Renewable Energy and Climate Policies: Studies in the Forest and Energy Sector

‪This dissertation examines the impacts of energy and climate policies on the energy and forest sectors, focusing on the case of Finland. The thesis consists of an introduction article and four separate studies. The dissertation was motivated by the climate concern and the increasing demand of renewable energy. In particular, the renewable energy consumption and greenhouse gas emission reduction targets of the European Union were driving this work. In Finland, both forest and energy sectors are in key roles in achieving these targets. In fact, the separation between forest and energy sector is diminishing as the energy sector is utilizing increasing amounts of wood in energy production and as the forest sector is becoming more and more important energy producer.‬ ‪The objective of this dissertation is to find out and measure the impacts of climate and energy policies on the forest and energy sectors. In climate policy, the focus is on emissions trading, and in energy policy the dissertation focuses on the promotion of renewable forest-based energy use. The dissertation relies on empirical numerical models that are based on microeconomic theory. Numerical partial equilibrium mixed complementarity problem models were constructed to study the markets under scrutiny. The separate studies focus on co-firing of wood biomass and fossil fuels, liquid biofuel production in the pulp and paper industry, and the impacts of climate policy on the pulp and paper sector.‬ ‪The dissertation shows that the policies promoting wood-based energy may have have unexpected negative impacts. When feed-in tariff is imposed together with emissions trading, in some plants the production of renewable electricity might decrease as the emissions price increases. The dissertation also shows that in liquid biofuel production, investment subsidy may cause high direct policy costs and other negative impacts when compared to other policy instruments. The results of the dissertation also indicate that from the climate mitigation perspective, perfect competition is the favored wood market competition structure, at least if the emissions trading system is not global.‬ ‪In conclusion, this dissertation suggests that when promoting the use of wood biomass in energy production, the favored policy instruments are subsidies that promote directly the renewable energy production (i.e. production subsidy, renewables subsidy or feed-in premium). Also, the policy instrument should be designed to be dependent on the emissions price or on the substitute price. In addition, this dissertation shows that when planning policies to promote wood-based renewable energy, the goals of the policy scheme should be clear before decisions are made on the choice of the policy instruments.‬

Harvesting undelimbed Scots pine (Pinus sylvestris L.) from first thinnings for integrated production of kraft pulp and energy

The present study evaluates the feasibility of undelimbed Scots pine (Pinus sylvestris L.) for integrated production of pulp and energy in a kraft pulp mill from the technical, economic and environmental points of view, focusing on the potential of bundle harvesting. The feasibility of tree sections for pulp production was tested by conducting an industrial wood-handling experiment, laboratory cooking and bleaching trials, using conventional small-diameter Scots pine pulpwood as a reference. These trials showed that undelimbed Scots pine sections can be processed in favourable conditions as a blend with conventional small-diameter pulpwood without reducing the pulp quality. However, fibre losses at various phases of the process may increase when using undelimbed material. In the economic evaluation, both pulp production and wood procurement costs were considered, using the relative wood paying capability of a kraft pulp mill as a determinant. The calculations were made for three Scots pine first-thinning stands with the breast-height diameter of the removal (6 12 cm) as the main distinctive factor. The supply chains included in the comparison were based on cut-to-length harvesting, whole-tree harvesting and bundle harvesting (whole-tree bundling). With the current ratio of pulp and energy prices, the wood paying capability declines with an increase in the proportion of the energy fraction of the raw material. The supply system based on the cut-to-length method was the most efficient option, resulting in the highest residual value at stump in most cases. A decline in the pulp price and an increase in the energy price improved the competitiveness of the whole-tree systems. With short truck transportation distances and low pulp prices, however, the harvesting of loose whole trees can result in higher residual value at stump in small-diameter stands. While savings in transportation costs did not compensate for the high cutting and compaction costs by the second prototype of the bundle harvester, an increase in transportation distances improved its competitiveness. Since harvesting undelimbed assortments increases nutrient export from the site, which can affect soil productivity, the whole-tree alternatives included in the present study cannot be recommended on infertile peatlands and mineral soils. The harvesting of loose whole trees or bundled whole trees implies a reduction in protective logging residues and an increase in site traffic or payloads. These factors increase the risk of soil damage, especially on peat soils with poor bearing capacity. Within the wood procurement parameters which were examined, the CO2 emissions of the supply systems varied from 13 27 kg m3. Compaction of whole trees into bundles reduced emissions from transportation by 30 39%, but these reductions were insufficient to compensate for the increased emissions from cutting and compaction.