Unlocking the potential of the bioeconomy for climate change reduction: The optimal use of lignocellulosic biomass in Germany

The concept of a circular bioeconomy has become a new economic leitmotif for reducing greenhouse gas (GHG) emissions. Its central narrative rests on the idea of replacing fossil resources with biobased ones for a broad spectrum of products including, for example, heat, electricity, fuels, plastics, or chemicals. Yet, the amount of available bio‐resources is limited, rendering some technologies successful while leaving behind others. Lignocellulosic biomass (LBM) is a key resource already used on a large scale for heating purposes or electricity production and increasingly for the production of chemicals and biofuels. Because market mechanisms do not necessarily drive a cost‐optimal use with respect to their GHG‐reduction potential, a new bi‐objective linear optimization model under long‐term scenarios was developed for Germany accounting for competition with non‐biobased technologies. In the biofuels and biochemicals sectors, multi‐output processes that address industrial symbiosis and fossil references are used to compute profits and GHG emission savings of biobased products. However, in the absence of a reference for heat, a detailed representation of the heat sector is used in which heat demand for 19 subsectors is met, thus deriving costs and emission savings endogenously. When explicitly accounting for GHG emission reduction targets, biomass is optimally used in high‐temperature industries whereas heat pumps dominate in building heat. Because of the optimal use of biomass in industrial usage, subsidies for biomass heating are found to be inefficient in the building sector. Catalytic hydropyrolysis to produce biogasoline and biodiesel using LBM dominates the production of biofuels while biochemicals—strongly depending on oil price developments—will become competitive on a large scale after 2030.