Are the Finnish targets for the energy use of forest chips realistic--Assessment with a spatial market model

A. Maarit I. Kallio, Perttu Anttila, Megan McCormick and Antti Asikainen

Journal of Forest Economics, 2011, vol. 17, issue 2, 110-126

Abstract: We develop a spatially elaborate partial equilibrium model for the forest chips market in Finland and demonstrate its use by examining the targets outlined by the government for the increase in the use of forest chips for energy. Because the supply of stumps and logging residues is tied to roundwood harvests, reaching the target seems unrealistic without investments in the new production capacity of the forest industry. In particular, the industries using sawlogs would need to get back to the high levels of production seen a few years ago. For instance, policies leading to the increased use of wood in construction would support the renewable energy goals as well. Also subsidies for CHP-production at sawmills would facilitate that. Tight carbon policy alone would lead to considerable increases in the use of forest chips, but because the prices of the CO2 emission permits are difficult to foresee, subsidies are needed to decrease the uncertainty faced by the market actors. The government is planning to set subsidies for wood-based electricity, which would be tied to the carbon price. Based on our results, we recommend binding the potential subsidies for chipping energy wood to the carbon price as well.

Keywords: Forest; chips; Logging; residues; Renewable; energy; Co-firing; Biodiesel; Energy; policy; Subsidies; Finland (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1104-6899(11)00007-9
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:foreco:v:17:y:2011:i:2:p:110-126

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/journaldescription.cws_home/701775/bibliographic
http://www.elsevier. ... 701775/bibliographic

Access Statistics for this article

Journal of Forest Economics is currently edited by P. Gong and R. Brännlund

More articles in Journal of Forest Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().