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Competition for forest resources between the biofuels and the forest industry in Sweden

Dijkman, Teunis (2009) FMI820 20091
Environmental and Energy Systems Studies
Abstract
The aim of this project was to determine the consequences of the large-scale introduction of wood-based biofuels in the road transport sector. Therefore a model has been developed to project the demand for wood in Sweden in the period from 2007 to 2050. The wood-using sectors that were taken into account are: the sawmill industry; the paper and pulp industry, which was split in three: integrated chemical paper mills, integrated mechanical paper mills, and chemical market pulp mills; the district heating (DH) sector; the electricity sector; the producers of bioethanol; and Fischer-Tropsch (FT) diesel producers.As the Swedish forest industry is export-oriented, working on the global market, the wood demand for the sawmill, paper and pulp... (More)
The aim of this project was to determine the consequences of the large-scale introduction of wood-based biofuels in the road transport sector. Therefore a model has been developed to project the demand for wood in Sweden in the period from 2007 to 2050. The wood-using sectors that were taken into account are: the sawmill industry; the paper and pulp industry, which was split in three: integrated chemical paper mills, integrated mechanical paper mills, and chemical market pulp mills; the district heating (DH) sector; the electricity sector; the producers of bioethanol; and Fischer-Tropsch (FT) diesel producers.As the Swedish forest industry is export-oriented, working on the global market, the wood demand for the sawmill, paper and pulp industry was based on current and expected future developments in the production costs and product prices. For the DH sector, the demand was based on the estimated potential for DH, assuming unchanged policy. The same assumption was used for the electricity sector.The transport demand developments are coupled to economic growth. As the present coupling (= the ratio of annual transport growth to annual economic growth percentages) is different for passenger and freight transport, the demand for transport was split in passenger and freight transport demand. It was assumed that government policy results in diminishing the coupling ratios. From this, the future total distance covered by vehicles was calculated, which was used to calculate the future wood demand from the transport sector. The model took three renewable transport fuels into account: bioethanol, electricity, and FT-diesel. The first two were used in passenger transport; FT-diesel was used in freight transport. The market introduction was assumed to start in 2011 for bioethanol and FT-diesel, and in 2020 for electric vehicles. The electricity for electric vehicles was assumed to be produced by CHP-plants in the DH sector.The vehicle stock in the model was rejuvenated in a regular way. The choice between different fuel types for the cars to be replaced was done each year on basis of fuel costs, and can be influenced by taxes and subsidies.Once the wood demands for all sectors are known, the model calculates the total demand for sawwood, pulpwood, wood chips, and bark. Based on differences in the sector's abilities to pay for the wood, the model calculates which sectors receive wood, and what quantities.The model was used to study three scenarios: a CO2 price scenario, a Subsidy scenario, and a Sustainability scenario. The CO2 price scenario was based on pricing of fossil CO2 production. The Subsidy Scenario combined exemptions of energy tax for renewable fuels with subsidies for purchasing renewable-energy fuelled vehicles. For the first 2 scenarios, subscenarios were made for low, average and high taxes and subsidies. The Sustainability scenario combined energy and CO2 exemptions for biofuels with high subsidies for purchase of biofuel vehicles.The results of these scenarios were used to test if the measures would be sufficient to fulfil targets set for the introduction of biofuels from domestic forests. The targets increased from 2.5% in 2020 to 75% of the energy used in transport in 2050. For the scenarios with average subsidies and/or taxes, all but one target for the biofuel introduction are reached. In the subscenarios in with higher taxes and more subsidies, all targets were reached too. The subscenarios in which the measures were less powerful (lower taxes or subsidies), the results differed: in the CO2 price scenario, they were fulfilled from 2030 onwards; in the Subsidy scenario all targets were met.A competition for wood was observed in all scenarios. In the CO2 price and Subsidy scenarios, the transport biofuel sectors' abilities to pay for wood were initially too low to purchase wood. However, once these sectors were able to compete with other sectors, it the paper and pulp industry was the sector which was the first to lose the competition. This resulted in lower production levels, in some scenarios even in closing down of the entire sector. In some scenarios, the DH sector and the sawmill industry were affected by the competition as well. In the Sustainability scenarios, all other sectors were forced to close down as a consequence of rapidly rising wood prices.To test the robustness of the model outcomes, a sensitivity analysis was performed in which 5 important parameters of the verage†subscenarios were varied: economic growth, forest industry product price, annual increment of the wood stock, biofuel production cost development, and oil price. These analyses demonstrated robustness with regard to changes in the first 4 inputs. However, the height of the oil price was shown to influence seriously the outcomes of most scenarios. A low oil price ($30/barrel in 2007, rising to $50 in 2050) slowed the introduction of biofuels, a high oil price ($50 in 2007, $110 in 2050) resulted in a faster introduction. For the average scenarios, the oil price was assumed at $40 in 2007, increasing to $80 in 2050. However, the sustainability scenario was not sensitive to the oil price levels. (Less)
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author
Dijkman, Teunis
supervisor
organization
course
FMI820 20091
year
type
H3 - Professional qualifications (4 Years - )
subject
keywords
Competion for wood, biofuels, transport sector, scenarios, modelling
report number
TFEM--09/5042
other publication id
LUTFD2/TFEM--09/5042--SE + (1-67)
language
English
id
4468120
date added to LUP
2014-06-18 11:26:41
date last changed
2014-06-18 11:26:41
@misc{4468120,
  abstract     = {The aim of this project was to determine the consequences of the large-scale introduction of wood-based biofuels in the road transport sector. Therefore a model has been developed to project the demand for wood in Sweden in the period from 2007 to 2050. The wood-using sectors that were taken into account are: the sawmill industry; the paper and pulp industry, which was split in three: integrated chemical paper mills, integrated mechanical paper mills, and chemical market pulp mills; the district heating (DH) sector; the electricity sector; the producers of bioethanol; and Fischer-Tropsch (FT) diesel producers.As the Swedish forest industry is export-oriented, working on the global market, the wood demand for the sawmill, paper and pulp industry was based on current and expected future developments in the production costs and product prices. For the DH sector, the demand was based on the estimated potential for DH, assuming unchanged policy. The same assumption was used for the electricity sector.The transport demand developments are coupled to economic growth. As the present coupling (= the ratio of annual transport growth to annual economic growth percentages) is different for passenger and freight transport, the demand for transport was split in passenger and freight transport demand. It was assumed that government policy results in diminishing the coupling ratios. From this, the future total distance covered by vehicles was calculated, which was used to calculate the future wood demand from the transport sector. The model took three renewable transport fuels into account: bioethanol, electricity, and FT-diesel. The first two were used in passenger transport; FT-diesel was used in freight transport. The market introduction was assumed to start in 2011 for bioethanol and FT-diesel, and in 2020 for electric vehicles. The electricity for electric vehicles was assumed to be produced by CHP-plants in the DH sector.The vehicle stock in the model was rejuvenated in a regular way. The choice between different fuel types for the cars to be replaced was done each year on basis of fuel costs, and can be influenced by taxes and subsidies.Once the wood demands for all sectors are known, the model calculates the total demand for sawwood, pulpwood, wood chips, and bark. Based on differences in the sector's abilities to pay for the wood, the model calculates which sectors receive wood, and what quantities.The model was used to study three scenarios: a CO2 price scenario, a Subsidy scenario, and a Sustainability scenario. The CO2 price scenario was based on pricing of fossil CO2 production. The Subsidy Scenario combined exemptions of energy tax for renewable fuels with subsidies for purchasing renewable-energy fuelled vehicles. For the first 2 scenarios, subscenarios were made for low, average and high taxes and subsidies. The Sustainability scenario combined energy and CO2 exemptions for biofuels with high subsidies for purchase of biofuel vehicles.The results of these scenarios were used to test if the measures would be sufficient to fulfil targets set for the introduction of biofuels from domestic forests. The targets increased from 2.5% in 2020 to 75% of the energy used in transport in 2050. For the scenarios with average subsidies and/or taxes, all but one target for the biofuel introduction are reached. In the subscenarios in with higher taxes and more subsidies, all targets were reached too. The subscenarios in which the measures were less powerful (lower taxes or subsidies), the results differed: in the CO2 price scenario, they were fulfilled from 2030 onwards; in the Subsidy scenario all targets were met.A competition for wood was observed in all scenarios. In the CO2 price and Subsidy scenarios, the transport biofuel sectors' abilities to pay for wood were initially too low to purchase wood. However, once these sectors were able to compete with other sectors, it the paper and pulp industry was the sector which was the first to lose the competition. This resulted in lower production levels, in some scenarios even in closing down of the entire sector. In some scenarios, the DH sector and the sawmill industry were affected by the competition as well. In the Sustainability scenarios, all other sectors were forced to close down as a consequence of rapidly rising wood prices.To test the robustness of the model outcomes, a sensitivity analysis was performed in which 5 important parameters of the verage†subscenarios were varied: economic growth, forest industry product price, annual increment of the wood stock, biofuel production cost development, and oil price. These analyses demonstrated robustness with regard to changes in the first 4 inputs. However, the height of the oil price was shown to influence seriously the outcomes of most scenarios. A low oil price ($30/barrel in 2007, rising to $50 in 2050) slowed the introduction of biofuels, a high oil price ($50 in 2007, $110 in 2050) resulted in a faster introduction. For the average scenarios, the oil price was assumed at $40 in 2007, increasing to $80 in 2050. However, the sustainability scenario was not sensitive to the oil price levels.},
  author       = {Dijkman, Teunis},
  keyword      = {Competion for wood,biofuels,transport sector,scenarios,modelling},
  language     = {eng},
  note         = {Student Paper},
  title        = {Competition for forest resources between the biofuels and the forest industry in Sweden},
  year         = {2009},
}