The bioenergies development: the role of biofuels and the CO2 price
AbstractReduction in energy dependancy and emissions of CO2 via renewables targeted in the European Union energy mix and taxation system might trigger the production of bioenergy production and competition for biomass utilization. Torrefied biomass could be used to produce second generation biofuels to replace some of the fuels used in transportation and is also suitable as feedstock to produce electricity in large quantities. This paper examines how the CO2 price aspects demand of torrefied biomass in the power sector and its consequences on the profitability of second generation biofuel units (Biomass to Liquid units). Indeed, the profitability of the BtL units which are supplied only by torrefied biomass is related to the competitive demand of the power sector driven by the CO2 price and feed-in tarifis. We propose a linear dynamic model of supply and demand. On the supply side, a profit-maximizing torrefied biomass sector is modelized. The model aims to represent the transformation of biomass into torrefied biomass which could be sold to the refinery sector and the power sector. A two-sided (demanders and supplier) bidding process led us to arrive at the equilibrium price for torrefied biomass. The French case is used as an example. Our results suggest that the higher the CO2 price, the more stable and important the power sector demand. It also makes the torrefied biomass production less vulnerable to uncertainty on demand coming from the refining sector. The torrefied biomass co-firing with coal can offer a near-term market for the torrefied biomass for a CO2 emission price lower than 20 euros/tCO2, which can stimulate development of biomass supply systems. Beyond 2020, the demand for torrefied biomass from the power sector could be substituted by the refining sector if the oil price goes up whatever the CO2 price.
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Bibliographic InfoPaper provided by Chaire Economie du Climat in its series Working Papers with number 1201.
Length: 34 pages
Date of creation: Jan 2012
Date of revision:
Bioenergy; CO2 price; Re nery market; Electricity market; Optimization.;
Other versions of this item:
- Pierre-André Jouvet & Frédéric Lantz & Elodie Le Cadre, 2011. "The bioenergies development: the role of biofuels and the CO2 price," Working Papers, INRA, Economie Publique 2011/02, INRA, Economie Publique.
- C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
- Q16 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - R&D; Agricultural Technology; Biofuels; Agricultural Extension Services
- Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
- Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources
- Q58 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Government Policy
This paper has been announced in the following NEP Reports:
- NEP-AGR-2012-01-18 (Agricultural Economics)
- NEP-ALL-2012-01-18 (All new papers)
- NEP-ENE-2012-01-18 (Energy Economics)
- NEP-ENV-2012-01-18 (Environmental Economics)
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