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.

The purpose of this paper is to investigate the relationship between green industrial policies and domestic biofuel production among OECD countries. The analysis builds on a data set including 24 OECD countries over the time period 2000–2016. This panel is estimated using a variant of the so-called Poisson pseudo-maximum-likelihood model and includes 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 a positive relationship between blending mandates and domestic biofuel production. Thus, a more stringent blending mandate does not only increase the use of biofuels, but also domestic production (as a share of total fuel use). Government R&D has not, however, induced domestic biofuel industrialization processes. The results even suggest a negative interaction effect between government R&D and blending mandates, in turn implying that these two polices target different technological fields. The blending mandates tend to primarily favor commercialized first-generation biofuels, while government support to biofuel R&D has instead been focused on advanced biofuel technology.

This 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 then employed to analyze the consequences of a more intense use of bioenergy and increased forest conservation in Sweden. These scenarios are assessed individually and in combination. 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. Namely, the energy using sector (heat and power) is less negatively affected in terms of increased feedstock prices if bioenergy demand targets are accompanied by increased forest conservation. This effect is due to increasing pulpwood prices, which reduces pulp, paper and board production, and in turn mitigates the competition for the associated by-products. Overall, the paper illustrates the 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 decision-making.

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.