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Elias Olofsson
According to Elias Olofsson, more efficient forestry can contribute to biodiversity. View original picture , opens in new tab/window

Competition for forest raw materials is increasing

Published: 31 May 2021

The ongoing investments in fossil-free steel production will probably lead to increased demand for biomass as a cost-effective and carbon-neutral energy and carbon source. A new dissertation in economics analyzes the regional effects on, among other things, the paper industry and the wood products industry when competition with the steel industry for biomass increases.

The forest has historically been one of Sweden's most important raw materials, but with different uses during different eras. Several pilot projects in the steel and mining industry are now turning their eyes to the green gold.

– When the steel industry's demand for biofuels increases, the price rises. It will affect the regional market in Norrbotten and the conditions for the paper industry and the wood products industry, but the effects will also spill over to regions in both Sweden and Finland, says the dissertation's author, Elias Olofsson.

Largest efficiency gains in southern Sweden

In collaboration with researchers at Umeå University and SLU, Elias Olofsson has also examined how Swedish forestry can be made more efficient and thereby reduce the price of forest biomass, such as saw timber, pulpwood, firewood and branches and tops. Based on felling modeling collected by the researchers in Umeå, he has mapped the economic effects throughout Sweden. Elias Olofsson states that the greatest efficiency gains can be made in southern Sweden, while forest owners in northern Sweden already conduct relatively efficient forestry today.

– A bonus effect of more efficient forestry is that you can leave large areas of forest land untouched for a longer period of time, which increases the biological diversity and the possibility of different eco-services.

Elias Olofsson has also investigated the substitution possibilities in the sawmill industry, pulp industry and district heating industry. To what extent can the different industries replace a certain input product – wood, wood chips, labor, type of energy – with another? It turned out that the differences in flexibility between different types of industry at county level were relatively large.

– Among other things, there are good opportunities to increase district heating production in southern Sweden and thereby reduce the variable cost of heating. But it is uncertain whether the potential can be exploited because the increased supply would probably be greater than the regional demand.