Substitution between coal and wood in Europe

Forest Policy and Economics, 2012

In this study, we examine the effects of the price for fossil fuel CO 2 emissions on the use of wood in Europe. In particular, we assess the economic potential to substitute wood for coal in large scale heat and power production. We also review the impacts of increased energy wood usage on the forest industry and roundwood prices. The analysis is conducted with the European Forest and Agricultural Sector Optimization Model. We consider three scenarios, where carbon price remains at 20 €/tCO 2 , increases to 50 €/tCO 2, or increases to 110 euro/tCO 2 by 2040. It seems that a carbon price higher than 20 €/tCO 2 is required to increase wood based energy production. At prices below 50 €/tCO 2 , energy wood consists mainly of forest chips, recycled wood, bark, and black liquor. At the carbon price of 50 €/tCO 2 , the use of wood for energy begins to compete with the use of wood in the forest industry. At the price of 110 €/tCO 2 , roughly one third of wood used in large scale heat and power production would also be suitable for material use. Even then, the contribution of wood based energy in reaching the EU RES target is modest, since the availability of wood limits its increased use in energy production.

Energies, 2012

This study examines fuel switching in electricity production following the introduction of the European Union's Emissions Trading System (EU ETS) for greenhouse gas emissions. A short-run restricted cost equation is estimated with carbon permits, high-carbon fuels, and low carbon fuels as variable inputs. Shadow values and substitution elasticities for carbon-free energy resources from nuclear, hydroelectric and renewable sources are imputed from the cost equation. The empirical analysis examines 12 European countries using monthly data on fuel use, prices, and electricity generation during the first phase of the European Emissions Trading System. Despite low emission permit prices, this study finds statistically significant substitution between fossil fuels and carbon free sources of energy for electric power production. Significant substitution between fossil fuels and nuclear energy also was found. Still, while 18 of the 20 substitution elasticities are statistically significant, they are all less than unity, consistent with limited substitution. Overall, these results suggest that prices for carbon emission permits relative to prices for carbon and carbon free sources of energy do matter but that electric power producers have limited operational flexibility in the short-run to satisfy greenhouse gas emission limits.

International Journal of Forest Engineering, 2012

Use of bioenergy based on woody biomass has become increasingly important in recent years, especially in European countries. In three case studies from Scandinavia, we conducted life cycle assessment (LCA) of alternative wood fuel supply chains (WFSCs) with respect to greenhouse gas (GHG) emissions, energy use, and costs. Case study 1 is a local Norwegian supply chain, while case studies 2 and 3 are international WFSCs, where woody biomass is exported to Sweden from respectively lowland and mountain forests in Norway. The GHG emissions and energy use in the case of wood chip exportation from Norway to Sweden were lower than in the local alternative use of the biomass. The emissions were 31.7 kg CO 2e /m 3 solid over bark (67.4 kg CO 2e /MWh) for case study 1; 22.2 kg CO 2e /m 3 solid over bark (47.2 kg CO 2e /MWh) for case study 2; and 23.9 kg CO 2e /m 3 solid over bark (50.8 kg CO 2e /MWh) for case study 3. From a GHG point of view, WFSCs with relatively long transport distances were best when transportation was by railway and the combustion plant had high efficiency. The highest GHG emissions occurred in the truck transportation and chipping operations. Energy input-output ratios show that for case studies 1, 2, and 3, respectively, the fossil fuel energy inputs were 4.5%, 3.4%, and 4% of the bioenergy produced. Forest fuels from mountain forests in Norway seem promising for filling the high demand for wood fuel in Sweden, where bioenergy use is relatively high. In all case studies, the GHG balance was positive, especially when wood fuel plants substituted energy production from coal and oil plants. The cost analysis showed that wood chip import from Norway to Sweden was economically feasible.

Dissertationes Forestales, 2019

European energy and environmental policies have extensive effects on the Nordic forest products market. This thesis focuses on four main questions. First, the effects of global changes in the consumption, production, and trade of Finnish and Swedish forest products market. Second, investigate the effects of the policies on the substitution of fossil fuel (coal) by a solid form forestbased biofuel. Third, compares and evaluates Nordic countries’ research perception with the European Union’s other regions’, based on experts’ perceptions on attaining the European Union’s 2020 targets. Fourth, forecasts the interaction between the renewable energy and wood fuel energy production of Sweden, Finland, Denmark, and Norway. The first and fourth studies followed econometric analysis, the second study executes by developing a theoretical model, and third studies followed a questionnaire survey analysis. The results show that during 1981–2012, structural break years are 1991 and 1992 for the Fi...

Environmental Economics and Investment Assessment, 2006

Despite the significant boost that some renewable energy sources have undergone lately, partly promoted by the favourable EU legislation, biomass seems to face difficulties in realising its expected share in energy production. Some major reasons for this are the complexity of a bioenergy system and its related fuel supply chain, the wide variety of available technologies and most importantly the low and uncertain financial yield of bioenergy projects. This paper utilizes an innovative generic methodology for performing investment analysis in parallel with optimization of the location and the key characteristics of the biomass-to-energy project. This methodology may serve as a decision support tool for potential investors and may assist in promoting relevant investment decisions. The model developed focuses on the holistic optimization of the design and operational characteristics of a biomass energy conversion facility, including the discrete phases of biomass logistics, energy conversion and final energy products supply. The innovative ideas of using multiple biomass sources as well as employing tri-generation for district energy applications aim at proposing a more cost-effective system layout for biomass energy exploitation. In addition to these ideas, the recent issue of emissions trading and its potential impact on a bioenergy project is investigated in this paper. The analysis performed concludes that emissions trading is of extremely high importance for biomass-to-energy projects, as it may prove to be a major revenue stream.

Technological Forecasting and Social Change, 2009

Under the Kyoto Protocol, governments agreed on and accepted CO 2 reduction targets in order to counter climate change. In Europe one of the main policy instruments to meet the agreed reduction targets is CO 2 emission-trading (CET), which was implemented as of January 2005. In this system, companies active in specific sectors must be in the possession of CO 2 emission rights to an amount equal to their CO 2 emission. In Europe, electricity generation accounts for one-third of CO 2 emissions. Since the power generation sector, has been liberalized, reregulated and privatized in the last decade, around Europe autonomous companies determine the sectors' CO 2 emission. Short-term they adjust their operation, long-term they decide on (dis) investment in power generation facilities and technology selection. An agent-based model is presented to elucidate the effect of CET on the decisions of power companies in an oligopolistic market. Simulations over an extensive scenario-space show that there CET does have an impact. A long-term portfolio shift towards less-CO 2 intensive power generation is observed. However, the effect of CET is relatively small and materializes late. The absolute emissions from power generation rise under most scenarios. This corresponds to the dominant character of current capacity expansion planned in the Netherlands (50%) and in Germany (68%), where companies have announced many new coal based power plants. Coal is the most CO 2 intensive option available and it seems surprising that even after the introduction of CET these capacity expansion plans indicate a preference for coal. Apparently in power generation the economic effect of CO 2 emission-trading is not sufficient to outweigh the economic incentives to choose for coal.

International Journal of Forest Engineering, 2012

Considering the ambitious goals to increase the share of renewable energies in the heat, power and transport sector, wood energy plays an important role in Germany´s energy transition. However, various wood market outlooks and scenarios describe the limitations of wood mobilization in Germany. This could result in rising wood prices, as well as in higher competition among wood fuel consumers. In that context, this paper deals with the question of which wood energy conversion pathways are most competitive in Germany. With regard to the feedstock prices, the competitiveness of various wood fuel conversion pathways is assessed. Applying the concept of ceiling prices, combined heat and power plants are relatively vulnerable to increasing wood prices. The ceiling prices of synthetic biofuels already reach high levels. However, their market entry depends on many other aspects. If fossil fuel prices continue to rise, heat provision from woody biomass remains a very attractive option in Germany. But different types of wood fractions are suitable as wood fuels, and an analysis of wood fuel qualities and prices provides more insights in the economic viability of wood energy pathways and their possible role in Germany´s energy transition.

2011

This thesis contains three papers. Paper I: Demand for waste as fuel in the Swedish district heating sector: a production function approach This paper evaluates inter-fuel substitution in the Swedish district heating industry by analyzing the district heating plants in Sweden in the period 1989 to 2003, specifically those plants incinerating waste. A multi-output plant-specific production function is estimated using panel data methods. A procedure for weighting the elasticities of factor demand to produce a single matrix for the whole industry is introduced. The price of waste is assumed to increase in response to the energy and CO 2 tax on waste-to-energy incineration that was introduced in Sweden on 1 July 2006. Analysis of the plants involved in waste incineration indicates that an increase in the net price of waste by 10% is likely to reduce the demand for waste by 4.2%, and increase the demand for bio-fuels, fossil fuels, other fuels and electricity by 5.5%,

Energy Policy, 2011

This paper assesses the increase in demand and supply for forest biomass for heating in Norway in 2020. By then there is a political aim to double the national production of bioenergy from the level in 2008. The competitiveness of woody biomass in central and district heating is analyzed in a model selecting the least-cost heating technology and scale in municipalities given a set of constraints and under different fuels price scenarios. The supply of forest biomass from roundwood is estimated based on data of forest inventories combined with elasticities regarding price and standing volumes. The supply of biomass from harvesting residues is estimated in an engineering approach based on data from the national forest inventories and roundwood harvest. The results show how the production of bioenergy is affected by changes in energy prices and support schemes for bioenergy. One conclusion from the analyses is that the government target of 14 TWh more bioenergy by 2020 is not likely to be met by current technologies and policy incentives. The contribution of the analysis is the detailed presentation of the heat market potentials and technology choices combined with supply functions for both roundwood and harvesting residues.

Fuel and Energy Abstracts, 2011

The Finnish energy industry is subject to policy decisions regarding renewable energy production and energy efficiency. Conventional electricity generation has environmental side-effects that may cause global warming. Renewable fuels are superior because they offer near-zero net emissions.