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Bryngemark, E. (2019). Second generation biofuels and the competition for forest raw materials: A partial equilibrium analysis of Sweden. Forest Policy and Economics, 109, Article ID 102022.
Open this publication in new window or tab >>Second generation biofuels and the competition for forest raw materials: A partial equilibrium analysis of Sweden
2019 (English)In: Forest Policy and Economics, ISSN 1389-9341, E-ISSN 1872-7050, Vol. 109, article id 102022Article in journal (Refereed) Published
Abstract [en]

In order to reach the renewable energy policy targets in the transport sector, biofuels from forest raw materials (e.g., harvesting residues) can play an important role. However, these raw materials are currently used in both the heat and power (HP) sector and the traditional forest industries. It is essential to understand how these sectors would be affected by an increased penetration of second generation (2G) biofuels. This study investigates price development and resource allocation in the Swedish forest raw materials market in the presence of 5–30 TWh of 2G biofuel production. Sweden is an interesting case study due to its well-developed forest industries and mature district heating sector, something which makes it a suitable country for future 2G biofuel production. A national partial equilibrium model of the forest sector is extended with a 2G biofuel module to address the impacts of such production. The simulation results show increasing forest industry by-product (e.g. sawdust) prices, thus displaying that the 2G biofuel targets lead to increased raw material competition. The higher feedstock prices make the use of forest biomass in the HP sector less profitable, but we find meagre evidence of substitution of fossil fuels for by-products. In this sector, there is instead an increased use of harvesting residues. Fiberboard and particleboard production ceases entirely due to increased input prices. There is also evidence of synergy effects between the sawmill sector and the use of forest raw materials in the HP sector. Higher by-product prices spur sawmills to produce more sawnwood, something that in turn induces forest owners to increase harvest levels. Already in the 5 TWh Bio-SNG scenario, there is an increase in the harvest level, suggesting that this by-product effect kicks in from start.

Place, publisher, year, edition, pages
Elsevier, 2019
Keywords
Second generation biofuels, Partial equilibrium model, Forest raw materials, By-products, Sweden
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:ltu:diva-76847 (URN)10.1016/j.forpol.2019.102022 (DOI)2-s2.0-85075103992 (Scopus ID)
Note

Validerad;2019;Nivå 2;2019-11-25 (johcin)

Available from: 2019-11-25 Created: 2019-11-25 Last updated: 2019-12-06Bibliographically approved
Bryngemark, E. (2019). The Competition for Forest Raw Materials in the Presence of Increased Bioenergy Demand: Partial Equilibrium Analysis of the Swedish Case. (Licentiate dissertation). Luleå: Luleå University of Technology
Open this publication in new window or tab >>The Competition for Forest Raw Materials in the Presence of Increased Bioenergy Demand: Partial Equilibrium Analysis of the Swedish Case
2019 (English)Licentiate thesis, comprehensive summary (Other academic)
Abstract [en]

Growing energy use and greenhouse gas emissions have implied an increased attention to the development of renewable energy sources. Bioenergy from forest biomass is expected to be one of the cornerstones in reaching renewable energy targets, especially in forest-rich countries such as Sweden. However, forest biomass is a limited resource, and an intensified use of bioenergy could affect roundwood and forest products’ markets in several ways. The overall purpose of this thesis is to analyze price formation and resource allocation of forest raw materials in the presence of increased bioenergy demand. The empirical focus is on the competition for wood fibres between bioenergy use and the traditional forest industries, as well as synergy effects between the various sectors using forest raw materials. The methodologic approach is partial equilibrium modeling (forest sector model), and the geographical focus is on Sweden. The thesis comprises three self-contained articles, which all address the above issues.

The first paper presents an economic assessment of two different policies – both implying an increased demand for forest ecosystem services – and how these could affect the competition for forest raw materials. A forest sector trade model is updated to a new base year (2016), and used to analyze the consequences of increased bioenergy use in the heat and power (HP) sector as well as increased forest conservation in Sweden. These overall scenarios are assessed individually and in combination. The results show how various forest raw material-using sectors are affected in terms of price changes and responses in production. A particularly interesting market impact is that bioenergy promotion and forest conservation tend to have opposite effects on forest industry by-product prices. Moreover, combining the two policies mitigates the forest industry by-product price increase compared to the case where only the bioenergy-promoting policy is implemented. In other words, the HP sector is less negatively affected in terms of increased feedstock prices if bioenergy demand target are accompanied by increased forest conservation. This effect is due to increasing pulpwood prices, which reduces pulp, paper and board production, and in turn mitiges the competition for the associated by-products. Overall, the paper illustrates the great complexity of the forest raw material market, and the importance of considering demand and supply responses within and between sectors in energy and forest policy designs.

The second article investigates the forest raw material market effects from introducing second-generation transport biofuel (exemplified by Bio-SNG) production in Sweden. Increases in Bio-SNG demand between 5 and 30 TWh are investigated. The simulation results illustrate increasing forest industry by-product (i.e., sawdust, wood chips and bark) prices, not least in the high-production scenarios (i.e. 20-30 TWh). This suggests that increases in second-generation biofuel productions lead to increased competition for the forest raw materials. The higher feedstock prices make the HP sector less profitable, but very meagre evidence of substitution of fossil fuels for by-products can be found. In this sector, there is instead an increased use of harvesting residues. Fiberboard and particleboard production ceases entirely due to increased input prices. There is also evidence of synergy (“by-product”) effects between the sawmill sector and the use of forest raw materials in the HP sector. Higher by-product prices spur sawmills to produce more sawnwood, something that in turn induces forest owners to increase harvest levels. Already in the 5 TWh Bio-SNG scenario, there is an increase in the harvest level, thus suggesting that the by-product effect kicks in from start.

Biofuels and green chemicals are likely to play significant roles in achieving the transition towards a zero-carbon society. However, large-scale biorefineries are not yet cost-competitive with their fossil-fuel counterparts, and it is therefore important to identify biorefinery concepts with high economic performance in order to achieve widespread deployment in the future. For evaluations of early-stage biorefinery concepts, there is a need to consider not only the technical performance and the process costs, but also the performance of the full supply chain and the impact of its implementation in the feedstock and products markets. The third article presents – and argues for – a conceptual interdisciplinary framework that can form the basis for future evaluations of the full supply-chain performance of various novel biorefinery concepts. This framework considers the competition for biomass feedstocks across sectors, and assumes exogenous end-use product demand and various geographical and technical constraints. It can be used to evaluate the impacts of the introduction of various biorefinery concepts in the biomass markets in terms of feedstock allocations and prices. Policy evaluations, taking into account both engineering constraints and market mechanisms, should also be possible.

Overall, the thesis illustrates the importance of considering the market effects when designing and evaluating forest policies and bioenergy policy targets. The forest industry sector and the bioenergy sector are closely interlinked and can both make or break one another depending on the policy design. The results indicate that for an increased demand of bioenergy, an industrial transformation is to be expected, as well as increased roundwood harvest.

Place, publisher, year, edition, pages
Luleå: Luleå University of Technology, 2019. p. 127
Series
Licentiate thesis / Luleå University of Technology, ISSN 1402-1757
Keywords
bioenergy, biodiversity, partial equilibrium model, forest raw materials, market competition, Sweden
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:ltu:diva-72540 (URN)978-91-7790-298-0 (ISBN)978-91-7790-299-7 (ISBN)
Presentation
2019-02-07, A109, Luleå Tekniska Universitet, Luleå, 10:00 (English)
Opponent
Supervisors
Available from: 2019-01-14 Created: 2019-01-14 Last updated: 2019-09-11Bibliographically approved
Lundmark, R., Wetterlund, E., Lundgren, J., Ouraich, I., Bryngemark, E., Zetterholm, J., . . . Andersson, S. (2016). Projekt: En hållbar omställning av energisystemet mot en ökad andel bioenergi. Paper presented at .
Open this publication in new window or tab >>Projekt: En hållbar omställning av energisystemet mot en ökad andel bioenergi
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2016 (English)Other (Other (popular science, discussion, etc.))
Abstract [en]

3 PhD projects: Markets and price formulation (LTU, economics); Technologies and value chains (Chalmers) and; Location and industrial change (LTU, energy engineering). The general system perspective has its starting point in the importance of biomass and bioenergy in the transition to a long-run sustainable energy system and to an efficient spatial resource utilization and production with increased value chains. Focus is on biorefineries. A spatial approach will be applied in combination with national energy system modelling in connection with technological development potentials and industrial applications is linked to the feed-stock supply as well as market and policy issues.

National Category
Economics Energy Engineering
Research subject
Economics; Energy Engineering
Identifiers
urn:nbn:se:ltu:diva-36273 (URN)d62ce193-52d2-4d90-ac51-c62ff55484df (Local ID)d62ce193-52d2-4d90-ac51-c62ff55484df (Archive number)d62ce193-52d2-4d90-ac51-c62ff55484df (OAI)
Note

Finansieringskälla: Public research programme (public); Forskningsprogram: Energimyndigheten; Belopp: 12 110 000,00 Svenska kronor; Publikationer: A Geographically Explicit Approach for Price Determination of Forest Feedstock under Different Next-Generation Biofuel Production Scenarios – The Case of Sweden; Status: Ongoing; Period: 01/09/2015 → 31/12/2018

Available from: 2016-09-30 Created: 2016-09-30 Last updated: 2019-06-26Bibliographically approved
Lundmark, R., Ouraich, I., Nolander, C., Andersson, S., Olofsson, E., Bryngemark, E., . . . Pettersson, K. (2016). Projekt: Storskalig utbyggnad av bioraffinaderier: Nya värdekedjor, produkter och effektivt utnyttjande av skoglig biomassa. Paper presented at .
Open this publication in new window or tab >>Projekt: Storskalig utbyggnad av bioraffinaderier: Nya värdekedjor, produkter och effektivt utnyttjande av skoglig biomassa
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2016 (Swedish)Other (Other (popular science, discussion, etc.))
Abstract [sv]

Utvecklingen av kommersiella bioraffinaderikoncept är av strategisk betydelse för Sveriges utveckling till en biobaserad ekonomi. Bioraffinaderier bidrar till att ersätta fossila med biobaserade råvaror. Dessutom bidrar de till en smartare användning av biomassa, ökat förädlingsvärde samt utvecklingspotentialen av nya bioprodukter. Tekniska potentialer och industriella tillämpningar sammanlänkas med råvaruförsörjning samt marknads-, innovations- och policyaspekter. Projektet är tvärvetenskapligt och omfattar integration av modeller som kan redogöra för samspelet mellan olika sektorer, som inkluderar geografiska variationer av utbud och efterfrågan av skoglig biomassa, och som kan fånga effekterna av förändrade marknadsvillkor och styrmedel. För modellintegrationen kommer verktyg tas fram för att underlätta kommunikation och återkoppling mellan de ingående modellerna. Projektet syftar till att generera ny kunskap och ett modellramverk för avancerade systemanalyser relaterade till (i) den svenska biomassa och dess roll i ett hållbart energisystem och (ii) industriell omvandling av processindustrin i riktning mot ett framtida bioraffinaderi branschen. Genomförandefasen bygger på tre uppgiftsområden.

Keywords
Bioenergi, Förnybar energi, Skog, modell integration
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:ltu:diva-36296 (URN)e4a8ce3c-8523-4d80-aeda-f2d660e7cf9c (Local ID)e4a8ce3c-8523-4d80-aeda-f2d660e7cf9c (Archive number)e4a8ce3c-8523-4d80-aeda-f2d660e7cf9c (OAI)
Note

Finansieringskälla: Public research programme (public); Forskningsprogram: Formas; Belopp: 7,00 Svenska kronor; Publikationer: A Geographically Explicit Approach for Price Determination of Forest Feedstock under Different Next-Generation Biofuel Production Scenarios – The Case of Swedena; Status: Pågående; Period: 01/06/2015 → 31/01/2018

Available from: 2016-09-30 Created: 2016-09-30 Last updated: 2019-06-26Bibliographically approved
Organisations
Identifiers
ORCID iD: ORCID iD iconorcid.org/0000-0001-9606-5981

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