This thesis examines the economics of biofuel development by studying the forest raw material market impacts of increased biofuel production, as well as the role of specific policy incentives. Paper [I] presents an economic assessment of two different developments – both implying an increased demand for forest ecosystem services – and how these could affect the competition for forest raw materials. A Swedish forest sector trade model is updated to a new base year and used to analyze the consequences of: (a) increased bioenergy use in the heat and power sector; and (b) increased forest conservation. A particularly interesting market impact is that bioenergy promotion and forest conservation tend to have opposite effects on forest industry by-product prices. Furthermore, combining the two scenarios mitigates the forest industry by-product price increase compared to the case where only the bioenergy-promoting scenario is implemented. In other words, the heat and power sector is less negatively affected in terms of increased feedstock prices if a bioenergy demand increase is accompanied by increased forest conservation. Paper [2] explores the forest product market impacts of increased domestic second-generation (2G) biofuel production in Sweden. Changes in forest raw material prices and resource allocation are assessed using a forest sector trade model, which has been extended with a 2G biofuel module to address such production. The simulation results show increasing forest industry by-product prices, e.g., displaying that increased 2G biofuel production leads to a more intense raw material competition. The higher feedstock prices make the use of forest biomass in the heat and power sector less profitable. Still, we find little evidence of substitution of fossil fuels for by-products. There is also evidence of synergy effects in that the higher by-product prices spur sawmills to produce more sawn wood, something which in turn induces forest owners to increase harvest levels. Paper [3] presents and demonstrates a conceptual interdisciplinary framework that can constitute the basis for evaluations of the full supply-chain performance of various biorefinery concepts. The framework involves soft-linking a bottom-up and a top-down model; it considers the competition for biomass across sectors, assumes exogenous end-use product demand, and incorporates various geographical and technical constraints. We demonstrate this framework empirically by modelling the case of a sawmill-integrated biorefinery, which produces liquefied biomethane from forest industry residues. This case shows, among other things, the importance of acknowledging price change responses when evaluating supply chains. Paper [4] studies the relationship between green industrial policies and domestic biofuel production among 24 OECD countries over the period 2000-2016. This panel is estimated using a variant of the so-called Poisson pseudo-maximum-likelihood model, and incorporates the mix of demand-pull (biofuel blending mandates) and technology-push policies (government R&D), as well as the interaction between these two types of instruments. The results suggest that a more stringent blending mandate tends not only to increase the use of biofuels, but also domestic production. Government R&D has not, however, induced domestic biofuel industrialization processes. The results instead imply that these two polices target different technological fields, in turn leading to no positive interaction between demand-pull and technology-push policies. Finally, Paper [5] investigates the factors that tend to influence Swedish municipalities’ uptake of green public procurement (GPP) practices in the transport sector. The analysis builds on survey responses from civil servants representing 140 Swedish municipalities, complemented by secondary data on, for instance, municipality size. The survey collected information about both individual (e.g., education) and organizational characteristics (e.g., strategies). These data were used to estimate a bivariate probit model, which addresses the endogeneity in the GPP decision-making process. The results indicate that municipality size increases the likelihood of adopting a GPP strategy but decreases the likelihood for GPP uptake. This suggests that larger municipalities benefit from more resources (e.g., staff), but suffer from a larger organizational distance between the procuring and environmental departments. Finally, the results lend meagre support to the street-level bureaucracy hypothesis, i.e., that individual characteristics influence the uptake of GPP.

_{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.}