The Economics of Biofuel Development : Policy Incentives and Market Impacts

• This thesis examines the economics of biofuel development by studying the forest raw material market impacts of increased biofuel production, as well as the role of specific policy incentives. Paper [I] presents an economic assessment of two different developments – both implying an increased demand for forest ecosystem services – and how these could affect the competition for forest raw materials. A Swedish forest sector trade model is updated to a new base year and used to analyze the consequences of: (a) increased bioenergy use in the heat and power sector; and (b) increased forest conservation. A particularly interesting market impact is that bioenergy promotion and forest conservation tend to have opposite effects on forest industry by-product prices. Furthermore, combining the two scenarios mitigates the forest industry by-product price increase compared to the case where only the bioenergy-promoting scenario is implemented. In other words, the heat and power sector is less negatively affected in terms of increased feedstock prices if a bioenergy demand increase is accompanied by increased forest conservation. Paper [2] explores the forest product market impacts of increased domestic second-generation (2G) biofuel production in Sweden. Changes in forest raw material prices and resource allocation are assessed using a forest sector trade model, which has been extended with a 2G biofuel module to address such production. The simulation results show increasing forest industry by-product prices, e.g., displaying that increased 2G biofuel production leads to a more intense raw material competition. The higher feedstock prices make the use of forest biomass in the heat and power sector less profitable. Still, we find little evidence of substitution of fossil fuels for by-products. There is also evidence of synergy effects in that the higher by-product prices spur sawmills to produce more sawn wood, something which in turn induces forest owners to increase harvest levels. Paper [3] presents and demonstrates a conceptual interdisciplinary framework that can constitute the basis for evaluations of the full supply-chain performance of various biorefinery concepts. The framework involves soft-linking a bottom-up and a top-down model; it considers the competition for biomass across sectors, assumes exogenous end-use product demand, and incorporates various geographical and technical constraints. We demonstrate this framework empirically by modelling the case of a sawmill-integrated biorefinery, which produces liquefied biomethane from forest industry residues. This case shows, among other things, the importance of acknowledging price change responses when evaluating supply chains. Paper [4] studies the relationship between green industrial policies and domestic biofuel production among 24 OECD countries over the period 2000-2016. This panel is estimated using a variant of the so-called Poisson pseudo-maximum-likelihood model, and incorporates the mix of demand-pull (biofuel blending mandates) and technology-push policies (government R&D), as well as the interaction between these two types of instruments. The results suggest that a more stringent blending mandate tends not only to increase the use of biofuels, but also domestic production. Government R&D has not, however, induced domestic biofuel industrialization processes. The results instead imply that these two polices target different technological fields, in turn leading to no positive interaction between demand-pull and technology-push policies. Finally, Paper [5] investigates the factors that tend to influence Swedish municipalities’ uptake of green public procurement (GPP) practices in the transport sector. The analysis builds on survey responses from civil servants representing 140 Swedish municipalities, complemented by secondary data on, for instance, municipality size. The survey collected information about both individual (e.g., education) and organizational characteristics (e.g., strategies). These data were used to estimate a bivariate probit model, which addresses the endogeneity in the GPP decision-making process. The results indicate that municipality size increases the likelihood of adopting a GPP strategy but decreases the likelihood for GPP uptake. This suggests that larger municipalities benefit from more resources (e.g., staff), but suffer from a larger organizational distance between the procuring and environmental departments. Finally, the results lend meagre support to the street-level bureaucracy hypothesis, i.e., that individual characteristics influence the uptake of GPP.

Subject headings

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Nationalekonomi (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business -- Economics (hsv//eng)

Keyword

Economics

Nationalekonomi

Publication and Content Type

vet (subject category)

dok (subject category)