IDEAS home Printed from https://ideas.repec.org/p/cec/wpaper/1707.html
   My bibliography  Save this paper

Heat or power: how to increase the use of energy wood at the lowest costs?

Author

Listed:
  • Vincent Bertrand
  • Sylvain Caurla
  • Elodie Le Cadre
  • Philippe Delacote

Abstract

We compute the optimal subsidy level to fuelwood consumption that makes it possible to achieve the French biomass energy consumption target. In this view, we model the competitions and trade-offs between the consumption of fuelwood for heat (FW-H) and the consumption of fuelwood for power generation (FW-E). To do so, we couple a forest sector model with an electricity simulation model and we test different scenarios combining FWH and FW-E that account for contrasted potential rise in carbon price and potential reduction in the number of nuclear plants. We assess the implications of these scenarios on (1) the budgetary costs for the Government, (2) the industrial wood producers’ profits, (3) the costs savings in power sector for the different scenarios tested and (4) the carbon balance. We show that the scenario with the highest carbon price and the lowest number of nuclear plants is the less expensive from a budgetary perspective. Indeed, when associated with a high carbon price, co-firing may increase FW-E demand with lower subsidy level, which enables reducing the cost of reaching the target. However, in this case, FW-E crowds-out part of FW-H which may cause political economy issues. From a carbon balance perspective, a FW-H only scenario better performs than any other scenario that combines FW-H and FW-E due to the relatively low emissions factors of alternative technologies for electricity generation, in particular nuclear energy.

Suggested Citation

  • Vincent Bertrand & Sylvain Caurla & Elodie Le Cadre & Philippe Delacote, 2017. "Heat or power: how to increase the use of energy wood at the lowest costs?," Working Papers 1707, Chaire Economie du climat.
  • Handle: RePEc:cec:wpaper:1707
    as

    Download full text from publisher

    File URL: http://www.chaireeconomieduclimat.org/RePEc/cec/wpaper/17-09-Cahier-R-2017-07-Bertrand-Caurla-Le-Cadre-Delacote.pdf
    File Function: First version, 2017
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Stéphane Couture & Serge Garcia & Arnaud Reynaud, 2009. "Household Energy Choices and Fuelwood Consumption: An Econometric Approach to the French Data," LERNA Working Papers 09.08.284, LERNA, University of Toulouse.
    2. 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.
    3. Markaki, M. & Belegri-Roboli, A. & Michaelides, P. & Mirasgedis, S. & Lalas, D.P., 2013. "The impact of clean energy investments on the Greek economy: An input–output analysis (2010–2020)," Energy Policy, Elsevier, vol. 57(C), pages 263-275.
    4. Sauquet, Alexandre & Lecocq, Franck & Delacote, Philippe & Caurla, Sylvain & Barkaoui, Ahmed & Garcia, Serge, 2011. "Estimating Armington elasticities for sawnwood and application to the French Forest Sector Model," Resource and Energy Economics, Elsevier, vol. 33(4), pages 771-781.
    5. Sylvain Caurla & Philippe Delacote & Franck Lecocq & Ahmed Barkaoui, 2013. "Stimulating fuelwood consumption through public policies: an assessment of economic and resource impacts based on the french forest sector model," Post-Print hal-01072295, HAL.
    6. Xian, Hui & Colson, Gregory & Mei, Bin & Wetzstein, Michael E., 2015. "Co-firing coal with wood pellets for U.S. electricity generation: A real options analysis," Energy Policy, Elsevier, vol. 81(C), pages 106-116.
    7. Vincent Bertrand & Elodie Le Cadre, 2015. "Simulating the use of biomass in electricity with the green electricity simulate model: An application to the French power generation," Working Papers 1503, Chaire Economie du climat.
    8. Quentin Grafton, R. & Kompas, Tom & Van Long, Ngo, 2012. "Substitution between biofuels and fossil fuels: Is there a green paradox?," Journal of Environmental Economics and Management, Elsevier, vol. 64(3), pages 328-341.
    9. Kangas, Hanna-Liisa & Lintunen, Jussi & Uusivuori, Jussi, 2009. "The cofiring problem of a power plant under policy regulations," Energy Policy, Elsevier, vol. 37(5), pages 1898-1904, May.
    10. Lecocq, Franck & Caurla, Sylvain & Delacote, Philippe & Barkaoui, Ahmed & Sauquet, Alexandre, 2011. "Paying for forest carbon or stimulating fuelwood demand? Insights from the French Forest Sector Model," Journal of Forest Economics, Elsevier, vol. 17(2), pages 157-168, April.
    11. Lintunen, Jussi & Kangas, Hanna-Liisa, 2010. "The case of co-firing: The market level effects of subsidizing biomass co-combustion," Energy Economics, Elsevier, vol. 32(3), pages 694-701, May.
    12. Lobianco, Antonello & Caurla, Sylvain & Delacote, Philippe & Barkaoui, Ahmed, 2016. "Carbon mitigation potential of the French forest sector under threat of combined physical and market impacts due to climate change," Journal of Forest Economics, Elsevier, vol. 23(C), pages 4-26.
    13. 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.
    14. Bertrand, Vincent & Dequiedt, Benjamin & Le Cadre, Elodie, 2014. "Biomass for electricity in the EU-27: Potential demand, CO2 abatements and breakeven prices for co-firing," Energy Policy, Elsevier, vol. 73(C), pages 631-644.
    15. Johnston, Craig M.T. & van Kooten, G. Cornelis, 2015. "Economics of co-firing coal and biomass: An application to Western Canada," Energy Economics, Elsevier, vol. 48(C), pages 7-17.
    16. repec:dau:papers:123456789/14543 is not listed on IDEAS
    17. Marie-Catherine Riekhof & Johannes Bröcker, 2017. "Does The Adverse Announcement Effect Of Climate Policy Matter? — A Dynamic General Equilibrium Analysis," Climate Change Economics (CCE), World Scientific Publishing Co. Pte. Ltd., vol. 8(02), pages 1-34, May.
    18. Kangas, Hanna-Liisa & Lintunen, Jussi & Pohjola, Johanna & Hetemäki, Lauri & Uusivuori, Jussi, 2011. "Investments into forest biorefineries under different price and policy structures," Energy Economics, Elsevier, vol. 33(6), pages 1165-1176.
    19. Sergent, Arnaud, 2014. "Sector-based political analysis of energy transition: Green shift in the forest policy regime in France," Energy Policy, Elsevier, vol. 73(C), pages 491-500.
    20. Grafton, R. Quentin & Kompas, Tom & Long, Ngo Van & To, Hang, 2014. "US biofuels subsidies and CO2 emissions: An empirical test for a weak and a strong green paradox," Energy Policy, Elsevier, vol. 68(C), pages 550-555.
    21. Mei, Bin & Wetzstein, Michael, 2017. "Burning wood pellets for US electricity generation? A regime switching analysis," Energy Economics, Elsevier, vol. 65(C), pages 434-441.
    22. Sylvain Caurla & Franck Lecocq & Philippe Delacote & Ahmed Barkaoui, 2010. "The French Forest Sector Model: version 1.0. Presentation and theorical foundations," Working Papers - Cahiers du LEF 2010-04, Laboratoire d'Economie Forestiere, AgroParisTech-INRA.
    23. Aguilar, Francisco X. & Cai, Zhen, 2010. "Exploratory analysis of prospects for renewable energy private investment in the U.S," Energy Economics, Elsevier, vol. 32(6), pages 1245-1252, November.
    24. Yushchenko, Alisa & Patel, Martin Kumar, 2016. "Contributing to a green energy economy? A macroeconomic analysis of an energy efficiency program operated by a Swiss utility," Applied Energy, Elsevier, vol. 179(C), pages 1304-1320.
    25. Couture, Stéphane & Garcia, Serge & Reynaud, Arnaud, 2012. "Household energy choices and fuelwood consumption: An econometric approach using French data," Energy Economics, Elsevier, vol. 34(6), pages 1972-1981.
    26. 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.
    27. Ahmed Barkaoui & Sylvain Caurla & Philippe Delacote & Antonello Lobianco, 2013. "The French Forest Sector Model 2.0 (FFSM++)," Post-Print hal-01627988, HAL.
    28. 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

    Forestry sector; Bioenergy; Biomass-based electricity; Carbon pricing; Nuclear power;

    JEL classification:

    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy
    • Q23 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Forestry

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:cec:wpaper:1707. 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: (Chaire Economie du Climat). General contact details of provider: http://www.chaireeconomieduclimat.org .

    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.