Eirik Ogner Jåstad, Niels Oliver Nagel, Junhui Hu, Per Kristian Rørstad. (2023). The location and capacity-dependent price impacts of biofuel production and its effect on the forest industry. Silva Fennica vol. 57 no. 1 article id 23001. https://doi.org/10.14214/sf.23001

Keywords: partial equilibrium model; biofuel location policy; biomass supply; forest-based biofuel; nordic forest sector

Highlights: Large biofuel units prefer regions close to transportation facilities; Forest owners are the main winners if large-scale biofuel production is established; The first production units reduce export, hence should be located at an exporting hub; Biofuel production will reduce the Norwegian export of roundwood to Sweden; Biofuel production increases the local demand and pulpwood prices.

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Forest-based biofuel stands out as a promising solution to avoid fossil emissions in parts of the transport sector. Biofuel production will need large amounts of forest biomass, collected from a large area. Roundwood is costly to transport compared with other goods. Therefore, the location of forest-based biofuel production is a crucial part of an investment decision. This study analyses the optimal location of biofuel plants in Norway and the implications for the traditional forest sector in the Nordic countries. We test different numbers of production units, different sizes of the units, and various raw materials. The study applies a partial equilibrium model that covers the Norwegian and Nordic forest sectors, with 356 regions in Norway. The results indicate that small biofuel plants have the potential to turn exporting regions into importing regions. Larger biofuel plants are suitable for areas with large harvest activity today or regions with access to harbour or timber terminals along railways. We find that forest owners close to a biofuel plant will profit the most from biofuel production. Policymakers and investors should take into account that different locations and production capacities have different impacts on the forest sectors.

Jåstad, Faculty of Environmental Sciences and Natural Resource Management, Norwegian University of Life Sciences, P.O. Box 5003, NO-1432 Ås, Norway https://orcid.org/0000-0002-1089-0284 E-mail: eirik.jastad@nmbu.no
Nagel, Faculty of Environmental Sciences and Natural Resource Management, Norwegian University of Life Sciences, P.O. Box 5003, NO-1432 Ås, Norway https://orcid.org/0000-0002-3171-0262 E-mail: niels.oliver.nagel@nmbu.no
Hu, Faculty of Environmental Sciences and Natural Resource Management, Norwegian University of Life Sciences, P.O. Box 5003, NO-1432 Ås, Norway https://orcid.org/0000-0003-0001-5993 E-mail: junhui.hu@nmbu.no
Rørstad, Faculty of Environmental Sciences and Natural Resource Management, Norwegian University of Life Sciences, P.O. Box 5003, NO-1432 Ås, Norway E-mail: per.kristian.rorstad@nmbu.no

article id 399, category Research article

Torjus F. Bolkesjø. (2005). Projecting pulpwood prices under different assumptions on future capacities in the pulp and paper industry. Silva Fennica vol. 39 no. 1 article id 399. https://doi.org/10.14214/sf.399

Keywords: paper industry; Norway; capacity; partial equilibrium model; pulpwood; prices

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Capacity changes in the pulp and paper industry affect demand for pulpwood and thus pulpwood prices. This paper analyzes the impacts on roundwood prices in Norway of two possible capacity changes (one new machine and one close-down) that currently are high on the agenda in the Norwegian paper industry, and assesses the generality of the results obtained from these case studies. The two cases are implemented exogenously into a regionalized partial equilibrium forest sector model, and the capacity change scenarios are compared with a business as usual scenario assuming no demand shocks. The projected pulpwood prices change significantly in regions near mills where capacity shifts, at least for the close-down case, but only moderately at an aggregated national level. The reduction in prices under the close-down studied is higher than the price increase from the possible capacity increase case. The asymmetric price responses projected for the two case studies are supported by sensitivity analyses on other regions and cases (technologies). For the capacity increase case it is shown that the level of the projected pulpwood price is sensitive to assumptions on base-year prices and transport costs of imported roundwood, but the magnitudes of the price increases projected as a result of increased demand are less affected by these assumptions.

Bolkesjø, Norwegian University of Life Sciences, Dept. of Ecology and Natural Resource Management, Høyskoleveien 14, NO-1432 Ås, Norway E-mail: torjus.bolkesjo@umb.no

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