Europe’s Increasing Bioenergy Demand

EuropeEuropean governments are rapidly turning to biomass to comply with the EU’s legislated renewable energy targets set out for 2020 and 2030. It is expected that EU member states will have to further rely on imports of biomass from timber rich regions, which will undoubtedly disrupt international wood product markets.

We develop and apply a global forest trade model to examine the global effects of expanded demand for wood pellets fired within European coal power plants. Positive mathematical p
rogramming is used to calibrate the model to bilateral trade flows. Preliminary results suggest renewable energy policies that increase the demand for wood pellets may harm consumers of electricity and/or taxpayers in the region implementing these policies. Additionally, there is need to account for the interconnections among forest products, globally. Further, although the EU renewable energy policies are beneficial to the forestry sector as a whole (assuming gainers can compensate losers), there may be winners and losers within this sector.