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Are the Finnish targets for the energy use of forest chips realistic--Assessment with a spatial market model

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  • Kallio, A. Maarit I.
  • Anttila, Perttu
  • McCormick, Megan
  • Asikainen, Antti

Abstract

We develop a spatially elaborate partial equilibrium model for the forest chips market in Finland and demonstrate its use by examining the targets outlined by the government for the increase in the use of forest chips for energy. Because the supply of stumps and logging residues is tied to roundwood harvests, reaching the target seems unrealistic without investments in the new production capacity of the forest industry. In particular, the industries using sawlogs would need to get back to the high levels of production seen a few years ago. For instance, policies leading to the increased use of wood in construction would support the renewable energy goals as well. Also subsidies for CHP-production at sawmills would facilitate that. Tight carbon policy alone would lead to considerable increases in the use of forest chips, but because the prices of the CO2 emission permits are difficult to foresee, subsidies are needed to decrease the uncertainty faced by the market actors. The government is planning to set subsidies for wood-based electricity, which would be tied to the carbon price. Based on our results, we recommend binding the potential subsidies for chipping energy wood to the carbon price as well.

Suggested Citation

  • Kallio, A. Maarit I. & Anttila, Perttu & McCormick, Megan & Asikainen, Antti, 2011. "Are the Finnish targets for the energy use of forest chips realistic--Assessment with a spatial market model," Journal of Forest Economics, Elsevier, vol. 17(2), pages 110-126, April.
  • Handle: RePEc:eee:foreco:v:17:y:2011:i:2:p:110-126
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    References listed on IDEAS

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    1. Savolainen, Kati, 2003. "Co-firing of biomass in coal-fired utility boilers," Applied Energy, Elsevier, vol. 74(3-4), pages 369-381, March.
    2. Tromborg, Erik & Bolkesjo, Torjus Folsland & Solberg, Birger, 2007. "Impacts of policy means for increased use of forest-based bioenergy in Norway--A spatial partial equilibrium analysis," Energy Policy, Elsevier, vol. 35(12), pages 5980-5990, December.
    3. Kallio, A. Maarit I. & Hänninen, Riitta & Vainikainen, Nina & Luque, Sandra, 2008. "Biodiversity value and the optimal location of forest conservation sites in Southern Finland," Ecological Economics, Elsevier, vol. 67(2), pages 232-243, September.
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    Citations

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    Cited by:

    1. Caurla, Sylvain & Delacote, Philippe & Lecocq, Franck & Barkaoui, Ahmed, 2013. "Stimulating fuelwood consumption through public policies: An assessment of economic and resource impacts based on the French Forest Sector Model," Energy Policy, Elsevier, vol. 63(C), pages 338-347.
    2. Moiseyev, Alexander & Solberg, Birger & Kallio, A. Maarit I., 2013. "Wood biomass use for energy in Europe under different assumptions of coal, gas and CO2 emission prices and market conditions," Journal of Forest Economics, Elsevier, vol. 19(4), pages 432-449.
    3. Halder, Pradipta, 2014. "Perceptions of energy production from forest biomass among school students in Finland: Directions for the future bioenergy policies," Renewable Energy, Elsevier, vol. 68(C), pages 372-377.
    4. Kallio, A.M.I. & Salminen, O. & Sievänen, R., 2013. "Sequester or substitute—Consequences of increased production of wood based energy on the carbon balance in Finland," Journal of Forest Economics, Elsevier, vol. 19(4), pages 402-415.
    5. Galik, Christopher S. & Abt, Robert C. & Latta, Gregory & Vegh, Tibor, 2015. "The environmental and economic effects of regional bioenergy policy in the southeastern U.S," Energy Policy, Elsevier, vol. 85(C), pages 335-346.
    6. Latta, Gregory S. & Baker, Justin S. & Beach, Robert H. & Rose, Steven K. & McCarl, Bruce A., 2013. "A multi-sector intertemporal optimization approach to assess the GHG implications of U.S. forest and agricultural biomass electricity expansion," Journal of Forest Economics, Elsevier, vol. 19(4), pages 361-383.
    7. Caurla, Sylvain & Bertrand, Vincent & Delacote, Philippe & Le Cadre, Elodie, 2018. "Heat or power: How to increase the use of energy wood at the lowest cost?," Energy Economics, Elsevier, vol. 75(C), pages 85-103.
    8. Halaj, Daniel & Brodrechtova, Yvonne, 2018. "Marketing decision making in the forest biomass market: The case of Austria, Finland and Slovakia," Forest Policy and Economics, Elsevier, vol. 97(C), pages 201-209.
    9. Lauri, Pekka & Kallio, A. Maarit I. & Schneider, Uwe A., 2012. "Price of CO2 emissions and use of wood in Europe," Forest Policy and Economics, Elsevier, vol. 15(C), pages 123-131.
    10. Zakeri, Behnam & Syri, Sanna & Rinne, Samuli, 2015. "Higher renewable energy integration into the existing energy system of Finland – Is there any maximum limit?," Energy, Elsevier, vol. 92(P3), pages 244-259.
    11. Guo, Jinggang & Gong, Peichen, 2019. "Assessing the impacts of rising fuelwood demand on Swedish forest sector: An intertemporal optimization approach," Forest Policy and Economics, Elsevier, vol. 105(C), pages 91-98.
    12. Moiseyev, Alexander & Solberg, Birger & Kallio, A. Maarit I., 2014. "The impact of subsidies and carbon pricing on the wood biomass use for energy in the EU," Energy, Elsevier, vol. 76(C), pages 161-167.

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