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Bioenergy versus forest conservation: a partial equilibrium analysis of the Swedish forest raw materials market
Luleå University of Technology, Department of Business Administration, Technology and Social Sciences, Social Sciences.ORCID iD: 0000-0001-9606-5981
2020 (English)In: Scandinavian Journal of Forest Research, ISSN 0282-7581, E-ISSN 1651-1891, Vol. 35, no 7, p. 367-382Article in journal (Refereed) Published
Abstract [en]

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.

Place, publisher, year, edition, pages
Taylor & Francis, 2020. Vol. 35, no 7, p. 367-382
Keywords [en]
Bioenergy, forest conservation, partial equilibrium model, forest raw materials, market competition, Sweden
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:ltu:diva-80731DOI: 10.1080/02827581.2020.1808696ISI: 000566979100001Scopus ID: 2-s2.0-85090316358OAI: oai:DiVA.org:ltu-80731DiVA, id: diva2:1465001
Note

Validerad;2020;Nivå 2;2020-09-28 (alebob)

Available from: 2020-09-08 Created: 2020-09-08 Last updated: 2021-03-11Bibliographically approved
In thesis
1. The Economics of Biofuel Development: Policy Incentives and Market Impacts
Open this publication in new window or tab >>The Economics of Biofuel Development: Policy Incentives and Market Impacts
2021 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

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.

Place, publisher, year, edition, pages
Luleå University of Technology, 2021
Series
Doctoral thesis / Luleå University of Technology 1 jan 1997 → …, ISSN 1402-1544
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:ltu:diva-83235 (URN)978-91-7790-779-4 (ISBN)978-91-7790-780-0 (ISBN)
Public defence
2021-05-04, A109, 13:00 (English)
Opponent
Supervisors
Available from: 2021-03-11 Created: 2021-03-11 Last updated: 2021-04-22Bibliographically approved

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