IDEAS home Printed from https://ideas.repec.org/p/hal/wpaper/hal-02505389.html
   My bibliography  Save this paper

The bioenergies development: the role of biofuels and the C02 price

Author

Listed:
  • Elodie Le Cadre

    (IFPEN - IFP Energies nouvelles, INRA - Institut National de la Recherche Agronomique, UPN - Université Paris Nanterre)

  • Frederic Lantz

    (IFPEN - IFP Energies nouvelles)

  • Pierre-André Jouvet

    (Climate Economics Chair - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres, EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

Abstract

Reduction in energy dependancy and emissions of CO2 via renewables targeted in the European Union energy mix and taxation system, might trigger the production of bioenergy production and competition for biomass utilization. Torre ed 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 a ects demand of torre ed biomass in the power sector and its consequences on the pro tability of second generation biofuel units (Biomass to Liquid units). Indeed, the pro tability of the BtL units which are supplied only by torre ed biomass is related to the competitive demand of the power sector driven by the CO2 price and feed-in tari s. We propose a linear dynamic model of supply and demand. On the supply side, a pro t-maximizing torre ed biomass sector is modelized. The model aims to represent the transformation of biomass into torre ed biomass which could be sold to the re nery sector and the power sector. A two-sided (demanders and supplier) bidding process led us to arrive at the equilibrium price for torre ed biomass. The French case is used as an example. Our results suggest that the higher the CO2 price, the more stable and important the power sector demand. It also makes the torre ed biomass production less vulnerable to uncertainty on demand coming from the re ning sector. The torre ed biomass co- ring with coal can o er a near-term market for the torre ed biomass for a CO2 emission price lower than 20 euros/tCO2, which can stimulate development of biomass supply systems. Beyond 2020, the demand for torre ed biomass from the power sector could be substituted by the re ning sector if the oil price goes up whatever the CO2 price.

Suggested Citation

  • Elodie Le Cadre & Frederic Lantz & Pierre-André Jouvet, 2011. "The bioenergies development: the role of biofuels and the C02 price," Working Papers hal-02505389, HAL.
  • Handle: RePEc:hal:wpaper:hal-02505389
    Note: View the original document on HAL open archive server: https://ifp.hal.science/hal-02505389
    as

    Download full text from publisher

    File URL: https://ifp.hal.science/hal-02505389/document
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. 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.
    2. 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.
    3. Ruiqing Miao & David A. Hennessy & Bruce A. Babcock, 2010. "Investment in Cellulosic Biofuel Refineries: Do Renewable Identification Numbers Matter?," Center for Agricultural and Rural Development (CARD) Publications 10-wp514, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    4. Levin, Todd & Thomas, Valerie M. & Lee, Audrey J., 2011. "Erratum to "State-scale evaluation of renewable electricity policy: The role of renewable electricity credits and carbon taxes" [Energy Policy 39 (2) (2010) 950-960]," Energy Policy, Elsevier, vol. 39(4), pages 2216-2216, April.
    5. 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.
    6. Tehrani Nejad Moghaddam, Alireza & Saint-Antonin, Valérie, 2008. "Impact of tightening the sulfur specifications on the automotive fuels' CO2 contribution: A French refinery case study," Energy Policy, Elsevier, vol. 36(7), pages 2449-2459, July.
    7. Lin Fan & Benjamin F. Hobbs & Catherine S. Norman, 2010. "Risk Aversion and CO2 Regulatory Uncertainty in Power Generation Investment: Policy and Modeling Implications," Working Papers EPRG 1014, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    8. 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.
    9. 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.
    10. Tehrani Nejad M., Alireza, 2007. "Allocation of CO2 emissions in petroleum refineries to petroleum joint products: A linear programming model for practical application," Energy Economics, Elsevier, vol. 29(4), pages 974-997, July.
    11. Uslu, Ayla & Faaij, André P.C. & Bergman, P.C.A., 2008. "Pre-treatment technologies, and their effect on international bioenergy supply chain logistics. Techno-economic evaluation of torrefaction, fast pyrolysis and pelletisation," Energy, Elsevier, vol. 33(8), pages 1206-1223.
    12. 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)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dupoux, Marion, 2019. "The land use change time-accounting failure," Ecological Economics, Elsevier, vol. 164(C), pages 1-1.
    2. Albert Banal-Estañol & Jeremy Eckhause & Olivier Massol, 2015. "Incentives for early adoption of carbon capture technology: further considerations from a European perspective," Working Papers hal-02475485, HAL.
    3. Vincent Brémond & Emmanuel Hache & Tovonony Razafindrabe, 2015. "On the link between oil price and exchange rate : A time-varying VAR parameter approach," Working Papers hal-03206684, HAL.
    4. Anthony Paris, 2016. "The Effect of Biofuels on the Link between Oil and Agricultural Commodity Prices: A Smooth Transition Cointegration Approach," EconomiX Working Papers 2016-5, University of Paris Nanterre, EconomiX.
    5. Hache, Emmanuel, 2018. "Do renewable energies improve energy security in the long run?," International Economics, Elsevier, vol. 156(C), pages 127-135.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Choi, Dong Gu & Thomas, Valerie M., 2012. "An electricity generation planning model incorporating demand response," Energy Policy, Elsevier, vol. 42(C), pages 429-441.
    2. Megy, Camille & Massol, Olivier, 2023. "Is Power-to-Gas always beneficial? The implications of ownership structure," Energy Economics, Elsevier, vol. 128(C).
    3. Zhang, Xinhua & Yang, Hongming & Yu, Qian & Qiu, Jing & Zhang, Yongxi, 2018. "Analysis of carbon-abatement investment for thermal power market in carbon-dispatching mode and policy recommendations," Energy, Elsevier, vol. 149(C), pages 954-966.
    4. Inzunza, Andrés & Muñoz, Francisco D. & Moreno, Rodrigo, 2021. "Measuring the effects of environmental policies on electricity markets risk," Energy Economics, Elsevier, vol. 102(C).
    5. Shree Shakya & S. Kumar & Ram Shrestha, 2012. "Co-benefits of a carbon tax in Nepal," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 17(1), pages 77-101, January.
    6. Xinhua Shen & Raghava R. Kommalapati & Ziaul Huque, 2015. "The Comparative Life Cycle Assessment of Power Generation from Lignocellulosic Biomass," Sustainability, MDPI, vol. 7(10), pages 1-14, September.
    7. Massol, Olivier & Rifaat, Omer, 2018. "Phasing out the U.S. Federal Helium Reserve: Policy insights from a world helium model," Resource and Energy Economics, Elsevier, vol. 54(C), pages 186-211.
    8. Delfina Rogowska & Artur Wyrwa, 2021. "Analysis of the Potential for Reducing Life Cycle Greenhouse Gas Emissions from Motor Fuels," Energies, MDPI, vol. 14(13), pages 1-19, June.
    9. Munoz, Francisco D. & van der Weijde, Adriaan Hendrik & Hobbs, Benjamin F. & Watson, Jean-Paul, 2017. "Does risk aversion affect transmission and generation planning? A Western North America case study," Energy Economics, Elsevier, vol. 64(C), pages 213-225.
    10. Pahle, Michael & Fan, Lin & Schill, Wolf-Peter, 2011. "How Emission Certificate Allocations Distort Fossil Investments: The German Example," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 39(4), pages 1975-1987.
    11. Lin-Ju Chen & Lei Zhu & Ying Fan & Sheng-Hua Cai, 2013. "Long-Term Impacts of Carbon Tax and Feed-in Tariff Policies on China's Generating Portfolio and Carbon Emissions: A Multi-Agent-Based Analysis," Energy & Environment, , vol. 24(7-8), pages 1271-1293, December.
    12. Koltsaklis, Nikolaos E. & Dagoumas, Athanasios S., 2018. "State-of-the-art generation expansion planning: A review," Applied Energy, Elsevier, vol. 230(C), pages 563-589.
    13. Guy Meunier, 2014. "Risk Aversion and Technology Portfolios," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 44(4), pages 347-365, June.
    14. Harrison Fell & Dallas Burtraw & Richard Morgenstern & Karen Palmer, 2012. "Climate Policy Design with Correlated Uncertainties in Offset Supply and Abatement Cost," Land Economics, University of Wisconsin Press, vol. 88(3), pages 589-611.
    15. Freyre, Alisa & Klinke, Sandra & Patel, Martin K., 2020. "Carbon tax and energy programs for buildings: Rivals or allies?," Energy Policy, Elsevier, vol. 139(C).
    16. Apergis, Nicholas & Lau, Marco Chi Keung, 2015. "Structural breaks and electricity prices: Further evidence on the role of climate policy uncertainties in the Australian electricity market," Energy Economics, Elsevier, vol. 52(PA), pages 176-182.
    17. Baiardi, Donatella & Manera, Matteo & Menegatti, Mario, 2014. "The Effects of Environmental Risk on Consumption: an Empirical Analysis on the Mediterranean Countries," Energy: Resources and Markets 172443, Fondazione Eni Enrico Mattei (FEEM).
    18. Bamiére, Laure & Martinet, Vincent & Gouel, Christophe & Le Cadre, Elodie, 2011. "Stochastic Viability of Second Generation Biofuel Chains: Micro-economic Spatial Modeling in France," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114238, European Association of Agricultural Economists.
    19. van der Weijde, Adriaan Hendrik & Hobbs, Benjamin F., 2012. "The economics of planning electricity transmission to accommodate renewables: Using two-stage optimisation to evaluate flexibility and the cost of disregarding uncertainty," Energy Economics, Elsevier, vol. 34(6), pages 2089-2101.
    20. Lamers, Patrick & Junginger, Martin & Hamelinck, Carlo & Faaij, André, 2012. "Developments in international solid biofuel trade—An analysis of volumes, policies, and market factors," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(5), pages 3176-3199.

    More about this item

    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:hal:wpaper:hal-02505389. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: CCSD (email available below). General contact details of provider: https://hal.archives-ouvertes.fr/ .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.