Investments into forest biorefineries under different price and policy structures

摘要

Increasing scarcity of oil reserves and the high CO2 emissions from using oil have contributed to the development of renewable biofuels. Pulp and paper mill integrated forest biorefineries offer one important means to increase biofuel production. This study analyzes the costs of policies to support biofuel production in the pulp and paper sector. Also, the relative effectiveness of two biofuel supporting policy instruments is studied. We present a market model of profit maximizing pulp and paper mill that allows investments into different biorefinery technologies. The model is utilized for numerical simulations, in which the impacts of subsidies on the biorefinery investments and raw-material choices are analyzed. The results show that the choice of the policy instrument affects not only the overall policy costs, but also the input use in biofuel production, and the number of pulp and paper mills that would invest in biofuel production. Thus, the policy choices also affect the extent of centralization of biofuel production within a country.