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Price of CO2 emissions and use of wood in Europe

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  • Lauri, Pekka
  • Kallio, A. Maarit I.
  • Schneider, Uwe A.

Abstract

In this study, we examine the effects of the price for fossil fuel CO2 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 €/tCO2, increases to 50 €/tCO2, or increases to 110 euro/tCO2 by 2040. It seems that a carbon price higher than 20 €/tCO2 is required to increase wood based energy production. At prices below 50 €/tCO2, energy wood consists mainly of forest chips, recycled wood, bark, and black liquor. At the carbon price of 50 €/tCO2, the use of wood for energy begins to compete with the use of wood in the forest industry. At the price of 110 €/tCO2, 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.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:forpol:v:15:y:2012:i:c:p:123-131
    DOI: 10.1016/j.forpol.2011.10.003
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    3. 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.
    4. Lochhead, Kyle & Ghafghazi, Saeed & Havlik, Petr & Forsell, Nicklas & Obersteiner, Michael & Bull, Gary & Mabee, Warren, 2016. "Price trends and volatility scenarios for designing forest sector transformation," Energy Economics, Elsevier, vol. 57(C), pages 184-191.
    5. Zech, Konstantin M. & Schneider, Uwe A., 2019. "Technical biofuel production and GHG mitigation potentials through healthy diets in the EU," Agricultural Systems, Elsevier, vol. 168(C), pages 27-35.
    6. 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.
    7. Kallio, A.M.I. & Salminen, O. & Sievänen, R., 2016. "Forests in the Finnish low carbon scenarios," Journal of Forest Economics, Elsevier, vol. 23(C), pages 45-62.
    8. Alice Favero & Robert Mendelsohn, 2013. "Evaluating the Global Role of Woody Biomass as a Mitigation Strategy," Working Papers 2013.37, Fondazione Eni Enrico Mattei.
    9. Munnich Vass, Miriam & Elofsson, Katarina, 2013. "Is forest sequestration at the expense of bioenergy and forest products cost-effective in EU climate policy to 2050?," Working Paper Series 2013:9, Swedish University of Agricultural Sciences, Department Economics.
    10. 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.
    11. Olivia Cintas & Göran Berndes & Annette L. Cowie & Gustaf Egnell & Hampus Holmström & Göran I. Ågren, 2016. "The climate effect of increased forest bioenergy use in Sweden: evaluation at different spatial and temporal scales," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 5(3), pages 351-369, May.
    12. Jonsson, Ragnar & Rinaldi, Francesca & Pilli, Roberto & Fiorese, Giulia & Hurmekoski, Elias & Cazzaniga, Noemi & Robert, Nicolas & Camia, Andrea, 2021. "Boosting the EU forest-based bioeconomy: Market, climate, and employment impacts," Technological Forecasting and Social Change, Elsevier, vol. 163(C).
    13. Latta, Gregory S. & Sjølie, Hanne K. & Solberg, Birger, 2013. "A review of recent developments and applications of partial equilibrium models of the forest sector," Journal of Forest Economics, Elsevier, vol. 19(4), pages 350-360.
    14. Miguel RIVIERE & Sylvain CAURLA, 2018. "Integrating non-timber objectives into bio-economic models of the forest sector: a review of recent innovations and current shortcomings," Working Papers of BETA 2018-26, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    15. Lauri, Pekka & Havlík, Petr & Kindermann, Georg & Forsell, Nicklas & Böttcher, Hannes & Obersteiner, Michael, 2014. "Woody biomass energy potential in 2050," Energy Policy, Elsevier, vol. 66(C), pages 19-31.

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