Robert Lundmark
Robert Lundmark, professor of Economics at Luleå University of Technology. Photo: Sofia Stridsman View original picture , opens in new tab/window

More biorefineries will not affect pricing of forest feedstocks

Published: 18 September 2018

There is a growing demand for biofuel in Sweden. But more biorefineries, which produce biobased fuels and chemicals, will have only a small effect on the availability and pricing of wood products and feedstocks, according to a new report.

– Even though large-scale biorefineries will be built, we cannot see that there will be any major effects on the price level of forest feedstocks, says Robert Lundmark, professor of Economics at Luleå University of Technology and leader of the interdisciplinary project “Large-scale implementation of biorefineries”, a collaboration involving researchers from Rise Research Institutes of Sweden, Austrian IIASA and Luleå University of Technology.

The development of commercial biorefinery concept is of strategic importance for Sweden's development into a biobased economy. A reduction quota for gasoline and diesel and was introduced on July 1, 2018, and the demand for biofuel is growing in Sweden, as in the rest of Europe.

Efficient use of resources

As the demand for biofuel increases in Sweden, it will be important to use biomass resources more efficiently, so other, so-called “fringe feedstocks” could be introduced into the fuel mix. This includes various waste products and by-products such as forest residues like tree stumps and logging residue, waste bark, woodchips, and sawdust. Waste and by-products like bark, sawdust, and woodchips are likely to be the most economic as they will incur no extra, or very low, transport or handling costs.

The research team found that in Sweden, increased targets for the production and use of biofuels only will have limited effects on the cost of forest feedstock. There are unlikely to be any large price spikes in the medium term. The biomass markets should be able to handle the increased demand, according to the study.

– If biomass resources are used efficiently, we will only see limited price effects.  We have forests all over Sweden, not only at certain locations, and there are areas available that are not utilized so much today. If you place a biorefinery there, it means that you reduce the price impact, says Robert Lundmark.

Distance and spatial issues

He emphasizes that geography matters; Spatial issues are important determinates for the implementation of large-scale biorefineries. Proximity to biomass resources, possibilities for integration and distance to biofuel users are crucial aspects to consider.

– We have the technology for biofuel but there are no investments made today, much due to political uncertainty. It is required that politicians either decide that a refinery should be built or use other instruments to make it happen. We hope our study can be a support for politicians and other decision makers when decisions are to be made, says Robert Lundmark.

Robert Lundmark

Robert Lundmark, Professor

Phone: +46 (0)920 492346
Organisation: Economics, Social Sciences, Department of Business Administration, Technology and Social Sciences

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