Uncertain and unstable policy support has often been claimed to be a major cause of the slower than expected deployment of technologies for production of advanced biofuels. We investigate the economic rationale of this claim by applying a real options framework incorporating uncertainties regarding energy prices, investment costs, and prevalence of policy support, in terms of an economic support per produced unit of biofuel depending on the greenhouse gas (GHG) mitigation potential. Six industrially relevant forest-based technologies for production of drop-in biofuels were evaluated. The technologies were integrated with a pulp mill and an oil refinery and are at different stages of their technical development. The results show that there is a limited economic rationale behind the claim that policy uncertainties are a major source for the stalled deployment of forest-based biorefinery technologies. Only technologies that require very high policy support to become economically viable, with associated low likeliness of investment, showed any significant sensitivity to the policy uncertainty. The results show that the stalled deployment is mainly related to the uncertainties regarding investment costs and future energy prices — and not related to the specific policy uncertainty. The results show that the stalled deployment is mainly related to the uncertainties regarding investment costs and future energy prices. This results in technologies with lower sensitivity with respect to these uncertainties have a larger chance of becoming commercially relevant investment options. The findings show that reduced policy uncertainty will neither lead to earlier investments nor improve the commercial viability of emerging biorefinery technologies. Literature citing policy uncertainty as the main hindrance for commercial deployment cannot do so from an economic perspective without simultaneously investigating the impacts from investment cost and market price uncertainties. Additionally we find that if policy support is intended to promote investment in technologies with high GHG performance, it must be directed specifically to these technologies, otherwise, it is more beneficial to invest in technologies with more favourable conditions for investment and operational costs, but lower GHG performance.

_{Biorefineries have been promoted to reduce dependency on fossil resources, increase self-sufficiency, and revitalise rural areas. Commercial deployment of forest-based biorefineries has been slow, although academic research has identified several technology options as promising in terms of both costs and resource usage. The low deployment of forest-based biorefinery technologies can be attributed to technology-specific (such as capital cost, process immaturities, and scale-up challenges) or market related (such as biomass and fuel prices, and lack of long-term stable legislation) barriers. The economic and greenhouse gas (GHG) performance of emerging forest-based biorefineries will be highly affected by the assumed characteristics of the surrounding system, such as the assumed energy prices and reference GHG emissions. Future energy prices and policy landscapes are highly uncertain, and, additionally, a successful commercialisation of biorefineries can be expected to have a substantial impact on biomass prices. To fully assess the future performance of emerging biorefinery concepts, these future uncertainties need to be incorporated in the evaluation to identify robust biorefinery concepts that have a high performance for a large set of future market developments. The performance of biorefinery concepts is often assessed using techno-economic approaches, typically using the system boundaries either around the plant, or using a larger geographical area, depending on the scope of the study. The choice of system boundary affects the appropriate methodological choices for the assessment and will depend on the perspective of the evaluation.}

_{This thesis examines the performance of emerging forest industry integrated biorefinery concepts in terms of economy, GHG mitigation potential, and policy support requirement. The aim is to explore strategies to help identify biorefinery concepts with a robust performance considering plant-level design choices and surrounding economic uncertainties. Two perspectives are adopted and compared; i) the performance as seen by a plant-owner, related to the economic performance required for investments to occur, and ii) the performance as seen by a policymaker, related to the cost and impact of implementing the technology on a national level. Biorefinery concepts based on thermochemical conversion technologies are investigated, as they are well suited to a wide variety of residual feedstocks from the forest.}

_{The results show that the production capacity of the biorefinery has a major impact on the economic performance due to economy-of-scale effects. Very large facilities can, from a policymaker perspective, constitute a way to enable a cost-efficient large-scale deployment of biorefineries, while they are not necessary favoured from a plant-owner perspective. This is due to the cost structure of the large-scale deployment of biorefineries, and the division of costs between the plant-owner and other actors in the system.}

_{Traditional techno-economic approaches can be insufficient to identify promising technology configurations considering the wide array of future economic conditions and uncertainties faced by both plant-owners and policymakers. To make any conclusive judgement of the future performance of emerging technologies and investments that can be in operation for more than 20 years, future market developments must be considered. In this thesis, traditional techno-economic analysis is complemented with additional approaches to gain further understanding regarding the future performance of biorefineries. The combined approaches provide complementary insights regarding likely ranges of the future performance depending on future policy ambition levels, as well as impacts of changed biomass prices resulting from the large-scale introduction of biorefineries.}

_{The combined approaches also highlight that, from an economic rationale perspective, policy uncertainty is, in fact, not a major contributor to postponed investments in emerging forest industry-integrated biorefineries. Despite this, the overall results show that most of the examined forest-industry integrated biorefinery concepts would require substantial policy support to become financially viable. A complicating factor is that increased policy support premiering the use of renewable fuels will likely decrease the future prices for the fossil alternatives due to the reduced demand.}

_{This thesis demonstrates that in order to identify robust biorefinery concepts, a multifaceted approach is required to be able to fully capture the interplay between biorefinery configurations and economic performance in face of future uncertainties. Firstly, the plant-owner needs a high probability of a profitable investment; otherwise, investments will not occur. Secondly, for the policymaker, high GHG performance is required, while the cost for large-scale deployment of biorefineries for the entire energy system needs to be kept low. These different objectives can sometimes be at odds with each other, and the policymaker must thus create market incentives that simultaneously premier investments in biorefinery configurations, and benefits the entire energy system.}

Biofuels and biochemicals play significant roles in the transition towards a fossil-free society. However, large-scale biorefineries are not yet cost-competitive with their fossil-fuel counterparts, and it is important to identify biorefinery concepts with high economic performance. For evaluating early-stage biorefinery concepts, one needs to consider not only the technical performance and process costs but also the economic performance of the full supply chain and the impacts on feedstock and product markets. This article presents and demonstrates a conceptual interdisciplinary framework that can constitute the basis for evaluations of the full supply-chain performance of biorefinery concepts. This framework considers the competition for biomass across sectors, assumes exogenous end-use product demand, and incorporates various geographical and technical constraints. The framework is demonstrated empirically through a case study of a sawmill-integrated biorefinery producing liquefied biomethane from forestry and forest industry residues. The case study results illustrate that acknowledging biomass market effects in the supply chain evaluation implies changes in both biomass prices and the allocation of biomass across sectors. The proposed framework should facilitate the identification of biorefinery concepts with a high economic performance which are robust to feedstock price changes caused by the increase in biomass demand.

In Sweden, the iron and steel industry (ISI) is a major source of greenhouse gas (GHG) emissions. Most of the emissions result from the use of fossil reducing agents. Nevertheless, the use of fossil fuels for other purposes must also be eliminated in order to reach the Swedish emissions reduction targets. In this study, we investigate the possibility to replace fossil gaseous and liquid fuels used for heating in the ISI, with liquefied biomethane (LBG) produced through gasification of forest residues. We hypothesize that such utilization of fuels in the Swedish ISI is insufficient to independently drive the development of large-scale LBG production, and that other sectors demanding LBG, e.g., for transportation, can be expected to influence the economic potential for the ISI to switch to LBG. The paper investigates how demand for LBG from other sectors can contribute to, or prevent, a phase-out of fossil fuels used for heating purposes in the ISI under different future energy market scenarios, with additional analysis of the impact of a CO2 emissions charge. A geographically explicit cost-minimizing biofuel production localization model is combined with heat integration and energy market scenario analysis. The results show that from a set of possible future energy market scenarios, none yielded more than a 9% replacement of fossil fuels used for heating purposes in the ISI, and only when there was also a demand for LBG from other sectors. The scenarios corresponding to a more ambitious GHG mitigation policy did not achieve higher adoption of LBG, due to corresponding higher biomass prices. A CO2 charge exceeding 200 EUR/tonCO2 would be required to achieve a full phase-out of fossil fuels used for heating purposes in the ISI. We conclude that with the current policy situation, substitution of fossil fuels by LBG will not be economically feasible for the Swedish ISI.

Large-scale implementation of forest-based biofuel production will have an impact on biomass prices, something which in turn will affect biofuel production costs. The profitability of emerging biofuel production technologies is usually assessed using techno-economic or market approaches. While techno-economic approaches have a detailed description of technologies within plant-level or supply chain system boundaries, they build on exogenously given static biomass prices. Conversely, market approaches have a consistent description of the economic system including market interactions for prices within local or national boundaries, but they generally lack technological depth. This paper combines these two approaches using an iterative framework for a case study optimising the production cost of liquefied biomethane (LBG) using different configurations of sawmill-integrated biomass gasification.

Cost estimates are developed using system boundaries surrounding a LBG production plant, and the Swedish national borders, reflecting the plant-owner and policymaker perspectives, respectively. The results show that different plant configurations are favoured depending on the choice between minimising the biofuel production cost for the plant-owner or for the policymaker. Market dynamics simulated by the iterative procedure show that a direct policy support of 36–56 EUR/MWh would be needed to sustain large-scale LBG production, which is 12–31% higher than the necessary policy support estimated based on static biomass prices.

In the endeavour to reduce CO₂ emissions from the transport sector, biofuels from forest industry by-products are key. The adaptation of forest-based biorefinery technologies has so far been low which can partly be attributed to uncertainties in the form of policy instability, market prices, and technology costs. These uncertainties in combination with technology learning, which can be expected to reduce future investment costs, could make it favourable to postpone an investment decision. When applying real options theory, it is recognised that there is an opportunity cost associated with the decision to invest, since the option to wait for more favourable market conditions to occur is forfeited. In traditional discounted cash flow analysis, the impact of uncertainty and the value of reducing it (e.g. by waiting), is usually not taken into consideration. This paper uses a real options framework that incorporates the option to postpone an investment to reduce market uncertainties and wait for technology learning to occur. The focus is to investigate how the usage of an investment decision rule based on real options analysis affects technology choice, the economic performance, and when in time it is favourable to invest in pulp mill integrated biofuel production, compared with using a decision rule based on traditional discounted cash flow analysis. As an illustrative case study we examine a pulp mill which has the option, but not the obligation, to invest in either of two different biofuel production technologies that both use the pulp mill by-product black liquor as feedstock: (1) black liquor gasification followed by fuel synthesis, and (2) membrane separation of lignin followed by hydrodeoxygenation. With the usage of the real options framework and the inclusion of the uncertainties regarding future market prices and investment costs, the decision to invest is made later, compared with using traditional cash flow analysis. The usage of real options also reduces the likeliness of a net loss occurring if an investment is made, as well as increases the expected economic returns, showing the added economic value of flexibility in the face of uncertain future conditions.

Fast pyrolysis of lignocellulosic biomass constitutes a promising technology to reduce dependence on fossil fuels. The product, pyrolysis liquids, can either substitute heavy fuel oil directly, or be upgraded via e.g. hydroprocessing to diesel and petrol. This study presents a systematic evaluation of production costs and CO2 mitigation potentials of different fast pyrolysis value chain configurations. The evaluation considers types of localisations, emissions from electricity and hydrogen production, biomass feedstocks, and final products. The resulting production costs were found to be in the range of 36–60 EUR/MWh for crude pyrolysis liquids, and 61–90 EUR/MWh upgraded to diesel and petrol. Industrial integration was found to be favoured. The CO2 mitigation potential for the pyrolysis liquids was in the range of 187–282 t-CO2/GWh biomass. High variations were found when upgraded to diesel and petrol –best-case scenario resulted in a mitigation of 347 t-CO2/GWh biomass, while worst-case scenarios resulted in net CO2 emissions. Favourable policy support, continued technology development, and/or increased fossil fuel prices are required for the technology to be adapted on an industrial scale. It was concluded that integration with existing industrial infrastructure can contribute to cost reductions and thus help enable the transformation of traditional forest industry into biorefineries.

Biorefineries for production of fuels, chemicals, or materials, can bean important contribution to reach a fossil-free economy. Large-scaleforest-based biorefineries are not yet cost competitive with their fossil counterparts and it is important to identify biorefinery supply chain configurations with good economic, CO2, and biomass performance if biorefineries are to be a viable alternative to the fossil refineries.

Several factors influence the performance of biorefinery supply chains,e.g. type of conversion process, geographical localisation, and produc-tion capacity. These aspects needs to be analysed in conjunction to identify biorefineries with good supply chain performance. There ares everal approaches to improve the performance of biorefineries, wheree.g. integration with other industries can improve the economic perfor-mance by utilisation of excess heat and by-products. From a Swedish perspective the traditional forest industry is of interest as potential host industries, due to factors such as by-product availability, opportunity for heat integration, proximity to other biomass resources, and their experience in operating large-scale biomass supply chains.

The objectives of this work were to investigate how different supply chain configurations influence the economic, biomass, and CO2 perfor-mance of thermochemical biorefineries integrated with forest industries,as well as methods for evaluating those supply chains.

This work shows that there is an economic benefit for integration with the traditional forest industry for thermochemical biorefineries.This is especially true when the biorefinery concept can replace cur-rent old industrial equipment on site which can significantly improvethe economic performance of the biorefinery, highlighting the role the Swedish forest industry could play to reach a cost efficient large-scale implementation of lignocellulosic biorefineries.

The cost for biomass is a large contributor to the total cost of biore-fineries and for traditional techno-economic evaluations, the biomass prices are considered as static variables. A large-scale biorefinery will likely have an impact on the biomass market, which could lead to both changes in the biomass price, as well as changed biomass demand for other industries. A framework where this is accounted for was intro-duced, combining a techno-economic perspective for evaluating the sup-ply chain performance, with a market model which identifies changes in biomass price and allocation due to the increased biomass competition.

The biorefinery performance can be determined from several per-spectives and system boundaries, both from a plant-level and a national perspective. To facilitate a large-scale introduction of biorefineries and  maximise the benefit from their implementations, there is a need to identify biorefinery concepts with high performance considering severa system boundaries, which has been explored in this work.

Biorefineries for the production of fuels, chemicals, or materials can be an important contributor to reducing dependence on fossil fuels. The economic performance of the biorefinery supply chain can be increased by, for example, industrial integration to utilise excess heat and products, increasing size to improve economy of scale, and using intermediate upgrading to reduce feedstock transport cost. To enable a large-scale introduction of biorefineries it is important to identify cost efficient supply chain configurations.

This work investigates a lignocellulosic biorefinery concept integrated with forest industry, focusing on how different economic conditions affect the preferred supply chain configurations. The technology investigated is black liquor gasification, with and without the addition of pyrolysis liquids to increase production capacity. Primarily, it analyses trade-offs between high biomass conversion efficiency and economy of scale effects, as well as the selection of centralised vs. decentralised supply chain configurations.

The results show the economic advantage for biomass efficient configurations, when the biorefinery investment is benefited from an alternative investment credit due to the replacement of current capital-intensive equipment at the host industry. However, the investment credit received heavily influenced the cost of the biorefinery and clearly illustrates the benefit for industrial integration to reduce the cost of biorefineries. There is a benefit for a decentralised supply chain configuration under very high biomass competition. However, for lower biomass competition, site-specific conditions will impact the favourability of either centralised or decentralised supply chain configurations.

A large amount of energy is required in the production of steel where the preheating of blast in the hot blast stoves for iron-making is one of the most energy-intensive processes. To improve the energy efficiency of the steelmaking it is necessary to investigate how to improve the hot blast stove operation.In this work a mathematic model for evaluating the performance of the hot blast stove was developed using a finite difference approximation for the heat transfer inside the stove during operation. The developed model was calibrated and validated by using the process data from hot blast stove V26 at SSABs plant in Oxelösund, Sweden. The investigation shows a good agreement between the measured and modelled data.As a case study, the developed model was used to simulate the effect of a new concept of OxyFuel technique to hot blast stoves. The investigation shows that, by using this OxyFuel technique, it is possible to maintain the blast temperature while removing the usage of coke oven gas (COG). The saved COG can be used to replace some fossil fuel, such as oil and LPG.Furthermore, the effect of the cycle time on the single stove was studied. As expected, both the hot blast and flue gas temperatures are increased when increasing the cycle time. This shows that it is a good strategy for the hot blast stove to increase the blast temperature if the stove is currently not operated with the maximum allowed flue-gas temperature.