The impact of subsidies and carbon pricing on the wood biomass use for energy in the EU

Alexander Moiseyev, Birger Solberg and A. Maarit I. Kallio

Energy, 2014, vol. 76, issue C, 161-167

Abstract: This study examines how subsidies for wood-fired heat and power plants and wood with coal co-fired power plants influence the use of wood biomass for energy in the short (2020) to medium (2030) term in the EU (European Union). Analysis shows that without subsidies wood-fired electricity will take only a marginal market share due to limited availability of low-cost wood from logging residues. A high CO2 price of 100 €/t without subsidies results in 30 million m3 of industrial wood used for energy production, which is sourced from the reduction of 12 million m3 for wood products, 10 million m3 additional imports and 8 million m3 additional harvest. With a subsidy level of 30 €/MWh in the four EU member countries Denmark, Germany, Netherlands and UK, the total amount of industrial wood used for energy becomes 158 million m3. In the latter case, reduction of wood for wood-based products is 35 million m3, additional harvest in the EU is 21 million m3, and import to the EU is 102 million m3. Subsidies to wood-fired and especially coal with wood co-fired mills substantially increase the use of wood and especially industrial wood for energy. However, even with a high 100 €/tCO2 price and subsidy, mostly gas-fired electricity is projected to be displaced in 2030 by the increasing use of industrial wood, which is not beneficial regarding reducing the high CO2 emission from power production using coal. To a large extent, subsidies for wood co-firing maintain the coal power share, which will otherwise be reduced at high carbon emission price level. In addition, the model results show that the main sources of the growing use of industrial wood for energy are imports from regions outside of the EU, which thus creates considerable carbon leakages.

Keywords: Bioenergy; Subsidies; Forest biomass; Partial equilibrium model; Forest sector model; Renewable energy (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (26)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0360544214006173
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:energy:v:76:y:2014:i:c:p:161-167

DOI: 10.1016/j.energy.2014.05.051

Access Statistics for this article

Energy is currently edited by Henrik Lund and Mark J. Kaiser

More articles in Energy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().