Report on the cost-effective use of forest biomass
With the positive trend in the forest industry, the use of domestic wood grows significantly, enabling an increase in the production of by-product-based bioenergy and liquid biofuels.
The forest industry and energy production based on wood biomass increase the overall demand for wood by 2030. The commercialization of the production of wood-based liquid biofuels during the same period would further increase the overall demand. It can be estimated that the expected increase in the use of wood poses a major challenge to the domestic wood markets. The report published on 3 February examines the effects of the growing demand on the wood markets and different sectors. In addition, the report looks at the steering instruments required to start the production of wood-based biofuels and their key mechanisms.
According to Pöyry’s scenario analysis, the total use of wood in Finland in the future could rise up to 120 million m3 and harvesting up to 87 million m3 in 2030. Most of the increase in the use of wood is due to the estimated increase in the production of pulp and sawn wood and exports.
Wood resources allow to substantially increase the production of liquid biofuels. However, the increase in the production may, in particular in the high biofuel production scenario, also have negative economic effects on other sectors making use of wood, especially on pulp production. The report examines the effects of two biofuel production scenarios (300 000 t/year and 700 000 t/year) on the wood market, on the use of wood in a number of sectors, and on the national economy. An increase in the production of biofuels by 300,000 tonnes from the current levels would not have a significant effect on the forest industry production. Industrial by-products and forest chips would for the most part be sufficient to serve as raw material for the additional production of this quantity. There will be more of this raw material available as the use of wood by the forest industry is growing. In the high-growth scenario the production of wood-based biofuels would rise by 700,000 tonnes from the current levels, which would take industrial roundwood away from the chemical forest industry and by-products away from the energy sector.
In both scenarios examined new steering instruments are needed to get the wood-based biofuels to the markets. To get production operations started in Finland, the steering instruments should guarantee a clear market outlook for advanced biofuels up to 2030 or 2035. Without steering instruments the ability of plants to pay for wood is not at a level that would enable them to purchase raw material at the market price and still operate profitably. However, if the promotion of the production of wood-based biofuels is seen as an important strategic goal, the most important task for the steering instruments is to raise the ability of biofuel plants to pay for wood to a sufficient level to secure the raw material supply. The steering instruments should always focus primarily on fractions such as by-products, i.e. bark, sawdust and forest chips, in order not to endanger the supply of wood for and competitiveness of other industry sectors.
The study was conducted by Pöyry Management Consulting Oy as a background study on the National Energy and Climate Strategy until 2030 and as part of the implementation of the Government’s 2016 plan for analysis, assessment and research.
Final report of the study (in Finnish)
Further information about the Government’s analysis, assessment and research activities at tietokayttoon.fi.
Inquiries:
Esa Sipilä, Pöyry Management Consulting Oy, tel. +358 10 33 22701, esa.sipila(at)poyry.com
Contact person for the ministry: Päivi Janka, Ministerial Counsellor, Ministry of Economic Affairs and Employment, paivi.janka(at)tem.fi