IDEAS home Printed from https://ideas.repec.org/p/apu/wpaper/2011-02.html
   My bibliography  Save this paper

The bioenergies development: the role of biofuels and the CO2 price

Author

Listed:
  • Pierre-André Jouvet
  • Frédéric Lantz
  • Elodie Le Cadre

Abstract

Reduction in energy dependancy and emissions of CO2 via renewables target in the European Union energy mix and taxation system might trigger bioenergy production and competition for biomass utilization. Pretreated 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 affects choices of biomass supply 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 biomass is related to the competitive demand of the power sector driven by the CO2 price and feed-in-tariffs. We propose a linear dynamic model of supply and demands. On the supply side, a profit-maximizing torrefied biomass sector is modelized. The model aims to represent the transformation of biomass in biocoal which could be sold to the refinery sector and the power sector. A two-sided (demanders and supplier) bidding process let us to arrive at the equilibrium price for torrefied biomass. The French case is used as an exemple. 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 lignocellulosic biomass, which can stimulate development of biomass supply systems. The torrefied biomass demand can be triggered by the power sector for a low cost of CO2 and until no investment in gas power plants is necessary to replace the decommissioned nuclear power plants. Over 2020, the demand for torrefied biomass from the power sector could be substituted by the refining sector one if the oil price goes up. Thus the green power production could pave the way to BtL production.

Suggested Citation

  • Pierre-André Jouvet & Frédéric Lantz & Elodie Le Cadre, 2011. "The bioenergies development: the role of biofuels and the CO2 price," Working Papers 2011/02, INRA, Economie Publique.
  • Handle: RePEc:apu:wpaper:2011/02
    as

    Download full text from publisher

    File URL: https://www6.versailles-grignon.inra.fr/economie_publique/Media/fichiers/Working-Papers/Working-Papers-2011/2011_02
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Fan, Lin & Hobbs, Benjamin F. & Norman, Catherine S., 2010. "Risk aversion and CO2 regulatory uncertainty in power generation investment: Policy and modeling implications," Journal of Environmental Economics and Management, Elsevier, vol. 60(3), pages 193-208, November.
    2. Kocoloski, Matt & Michael Griffin, W. & Scott Matthews, H., 2011. "Impacts of facility size and location decisions on ethanol production cost," Energy Policy, Elsevier, vol. 39(1), pages 47-56, January.
    3. Babcock, Bruce A. & Marette, Stéphan & Tréguer, David, 2011. "Opportunity for profitable investments in cellulosic biofuels," Energy Policy, Elsevier, vol. 39(2), pages 714-719, February.
    4. Frota Neto, J. Quariguasi & Bloemhof-Ruwaard, J.M. & van Nunen, J.A.E.E. & van Heck, E., 2008. "Designing and evaluating sustainable logistics networks," International Journal of Production Economics, Elsevier, vol. 111(2), pages 195-208, February.
    5. Levin, Todd & Thomas, Valerie M. & Lee, Audrey J., 2011. "State-scale evaluation of renewable electricity policy: The role of renewable electricity credits and carbon taxes," Energy Policy, Elsevier, vol. 39(2), pages 950-960, February.
    6. Hansson, Julia & Berndes, Gran & Johnsson, Filip & Kjrstad, Jan, 2009. "Co-firing biomass with coal for electricity generation--An assessment of the potential in EU27," Energy Policy, Elsevier, vol. 37(4), pages 1444-1455, April.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Bioenergy; CO2 price; Refinery market; Electricity market; Optimization;

    JEL classification:

    • 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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:apu:wpaper:2011/02. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Régis Grateau). General contact details of provider: http://edirc.repec.org/data/epinrfr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.