IDEAS home Printed from https://ideas.repec.org/p/lef/wpaper/2017-03.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

    (Climate Economics Chair, Univ. Paris Dauphine, Paris, France
    CRESE EA3190, Univ. Bourgogne Franche-Comté, F-25000 Besançon, France)

  • Sylvain Caurla

    (UMR INRA – AgroParisTech, Laboratoire d’Economie Forestière, 54042 Nancy Cedex, France)

  • Elodie Le Cadre

    (Climate Economics Chair, Univ. Paris Dauphine, Paris, France)

  • Philippe Delacote

    (UMR INRA – AgroParisTech, Laboratoire d’Economie Forestière, 54042 Nancy Cedex, France)

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 FW-H 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 higher carbon price and the lower 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 - Cahiers du LEF 2017-03, Laboratoire d'Economie Forestiere, AgroParisTech-INRA, revised Mar 2017.
  • Handle: RePEc:lef:wpaper:2017-03
    as

    Download full text from publisher

    File URL: http://www6.nancy.inra.fr/lef/Cahiers-du-LEF/2017/2017-03
    File Function: First version, 2010
    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. Alexandre Sauquet & Ahmed Barkaoui & Sylvain Caurla & Philippe Delacote & Serge Garcia & Franck Lecocq, 2011. "Estimating Armington elasticities for sawnwood and application to the French Forest Sector Model," Post-Print halshs-00688822, HAL.
    5. 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.
    6. 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.
    7. 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.
    8. 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.
    9. 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.
    10. 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.
    11. 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.
    12. 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.
    13. 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.
    14. 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.
    15. Nico Bauer & Christophe McGlade & Jérôme Hilaire & Paul Ekins, 2018. "Divestment prevails over the green paradox when anticipating strong future climate policies," Nature Climate Change, Nature, vol. 8(2), pages 130-134, February.
    16. 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.
    17. Alexandre Sauquet & Ahmed Barkaoui & Sylvain Caurla & Philippe Delacote & Franck Lecocq, 2011. "Paying for forest carbon or stimulating fuel wood demand? Insights from the French Forest Sector Model," Post-Print halshs-00602112, HAL.
    18. 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.
    19. repec:dau:papers:123456789/14543 is not listed on IDEAS
    20. 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.
    21. 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.
    22. 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.
    23. 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.
    24. 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.
    25. Delacote, Philippe & Lecocq, Franck, 2011. "Fuelwood, timber and climate change: Insights from forest sector modeling-An introduction," Journal of Forest Economics, Elsevier, vol. 17(2), pages 107-109, April.
    26. 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.
    27. 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.
    28. 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.
    29. 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.
    30. 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.
    31. Ahmed Barkaoui & Sylvain Caurla & Philippe Delacote & Antonello Lobianco, 2013. "The French Forest Sector Model 2.0 (FFSM++)," Post-Print hal-01627988, HAL.
    32. 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. Miguel Riviere & Sylvain Caurla & Philippe Delacote, 2020. "Evolving Integrated Models From Narrower Economic Tools : the Example of Forest Sector Models," Post-Print hal-02512330, HAL.
    2. Li, Zhimin & Pan, Yanchun & Yang, Wen & Ma, Jianhua & Zhou, Ming, 2021. "Effects of government subsidies on green technology investment and green marketing coordination of supply chain under the cap-and-trade mechanism," Energy Economics, Elsevier, vol. 101(C).
    3. Miguel Riviere & Sylvain Caurla, 2020. "Representations of the Forest Sector in Economic Models [Les représentations du secteur forestier dans les modèles économiques]," Post-Print hal-03088084, HAL.
    4. Chen, Shi & Huang, Fu-Wei & Lin, Jyh-Horng, 2022. "Life insurance policyholder protection, government green subsidy, and cap-and-trade transactions in a black swan environment," Energy Economics, Elsevier, vol. 115(C).

    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. Miguel Riviere & Sylvain Caurla & Philippe Delacote, 2020. "Evolving Integrated Models From Narrower Economic Tools : the Example of Forest Sector Models," Post-Print hal-02512330, HAL.
    2. Miguel Riviere & Sylvain Caurla, 2020. "Representations of the Forest Sector in Economic Models [Les représentations du secteur forestier dans les modèles économiques]," Post-Print hal-03088084, HAL.
    3. 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.
    4. Etienne Lorang & Antonello Lobianco & Philippe Delacote, 2021. "Sectoral, resource and carbon impacts of increased paper and cardboard recycling," Working Papers 2021.12, FAERE - French Association of Environmental and Resource Economists.
    5. Pohjola, Johanna & Laturi, Jani & Lintunen, Jussi & Uusivuori, Jussi, 2018. "Immediate and long-run impacts of a forest carbon policy—A market-level assessment with heterogeneous forest owners," Journal of Forest Economics, Elsevier, vol. 32(C), pages 94-105.
    6. 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.
    7. Lobianco, Antonello & Delacote, Philippe & Caurla, Sylvain & Barkaoui, Ahmed, 2015. "The importance of introducing spatial heterogeneity in bio-economic forest models: Insights gleaned from FFSM++," Ecological Modelling, Elsevier, vol. 309, pages 82-92.
    8. Latta, Gregory S. & Sjølie, Hanne K. & Solberg, Birger, 2013. "A review of recent developments and applications of partial equilibrium models of the forest sector," Journal of Forest Economics, Elsevier, vol. 19(4), pages 350-360.
    9. 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.
    10. Miguel RIVIERE & Sylvain CAURLA, 2018. "Integrating non-timber objectives into bio-economic models of the forest sector: a review of recent innovations and current shortcomings," Working Papers of BETA 2018-26, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    11. Etienne Lorang & Antonello Lobianco & Philippe Delacote, 2023. "Increasing Paper and Cardboard Recycling: Impacts on the Forest Sector and Carbon Emissions," Post-Print hal-03832461, HAL.
    12. Etienne Lorang & Antonello Lobianco & Philippe Delacote, 2023. "Increasing Paper and Cardboard Recycling: Impacts on the Forest Sector and Carbon Emissions," Post-Print hal-04690101, HAL.
    13. 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.
    14. Claudio Petucco & Antonello Lobianco & Sylvain Caurla, 2020. "Economic Evaluation of an Invasive Forest Pathogen at a Large Scale : The Case of Ash Dieback in France," Post-Print hal-02625280, HAL.
    15. Lauri, Pekka & Kallio, A. Maarit I. & Schneider, Uwe A., 2012. "Price of CO2 emissions and use of wood in Europe," Forest Policy and Economics, Elsevier, vol. 15(C), pages 123-131.
    16. Claudio Petucco & Antonello Lobianco & Sylvain Caurla, 2020. "Economic Evaluation of an Invasive Forest Pathogen at a Large Scale : The Case of Ash Dieback in France," Post-Print hal-03639337, HAL.
    17. Jonas Zetterholm & Elina Bryngemark & Johan Ahlström & Patrik Söderholm & Simon Harvey & Elisabeth Wetterlund, 2020. "Economic Evaluation of Large-Scale Biorefinery Deployment: A Framework Integrating Dynamic Biomass Market and Techno-Economic Models," Sustainability, MDPI, vol. 12(17), pages 1-28, September.
    18. Kallio, A.M.I. & Salminen, O. & Sievänen, R., 2013. "Sequester or substitute—Consequences of increased production of wood based energy on the carbon balance in Finland," Journal of Forest Economics, Elsevier, vol. 19(4), pages 402-415.
    19. Hurmekoski, Elias & Hetemäki, Lauri, 2013. "Studying the future of the forest sector: Review and implications for long-term outlook studies," Forest Policy and Economics, Elsevier, vol. 34(C), pages 17-29.
    20. Zhang, Yun-Long & Liu, Lan-Cui & Kang, Jia-Ning & Peng, Song & Mi, Zhifu & Liao, Hua & Wei, Yi-Ming, 2024. "Economic feasibility assessment of coal-biomass co-firing power generation technology," Energy, Elsevier, vol. 296(C).

    More about this item

    Keywords

    Forestry sector; Bioenergy; Biomass-based electricity; Carbon pricing; Nuclear power;
    All these keywords.

    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:lef:wpaper:2017-03. 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: Sylvain CAURLa (email available below). General contact details of provider: https://edirc.repec.org/data/lefinfr.html .

    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.