustion yields production of synthesis gas, which is utilised in an integrated synthesis to dimethyl ether (DME). The process is kept CO2 neutral through co-combustion of biomass in the process. The proposed scheme is simulated with a computer model with a previous study of an oxy-fuel power plant as a reference process. The degree Of sub-stoichiometric combustion, or amount of synthesis gas produced, is optimised with respect to the overall efficiency. The maximal efficiency was found at a stoichiometric ratio just below 0.6 with the efficiency for the electricity producing oxy-fuel process of 0.35 and a DME process efficiency of 0.63. It can be concluded that the proposed oxygen lean combustion process constitutes a way to improve the oxy-fuel carbon capture processes with an efficient production of DME in a polygeneration process. (C) 2008 Elsevier Ltd. All rights reserved.