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Biomass for bioenergy and/or transportation biofuels : exploration of key drivers influencing biomass… Cadham, William James 2015

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	  Biomass	  for	  Bioenergy	  and/or	  Transportation	  Biofuels:	  Exploration	  of	  key	  drivers	  influencing	  biomass	  allocation	  	  	   	  by	  William	  James	  Cadham	  	  	  A	  THESIS	  SUBMITED	  IN	  PARTIAL	  FULFILLMENT	  OF	  	  THE	  REQUIREMENTS	  FOR	  THE	  DEGREE	  OF	  	  MASTER	  OF	  SCIENCE	  in	  	  THE	  FACULTY	  OF	  GRADUATE	  AND	  POSTDOCTORAL	  STUDIES	  (FORESTRY)	  	  THE	  UNIVERSITY	  OF	  BRITISH	  COLUMBIA	  (VANCOUVER)	  April	  2015	  	  	  	  ©	  William	  James	  Cadham,	  2015	   	  	  ii	  ABSTRACT	  Biomass	  is	  the	  world’s	  largest	  source	  of	  renewable	  energy	  and	  it	  is	  likely	  to	  remain	  so	  until	  at	   least	  2035	  (IEA,	  2013a).	  Globally,	   there	  should	  be	  enough	  biomass	  available	   to	  meet	   growing	   demand.	   However,	   biomass	   is	   predisposed	   to	   being	   used	   locally	   possibly	  resulting	  in	  limited	  domestic	  supply	  in	  countries	  where	  biomass	  is	  already	  used	  extensively	  (IEA,	   2009).	   This	   could	   potentially	   result	   in	   competition	   between	   bioenergy	   or	   biofuels	  applications.	  The	  work	  described	  here	  explored	  the	  current	  and	  potential	  bioenergy/biofuel	  uses	  of	  biomass	  both	  globally	  as	  well	  as	  regionally,	  with	  a	  focus	  on	  Brazil,	  Denmark,	  Sweden	  and	   the	   United	   States.	  	   In	   each	   of	   these	   countries,	   biofuels	   or	   bioenergy	   are	   already	  important	  parts	  of	  their	  energy	  mix.	  For	  all	  of	  the	  countries	  studied	  the	  major	  drivers	  to	  use	  biomass	   for	   energy/fuels	   were:	   energy	   security;	   the	   desire	   to	   mitigate	   climate	   change;	  prevailing	   regional	   economic	   interests,	   and;	   the	   potential	   that	   bioenergy/biofuels	   are	  cheaper	   than	   fossil	   derived	   alternatives.	   Government	   support	   policies	   for	   bioenergy	   and	  biofuels	  are	  examined	  within	  the	  context	  of	  each	  of	  the	  four	  drivers.	  	  It	   was	   apparent	   that	   there	   is	   limited	   competition	   for	   biomass	   between	   bioenergy	  and	   transportation	  biofuel	  applications.	  This	   situation	   is	   likely	   to	   continue	  until	   advanced	  biofuels	   technologies	   become	   much	   more	   commercially	   established.	   In	   each	   of	   the	   four	  countries	  biomass	   is	  predominantly	  used	  to	  produce	  bioenergy	  (heat	  and	  power),	  even	   in	  those	   regions	   where	   biofuels	   are	   significant	   component	   of	   their	   transportation	   sector	  (United	  States,	  Brazil	  and	  Sweden).	  The	  vast	  majority	  of	  biofuel	  production	  continues	  to	  be	  based	  on	  conventional	  sugar,	  starch	  and	  oil	  rich	  feedstocks,	  while	  bioenergy	  (heat,	  power,	  residential,	  industrial)	  is	  produced	  almost	  exclusively	  from	  forest	  biomass	  with	  agricultural	  biomass	   playing	   a	   small,	   but	   increasing,	   secondary	   role.	   As	   current	   and	   proposed	  commercial	   scale	   biomass-­‐to-­‐ethanol	   facilities	   almost	   exclusively	   use	   agriculture	   derived	  residues	  (corn	  stover,	  wheat	  straw,	  sugar	  cane	  bagasse),	  it	  is	  likely	  that,	  if	  there	  is	  ever	  to	  be	  competition	   for	   biomass	   feedstock’s	   for	   bioenergy/biofuel	   applications,	   it	   will	   be	   for	  agricultural	  based	  biomass	  with	  co-­‐product	  lignin	  and	  other	  residues	  used	  to	  concomitantly	  produce	  heat-­‐and-­‐electricity	  on	  site	  at	  biofuel	  production	  facilities.	  	  	  	  	  	  	   	  	  iii	  PREFACE	  This	  dissertation	  is	  the	  original	  intellectual	  property	  of	  the	  author,	  W.	  Cadham.	  	    	  iv	  TABLE	  OF	  CONTENTS	  ABSTRACT	  ....................................................................................................................	  ii	  PREFACE	  .....................................................................................................................	  iii	  TABLE	  OF	  CONTENTS………………………………………………………………………………………………….iv	  LIST	  OF	  TABLES	  ...........................................................................................................	  vi	  LIST	  OF	  FIGURES	  .........................................................................................................	  vii	  ACKNOWLEDGEMENTS	  .............................................................................................	  viii	  CHAPTER	  ONE:	  INTRODUCTION	  AND	  BACKGROUND	  ....................................................	  1	  1.1	  Introduction	  .......................................................................................................................................................	  1	  1.2	  Background	  ........................................................................................................................................................	  2	  1.2.1	  Global	  energy	  trends	  ......................................................................................................................................	  3	  1.3	  Biomass	  ...............................................................................................................................................................	  6	  1.3.1	  Biomass	  applications	  .....................................................................................................................................	  7	  1.3.2	  Bioenergy	  ............................................................................................................................................................	  7	  1.3.3	  Transportation	  biofuels	  ................................................................................................................................	  9	  1.4	  Biomass	  availability	  ....................................................................................................................................	  11	  1.5	  Competition	  for	  biomass	  ...........................................................................................................................	  14	  1.6	  Drivers	  for	  biomass	  allocation	  ...............................................................................................................	  15	  1.6.1	  Energy	  security	  defined	  .............................................................................................................................	  16	  1.6.2	  Climate	  change	  mitigation	  and	  biomass	  utilization	  .....................................................................	  17	  1.6.3	  Other	  drivers	  beyond	  energy	  security	  and	  climate	  change	  affecting	  biomass	  allocation	  decisions	  ......................................................................................................................................................................	  18	  1.7	  Problem	  statement	  ......................................................................................................................................	  21	  CHAPTER	  TWO:	  METHODS	  .........................................................................................	  22	  2.1	  Rationale	  for	  country	  selection	  ..............................................................................................................	  22	  2.2	  Benefits	  of	  exploratory	  research	  ...........................................................................................................	  22	  2.3	  Limitations	  of	  exploratory	  research	  ....................................................................................................	  23	  CHAPTER	  THREE:	  COUNTRY	  COMPARISONS	  ...............................................................	  24	  3.1	  Brazil	  ..................................................................................................................................................................	  24	  3.1.1	  The	  Brazilian	  energy	  mix	  ..........................................................................................................................	  24	  3.1.2	  Brazilian	  biomass	  .........................................................................................................................................	  27	  3.1.3	  Drivers	  for	  biomass	  allocation	  in	  Brazil	  .............................................................................................	  30	  3.1.4	  Brazilian	  conclusions	  ..................................................................................................................................	  38	  3.2	  Denmark	  ...........................................................................................................................................................	  39	  3.2.1	  The	  Danish	  energy	  mix	  ...............................................................................................................................	  39	  3.2.2.	  Danish	  biomass	  ............................................................................................................................................	  41	  3.2.3	  Drivers	  for	  biomass	  allocation	  in	  Denmark	  ......................................................................................	  46	  3.2.4	  Danish	  conclusions	  ......................................................................................................................................	  53	  3.3	  Sweden	  ..............................................................................................................................................................	  54	  3.3.1	  The	  Swedish	  energy	  mix	  ............................................................................................................................	  54	  3.3.2	  Swedish	  biomass	  ...........................................................................................................................................	  57	  3.3.3	  Drivers	  for	  biomass	  allocation	  in	  Sweden	  .........................................................................................	  60	  3.3.4	  Swedish	  conclusions	  ....................................................................................................................................	  66	  3.4	  United	  States	  ..................................................................................................................................................	  67	  	  v	  3.4.1	  The	  U.	  S.	  energy	  mix	  ....................................................................................................................................	  68	  3.4.2	  U.S.	  biomass	  ....................................................................................................................................................	  70	  3.4.3	  Drivers	  for	  biomass	  allocation	  in	  the	  U.S.	  ..........................................................................................	  74	  3.4.4	  U.S.	  conclusion	  ...............................................................................................................................................	  85	  CHAPTER	  FOUR:	  CONCLUSIONS	  FROM	  THE	  COUNTRY	  COMPARISONS	  ........................	  87	  4.1	  The	  importance	  of	  biomass	  in	  their	  current	  energy	  mix	  ............................................................	  87	  4.2	  The	  state	  of	  biomass	  competition	  .........................................................................................................	  88	  4.3	  The	  drivers	  for	  biomass	  allocation	  .......................................................................................................	  89	  4.3.1	  Energy	  security	  ..............................................................................................................................................	  90	  4.3.2	  Climate	  change	  mitigation	  .......................................................................................................................	  90	  4.3.3	  Prevailing	  economic	  interests	  .................................................................................................................	  91	  4.3.4	  Cost	  competitiveness	  of	  bioenergy	  or	  biofuels	  .................................................................................	  92	  4.3.5	  Policy	  and	  biomass	  allocation	  ................................................................................................................	  92	  CHAPTER	  FIVE:	  CONCLUSIONS	  AND	  FUTURE	  RESEARCH	  .............................................	  96	  5.1	  Conclusions	  .....................................................................................................................................................	  96	  5.2	  Future	  research	  .............................................................................................................................................	  97	  REFERENCES	  ...............................................................................................................	  98	  	  	   	  	  vi	  LIST	  OF	  TABLES	  	  Table	  1:	  Fossil	  fuel	  and	  renewable	  energy	  sources	  for	  both	  the	  stationary	  and	  transportation	  sectors……………………………………………………………………………………………………..3	  Table	  2:	  Estimated	  pre-­‐tax	  costs	  of	  biofuel	  and	  petroleum	  fuels	  (U.S.	  cents/liter)……………..21	  Table	  3:	  Danish	  domestic	  production,	  import	  and	  export	  of	  different	  biomass	  sources	  in	  2011	  displayed	  in	  petajoules………………………………………………………………………………………….44	  Table	  4:	  United	  States	  2011	  consumption	  of	  biomass	  sources	  in	  petajoules……………………..73	  Table	  5:	  EIA	  estimates	  of	  2011	  U.S.	  wood	  and	  biomass	  waste	  consumption	  by	  sector……….73	  Table	  6:	  Renewable	  fuels	  categories	  as	  outlined	  by	  RFS2…………………………………………………85	  	   	  	  vii	  LIST	  OF	  FIGURES	  	  	  Figure	  1:	  Global	  energy	  demand	  by	  energy	  source	  in	  2011……………………………………………….4	  Figure	  2:	  Global	  aggregate	  renewable	  energy	  consumption	  by	  source……………………………….5	  Figure	  3:	  Global	  estimates	  for	  biomass	  potential	  in	  2030,	  all	  ranges	  in	  exajoules	  per	  year...12	  Figure	  4:	  Trade	  routes	  for	  commonly	  traded	  biomass-­‐based	  energy	  products………………….13	  Figure	  5:	  Final	  energy	  consumption	  in	  2011	  by	  source	  in	  Brazil.	  Other	  represents	  the	  sum	  of	  coke	  oven	  gas,	  coal	  coke,	  and	  tar…………………………………………………………………………………….26	  Figure	  6:	  Domestic	  renewable	  energy	  supply	  by	  source	  in	  Brazil	  for	  2011……………………….27	  Figure	  7:	  Brazilian	  2011	  consumption	  of	  biofuels	  and	  bioenergy,	  expressed	  in	  petajoules..29	  Figure	  8:	  Use	  of	  biomass	  for	  energy	  generation	  by	  sector	  for	  2011	  in	  Brazil	  expressed	  in	  petajoules……………………………………………………………………………………………………………………...30	  Figure	  9:	  Brazilian	  consumption	  of	  gasoline	  and	  bioethanol	  in	  road	  transport	  from	  2005-­‐2012	  in	  million	  cubic	  meters………………………………………………………………………………………….35	  Figure	  10:	  Denmark’s	  2011	  energy	  mix…………………………………………………………………………..41	  Figure	  11:	  Denmark’s	  energy	  matrix	  for	  1990-­‐2011………………………………………………………..42	  Figure	  12:	  Renewable	  energy	  by	  source	  in	  Denmark	  in	  2011…………………………………………..42	  Figure	  13:	  Danish	  2011	  biomass	  consumption	  by	  feedstock…………………………………………….43	  Figure	  14:	  Danish	  bioethanol	  and	  biodiesel	  demand	  from	  2005-­‐2011……………………………...47	  Figure	  15:	  Final	  domestic	  energy	  consumption	  in	  Sweden	  in	  2013…………………………………..57	  Figure	  16:	  Renewable	  energy	  development	  by	  source	  in	  Sweden	  from	  1990-­‐2011…………..59	  Figure	  17:	  Industrial	  bioenergy	  generation	  in	  Sweden	  by	  source	  in	  PJ	  from	  1990-­‐2010…....60	  Figure	  18:	  Consumption	  of	  transportation	  biofuels	  in	  Sweden	  from	  2000-­‐2011……………….61	  Figure	  19:	  U.S.	  energy	  mix	  in	  2011………………………………………………………………………………….71	  Figure	  20:	  The	  proportional	  contribution	  of	  renewable	  technologies	  in	  the	  U.S.	  2011	  renewable	  energy	  mix…………………………………………………………………………………………………...72	  Figure	  21:	  Biomass	  use	  in	  the	  United	  States	  between	  1990-­‐2011…………………………………….74	  Figure	  22:	  Consumption	  of	  biofuels	  in	  the	  United	  States	  from	  1990-­‐2011………………………..75	  Figure	  23:	  U.S.	  total	  energy	  consumption	  (TEC),	  energy	  imports	  and	  the	  degree	  of	  energy	  self-­‐sufficiency……………………………………………………………………………………………………………....80	  Figure	  24:	  The	  U.S.	  renewable	  energy	  mix	  from	  1990-­‐2011	  by	  source……………………………..81	  Figure	  25:	  Consumption	  of	  biomass	  as	  a	  proportion	  of	  total	  energy	  demand	  for	  the	  country	  cases……………………………………………………………………………………………………………………………..90	  Figure	  26:	  Comparison	  of	  bioenergy	  and	  biofuel	  consumption,	  expressed	  in	  petajoules,	  for	  all	  case	  countries…………………………………………………………………………………………………………...91	  	   	  	  viii	  ACKNOWLEDGEMENTS	  	  	   First and foremost I would like to thank Dr. Jack Saddler for his supervision and guidance.  His positive, yet critical approach pushed me to set a higher standard for my academic abilities.   A special thank you to Dr. Susan Van Dyk, her feedback and clear insights during the drafting phases were essential to the completion of this thesis. My sanity is intact thanks to your timely support during the moments of peak frustration. Thank you.  Thank you to my committee member, Dr. Dave Cohen for his valuable feedback and challenging questions and to Dr. Paul McFarlane for his input during the foundation of stages of my thesis work. Dr. Harry Nelson for his time and comments during the final stages of my thesis project.  Dr. Warren Mabee, thank you for directing me to pursue my MSc with Dr. Saddler. I would not be here without your advice.    A final shout out to all of my friends and family who helped calm my frustrations with kind words and bicycle rides.   “The mountains are calling and I must go” –John Muir	  	   	  	  1	  CHAPTER	  ONE:	  INTRODUCTION	  AND	  BACKGROUND	  1.1	  Introduction	  This	  thesis	  performs	  exploratory	  research	  to	  address	  two	  questions	  regarding	  biomass	  utilization	  for	  bioenergy	  and	  biofuels.	  The	  first,	  “what	  is	  the	  current	  status	  of	  competition	  for	  biomass	  between	  bioenergy	  and	  biofuels?”	  and	  the	  second,	  “what	  conditions	  might	  lead	  to	  biomass	  being	  used	  to	  produce	  biofuels	  rather	  than	  bioenergy?”.	  	  	   It	  begins	  with	  a	  detailed	  background	  of	  global	  aggregate	  energy	  trends,	  focusing	  on:	  how	  biomass	  is	  consumed	  for	  both	  bioenergy	  and	  biofuels,	  and	  the	  rationale	  for	  the	  dominance	  of	  fossil	  fuels	  within	  the	  global	  energy	  mix.	  International	  biomass	  consumption	  trends	  are	  compared	  to	  global	  availability	  and	  trade,	  to	  elucidate	  the	  potential	  for	  competition	  between	  bioenergy	  and	  biofuels	  technologies	  for	  feedstock.	  This	  review	  highlights	  that	  although	  competition	  for	  biomass	  between	  bioenergy	  and	  biofuels	  is	  absent	  at	  a	  global	  level,	  it	  may	  occur	  regionally.	  	  	   The	  second	  half	  of	  the	  background	  section	  reviews	  key	  information	  pertaining	  to	  the	  second	  research	  question	  regarding	  conditions	  influencing	  biomass	  allocation	  decisions.	  Although	  all	  four	  drivers	  discussed:	  energy	  security	  concerns,	  climate	  change	  mitigation	  desires,	  prevailing	  economic	  interests	  and	  cost-­‐competitiveness	  of	  bioenergy/biofuel	  technologies,	  have	  all	  previously	  been	  well	  established	  in	  the	  literature	  as	  critical	  in	  renewable	  energy,	  and	  biomass	  development,	  this	  thesis	  strives	  to	  identify	  how	  these	  drivers	  direct	  biomass	  allocation	  to	  bioenergy	  or	  biofuels.	  	  	  	   The	  second	  chapter	  of	  the	  thesis	  introduces	  the	  methods	  employed	  for	  this	  exploratory	  research.	  The	  rationale	  for	  country	  selection	  is	  discussed	  and	  the	  objectives	  of	  the	  country	  analyses	  are	  outlined.	  The	  benefits	  of	  exploratory	  research	  are	  highlighted.	  	  The	  third	  chapter	  of	  the	  thesis	  examines	  potential	  bioenergy/biofuel	  uses	  of	  biomass	  in	  Brazil,	  Denmark,	  Sweden	  and	  the	  United	  States,	  independently.	  The	  relative	  importance	  of	  each	  of	  the	  four	  drivers	  and	  how	  they	  directed	  biomass	  allocation	  in	  each	  country	  was	  explored.	  Conclusions	  were	  drawn	  for	  each	  country	  individually.	  	  Chapter	  four	  compares	  the	  findings	  across	  each	  country	  study	  to	  infer	  broader	  patterns	  with	  respect	  to:	  the	  importance	  of	  biomass	  in	  the	  energy	  mix,	  chief	  biomass	  applications,	  the	  status	  of	  biomass	  competition	  and	  the	  influence	  of	  the	  four	  identified	  	  2	  drivers	  on	  biomass	  allocation.	  	  In	  addition	  to	  the	  four	  drivers,	  the	  importance	  of	  policy	  in	  biomass	  allocation	  decisions	  is	  addressed	  within	  each	  previously	  identified	  driver.	  The	  final	  chapter	  distills	  the	  major	  conclusions	  from	  this	  thesis	  work,	  addresses	  the	  limitations	  of	  exploratory	  research,	  and	  discusses	  avenues	  for	  future	  research.	  	  	   	  1.2	  Background	  	   Oil	  is	  currently	  the	  world’s	  predominant	  source	  of	  energy,	  partly	  due	  to	  its	  flexibility	  of	   end	  use	   (energy,	   transportation,	   chemicals,	   etc.)	   and	   it	  will	   likely	   remain	   the	  dominant	  global	   fuel	  source	   for	  several	  decades	   to	  come.	  Renewable	  energy	  has	  expanded	   in	  recent	  decades,	   primarily	   due	   to	   government	   support,	   currently	   constituting	   13%	   of	   the	   global	  energy	  mix	  with	  it	  projected	  to	  increase	  to	  possibly	  one-­‐third	  by	  2050	  (International	  Energy	  Agency	  {IEA},	  2013a).	  Biomass	  is	  the	  largest	  source	  of	  the	  world’s	  renewable	  energy	  and	  it	  is	   projected	   to	   remain	   so	   through	   to	   2035	   (International	   Energy	   Agency	   {IEA},	   2013a).	  Although	   biomass	   is	   predominantly	   used	   (60%)	   in	   traditional	   heating	   and	   cooking	  applications	   in	   developing	   countries,	   its	   use	   in	   modern,	   high-­‐efficiency	   bioenergy	   and	  transportation	  biofuel	  applications	  (40%)	  is	  increasing	  (IEA,	  2013a).	  	  At	  a	  global	  level,	  there	  appears	  to	  be	  enough	  biomass	  available	  to	  meet	  the	  projected	  increases	   in	   biomass-­‐based	   energy	   demand	   (IEA,	   2013a).	   However,	   biomass	   availability	  differs	   greatly	   by	   region	   and,	   in	   some	   countries,	   there	   is	   not	   enough	   of	   a	   sustainable	  domestic	  supply	  to	  be	  able	  to	  meet	  increasing	  national	  demand.	  As	  a	  result,	  it	  is	  anticipated	  that	   a	   constrained	   local	   biomass	   supply	  will	   create	   competition	   for	   the	   limited	   resources.	  Although	   a	   wide	   range	   of	   end	   products	   can	   be	   generated	   from,	   predominantly,	   forest	  derived	  biomass,	  (lumber,	  food,	  paper	  products,	  chemicals,	  etc.),	  the	  work	  in	  this	  thesis	  has	  focused	   on	   the	   possible	   competition	   for	   biomass	   between	   bioenergy	   and	   transportation	  biofuel	  production.	  	  In	  the	  competition	  for	  biomass,	  if	  net	  energy	  output	  is	  the	  primary	  goal,	  biomass	  will	  always	   be	   preferentially	   used	   for	   energy	   (heat	   and	   power)	   as	   opposed	   to	   biofuels	   as	  bioenergy	  allows	  for	   the	  recovery	  and	  use	  of	  more	  of	   the	   intrinsic	  energy	  (calorific	  value)	  within	   biomass	   than	   does	   its	   conversion	   to	   biofuels	   (Ohlrogge	   et	   al.	   2009).	  However,	   the	  decision	   for	  biomass	  utilization	   is	  more	  complex.	  Unlike	  electricity	  generation	   (which	  can	  employ	   solar,	   hydro	   and	  wind	   power),	   renewable	   substitutes	   for	   transportation	   fuels	   are	  limited	  to	  electric	  vehicles	  and	  biofuels	  (as	  outlined	  in	  table	  1).	  In	  some	  applications,	  such	  	  3	  as	   long-­‐distance	   transportation,	   biofuels	   are	   the	   most	   likely	   alternative	   to	   fossil	   fuels	  especially	  in	  long-­‐haul	  trucking,	  marine	  and	  aviation	  applications.	  	  Although	  a	  number	  of	  studies	  have	  looked	  at	  what	  drives	  the	  development	  of	   low-­‐carbon	  technologies	  (Lund,	  2007;	  Gan	  and	  Smith,	  2011;	  Hultman	  et	  al.	  2012),	  little	  work	  has	  looked	  at	  the	  conditions	  that	  might	  influence	  the	  allocation	  of	  biomass	  to	  either	  bioenergy	  or	   biofuels	   applications.	   Thus,	   one	   of	   the	   goals	   of	   the	  work	   described	   here	  was	   to	   assess	  current	   and	   possible	   future	   biomass	   feedstocks	   competition	   for	   bioenergy/biofuels	  applications	  and	  the	  historical,	  current	  and	  future	  drivers	  that	  have	  and	  might	  continue	  to	  significantly	   influence	   biomass	   allocation	   and	   use.	   A	   multitude	   of	   drivers	   are	   able	   to	  influence	  biomass	  allocation	  decisions,	  however	   this	   thesis	   is	   restricted	   to	  a	  discussion	  of	  the	   possible	   authority	   of	   energy	   security,	   climate	   change	  mitigation,	   prevailing	   economic	  interests	  and	  the	  cost-­‐competitiveness	  of	  energy	  technologies.	  	  	  Table	   1:	   Fossil	   fuel	   and	   renewable	   energy	   sources	   for	   both	   the	   stationary	   and	  transportation	  sectors.	  	  Energy	  Source	   Stationary	   Transportation	  Fossil	  Fuel	  Energy	   Coal	  Oil	  Natural	  Gas	  Gasoline	  Diesel	  Natural	  Gas	  Aviation	  gasoline	  Renewable	  Energy	  Substitutes	   Bioenergy	  Hydro	  Wind	  Geothermal	  Solar	  Ocean/Tidal	  Transportation	  Biofuels	  Electrified	  Transportation	  	  1.2.1	  Global	  energy	  trends	  Understanding	   global	   energy	   trends	   is	   a	   vital	   component	   when	   trying	   to	   discern	  how	  and	  why	  energy	  resources	  have	  been	  and	  might	  be	  allocated.	  An	  initial	  goal	  of	  the	  work	  was	  to	  look	  at	  the	  world’s	  current	  energy	  mix,	  the	  overall	  contribution	  of	  renewable	  energy	  and	  biomass	  derived	  energy/fuels	  in	  particular.	  Both	  renewable	  and	  non-­‐renewable	  energy	  sources	   are	   considered	   to	   provide	   context	   to	   the	   scale	   of	   biomass-­‐based	   energy	  technologies.	  As	  described	   in	   the	   second	  chapter	  of	   this	   thesis,	   alternative	  energy	  options	  must	  be	  considered	  when	  attempting	  to	  understand	  biomass	  allocation	  decisions.	  	  	  1.2.1.1	  Trends	  in	  the	  global	  energy	  mix	  	  Adequate	   provision	   of	   energy	   services	   is	   a	   keystone	   feature	   of	   economic	  development.	  In	  recent	  decades,	  worldwide	  energy	  production	  and	  consumption	  has	  risen	  	  4	  exponentially	   as	   most	   of	   the	   developing	   world	   strives	   to	   advance	   their	   economies.	   The	  world’s	  primary	  energy	  supply	  has	  increased	  from	  255	  exajoules	  (EJ)	  in	  1973	  to	  549	  EJ	  in	  2011	   (IEA,	   2013a).	  As	   illustrated	   in	   figure	  1,	   fossil	   fuels	   are	   the	  dominant	   energy	   source,	  accounting	  for	  82%	  of	  the	  world’s	  primary	  energy	  demand	  in	  2011	  while	  renewable	  energy	  contributed	  13%	  and	  nuclear	  5%.	  	  	  	  Figure	   1:	   Global	   energy	   demand	   by	   energy	   source	   in	   2011	   (adapted	   from	   IEA,	   2013a).	  *Renewables	  is	  the	  sum	  of	  hydro,	  bioenergy	  and	  other	  renewables	  as	  categorized	  by	  the	  IEA.	  Note	  that	  biomass	  is	  the	  largest	  renewable	  energy	  resource	  (76.9%	  of	  renewables).	  	  	   The	  world	  is	  in	  a	  transition	  period	  as	  many	  long-­‐standing	  regional	  energy	  trends	  are	  changing	  and	   the	  distribution	  of	  accessible	  energy	  resources	  around	   the	  world	   is	   shifting.	  Declining	   conventional	   oil	   reserves,	   increasing	   accessibility	   of	   unconventional	   oil	   and	   gas	  and	   expansion	   of	   renewable	   energy	   technologies	  means	   different	   regions,	   not	   previously	  rich	  in	  energy	  resources	  are	  emerging	  as	  major	  global	  energy	  producers.	  Long-­‐time	  energy	  importers,	   such	   as	   the	  United	   States,	   are	  becoming	  more	   energy	   self-­‐sufficient	  due	   to	   the	  development	   of	   unconventional	   oil	   and	   gas	   technologies.	   Improved	   access	   to	  unconventional	  oil	   is	  also	  leading	  to	  increased	  petroleum	  exports	  from	  Canada	  (tar	  sands)	  and	   Brazil	   (deep	  water)	   (however,	   Brazil	   remains	   a	   net	   importer)	   (IEA,	   2012b).	   In	   some	  countries,	   such	   as	   Denmark	   and	   Sweden,	   widespread	   development	   of	   renewable	  technologies,	   particularly	   bioenergy	   and	   wind,	   has	   drastically	   improved	   energy	   self-­‐sufficiency.	   In	   contrast,	   countries	   such	   as	   China,	   Japan,	   India	   and	   some	   members	   of	   the	  European	  Union	  (EU)	  are	  expected	  to	  grow	  their	  reliance	  on	  energy	  imports	  in	  the	  coming	  Coal	  29%	  Oil	  32%	  Gas	  21%	  Nuclear	  5%	  Biomass	  10%	  Hydro	  2%	  Other	  1%	  Renewables	  13%	  	  5	  decades	   (IEA,	   2013a).	   The	   significant	   shift	   in	   the	   allocation	   of	   energy	   resources	   and	  changing	  energy	  demands	  will	   influence	  how	  energy	   is	   traded,	  with	  energy	  surpluses	  and	  shortages	  emerging	  in	  new	  areas.	  	  1.2.1.2	  Renewable	  energy	  trends	  In	   2012,	   renewable	   energy	   accounted	   for	   13%	   of	   the	   world’s	   total	   energy	   mix	  (figure	   1)	   (IEA,	   2013a).	   Energy	   security	   concerns	   in	   some	   regions	   increased	   the	  development	   of	   renewables,	   as	   these	   technologies	   allowed	   countries	   not	   endowed	   with	  conventional	  energy	  resources	  to	   increase	  their	  domestic	  energy	  production.	  Additionally,	  countries	   looking	   to	   mitigate	   the	   effects	   of	   climate	   change	   have	   invested	   heavily	   in	  renewable	   energy	   sources	   to	   reduce	   energy	   related	   carbon	   emissions.	   As	   global	   energy	  trends	   continue	   to	   change,	   the	   emergence	   of	   energy	   security	   concerns	   in	   some	   countries,	  combined	   with	   climate	   change	   mitigation	   desires	   is	   expected	   to	   increase	   demand	   for	  renewables	  by	  75%	  between	  2012	  and	  2035,	  growing	  to	  18%	  of	  global	  total	  primary	  energy	  demand	  (Alagappan	  et	  al.	  2011;	  Hultman	  et	  al.	  2012;	  IEA,	  2013a).	  Figure	  2	  outlines	  global	  aggregate	   renewable	   energy	   consumption	   by	   source	   for	   2011,	   highlighting	   the	   dominant	  biomass	  component.	  	  	  Figure	   2:	   Global	   aggregate	   renewable	   energy	   consumption	   by	   source	   in	   2011	   (original	  figure	  data	  from	  IEA,	  2013a).	   	  	  1.2.1.3	  Fossil	  fuels	  continue	  to	  dominate	  Despite	   the	   observed	   shift	   towards	   renewable	   energy	   development,	   the	   world’s	  energy	  mix	  is	  expected	  to	  remain	  dominated	  by	  fossil	  fuels.	  The	  IEA	  prediction	  for	  2035	  is	  that	  fossil	  fuels	  will	  still	  be	  the	  dominant	  source	  of	  energy,	  accounting	  for	  ~76%	  of	  primary	  energy	  demand	   that	  year	   (IEA,	  2013a).	  The	  dominance	  of	   fossil	   fuels,	   especially	  oil,	   as	   an	  energy	   source	   remains	   due	   to	   factors	   such	   as	   poor	   cost	   competitiveness	   of	   alternative	  17%	  76%	  7%	   Hydro	  Biomass	  Other	  renewables	  	  6	  energy	  technologies	  and	  limited	  energy	  substitutes	  in	  transportation	  (Alagappan	  et	  al.	  2011,	  IEA,	   2013a).	   Cost	   competitiveness	   of	   renewable	   energy	   technologies	   is	   often	   cited	   as	   a	  major	   impediment	   to	  widespread	  commercialization	  (Alagappan	  et	  al.	  2011;	  Gan	  &	  Smith,	  2011).	  Relative	   to	   fossil	   fuels,	   renewable	   energy	   technologies	   are	   still	   developing	   and	  are	  typically	   subject	   to	   high	   initial	   generation	   costs.	   Technological	   barriers,	   such	   as	   the	  intermittent	   nature	   of	   some	   renewable	   energy	   technologies	   and	   a	   lack	   of	   large-­‐scale	  electrical	   storage	  capabilities,	   complicate	   their	   integration	   into	   the	  current	  electricity	  grid	  (Mathiesen	   et	   al.	   2011).	   The	   combined	   influence	   of	   these	   factors	   means	   that	   it	   will	   take	  some	  time	  before	  the	  world	  can	  wean	  itself	  off	  its	  dependency	  on	  fossil	  fuels	  (IEA,	  2013a).	  	  Proportionally,	   the	   transportation	   sector	   is	   most	   reliant	   on	   fossil	   fuels.	   In	   2012,	  petroleum	   products	   accounted	   for	  more	   than	   90%	   of	   transportation	   energy,	   equal	   to	   47	  million	   barrels	   per	   day	   (mb/d)	   or	   54%	   of	   total	   global	   oil	   consumption	   (IEA,	   2013a).	  Expectations	   of	   increased	   transportation	   demand	   in	   all	   forms,	   led	   by	   growing	   personal	  light-­‐duty	   vehicles	   (PLDVs)	   and	   freight	   in	   developing	   Asia,	   are	   expected	   to	   lead	   to	   a	  transportation	  oil	  demand	  of	  58.8	  mb/d	  by	  2035	  (58%	  of	  global	  oil	  demand)	  (IEA,	  2013a).	  Oil	   is	   ideal	   for	   transportation	   applications	   as	   it	   is	   energy-­‐dense	   and	   easily	   refined	   into	   a	  number	   of	   liquid	   fuels.	   Alternatively,	   renewable	   energy	   substitutes	   for	   transportation	   are	  limited,	  especially	  when	  compared	  to	  those	  accessible	  for	  stationary	  energy.	  Although	  there	  are	   several	   fossil	   fuel	   and	   renewable	   energy	   resources	   suitable	   for	   stationary	   energy	  production,	  there	  are	  far	  fewer	  for	  transportation	  (table	  1)	  where	  only	  electric	  vehicles	  and	  biofuels	  are	  viable	  alternatives.	  Biofuels	  are	  an	  attractive	  option	  as	  blends	  can	  be	  consumed	  in	   the	   current	   vehicle	   fleet	   while	   electrification	   will	   prove	   difficult	   in	   long-­‐haul	   freight,	  marine	  and	  aviation	  applications	  (Karatzos	  et	  al.	  2014).	  	  1.3	  Biomass	  Within	   the	  context	  of	   this	   thesis,	  biomass	   feedstocks	   include	  sugar	  and	  starch	  rich	  crops	   (i.e.	   sugarcane,	   corn	   and	   sugar	   beet),	   oil	   crops	   (i.e.	   palm,	   soy	   and	   mustard),	  lignocellulosic	   agricultural	   and	   forestry	   residues	   (i.e.	   wheat	   straw	   and	   forest	   slash)	   and	  energy	   crops	   (i.e.	   switchgrass	   and	   short-­‐rotation	  willow).	   Algal	   biomass	   is	   currently,	   and	  will	  likely	  be	  for	  the	  foreseeable	  future,	  a	  niche	  product	  and	  was	  therefore	  not	  considered.	  As	   mentioned	   earlier,	   although	   current	   biomass	   use	   is	   dominated	   (60%)	   by	  developing	   countries	   traditional	   heating	   and	   cooking	   applications,	  modern	  bioenergy	   and	  transportation	   biofuels	   account	   for	   a	   significant	   and	   growing	   proportion	   of	   biomass	   use	  (40%	  of	  biomass)	  (Chum	  et	  al.	  2011).	  The	  share	  of	  traditional	  biomass	  applications	  within	  	  7	  total	  biomass-­‐based	  energy	   is	  declining	  and	  by	  2035,	   traditional	  biomass	  applications	  are	  projected	   to	   provide	   only	   28.5	   EJ,	   down	   from	   31.1	   EJ	   in	   2011,	   while	   modern	   biomass	  applications	  are	  expected	  to	  generate	  48.9	  EJ,	  up	  from	  23.3	  EJ	  (IEA,	  2013a).	  	  Of	  the	  possible	  renewable	  energy	  resources,	  such	  as	  wind,	  wave,	  tidal,	  geothermal,	  solar,	  etc.,	  biomass	  has	   the	  potential	   to	  be	  most	   interchangeable	  with	   fossil	   fuels	  as	   it	   can	  satisfy	  both	  stationary	  and	  transportation	  energy	  needs	  (table	  1).	  Globally,	  the	  demand	  for	  biomass	   for	   both	   bioenergy	   and	   transportation	   biofuel	   applications	   is	   expected	   to	   grow	  (Chum	  et	   al.	   2011;	   IEA,	   2013a).	  Thus,	   it	   has	  been	   suggested	   that	  because	  biomass	   can	  be	  used	   for	  stationary	  and	   transportation	  energy	  uses,	   competition	   for	  biomass	  will	   increase	  significantly	  (IEA,	  2009;	  Chum	  et	  al.	  2011).	  	  1.3.1	  Biomass	  applications	  The	  various	  ways	  of	  converting	  biomass	  into	  energy	  (heat	  and	  power)	  and	  biofuels	  is	   reviewed	   in	   the	   following	   sections	  with	   reference	   to	  more	  detailed	   technology	   reviews	  available	  in	  the	  literature	  (Damartzis	  &	  Zabaniotou,	  2011;	  IEA,	  2012d;	  Karatzos	  et	  al.	  2014).	  1.3.2	  Bioenergy	  Modern	   bioenergy	   is	   dominated	   by	   combustion,	  with	   highly	   efficient	   technologies	  (up	   to	  90%	   intrinsic	  energy	   recovered)	  employed,	   including	  small	  and	   large-­‐scale	  boilers,	  domestic	   pellet	   furnaces,	   combined	   heat	   and	   power	   (CHP	   or	   co-­‐gen)	   and	   district	   heating	  (DH)	   facilities.	   Some	   of	   these	   are	   stand-­‐alone	   facilities	   or	   integrated	   within	   industrial	  operations	  and	  used	  in	  residential	  heating	  applications	  (IEA,	  2012d).	  As	  mentioned	  earlier,	  bioenergy	   technologies	   generally	   have	   a	   much	   higher	   efficiency	   as	   compared	   to	   biofuel	  production	   (Ohlrogge	   et	   al.	   2009).	   In	   some	   jurisdictions,	   such	   as	   Denmark	   and	   Sweden,	  bioenergy	   has	   and	   will	   continue	   to	   make	   a	   significant	   contribution	   to	   heat	   and	   power	  production	   (~20%	   of	   total	   energy	   demand)	   (IEA,	   2013b).	   The	   technologies	   used	   by	  biomass-­‐based	   power	   plants,	   co-­‐firing	   facilities	   and	   biomass-­‐based	   cogeneration	   facilities	  are	  reviewed	  below.	  	  1.3.2.1	  Biomass-­‐based	  power	  plants	  The	  most	  established	  method	  of	  biopower	  production	  in	  stand-­‐alone	  facilities	  is	  the	  steam-­‐powered	  turbine	  (IEA,	  2012d).	  In	  this	  system,	  the	  combustion	  of	  biomass	  in	  a	  boiler	  produces	   heat,	   which	   heats	   water	   or	   oil	   to	   generate	   steam,	   which	   powers	   a	   turbine	   to	  produce	  electricity.	  The	  overall	  efficiency	  is	  heavily	  contingent	  upon	  the	  facility’s	  scale	  and,	  typically,	   large-­‐scale	   30-­‐100	   MWe	   facilities	   are	   required	   to	   make	   biomass	   based	   steam-­‐powered	  turbine	  processes	  economically	  viable.	  Plants	  of	  this	  size	  achieve	  efficiencies	  in	  the	  	  8	  18-­‐33%	  range,	  somewhat	   lower	  than	  fossil	   fuel	   facilities	  of	  a	  similar	  scale	  (IEA,	  2012d).	   It	  should	  be	  noted	  that	   the	  economic	  attractiveness	  of	  a	  number	  of	  small	   (5-­‐10	  MWe)	  steam	  facilities	   is	   increasing	   across	   Europe	   and	   North	   America	   as	   biomass	   feedstocks,	   such	   as	  pellets,	  become	  more	  available	  at	  relatively	  lower	  costs	  (IEA,	  2012d).	  1.3.2.2	  Co-­‐firing	  Biomass	   co-­‐firing	   with	   coal	   has	   emerged	   as	   a	   popular	   method	   of	   bioenergy	  production	  with	   over	   150	   facilities	  worldwide	   using	   this	   strategy	   to	   try	   and	   reduce	   their	  carbon	   emissions	   (Al-­‐Mansour	   and	   Zulawa,	   2010).	   The	   combined	   combustion	   of	   biomass	  with	   fossil	   fuels	   to	   create	   heat	   and	   power	   is	   one	   of	   the	   most	   cost-­‐effective	   methods	   of	  transforming	   biomass	   into	   electricity	   and	   heat	   (Al-­‐Mansour	   and	   Zulawa,	   2010).	   Co-­‐firing	  leverages	   the	   existing	   infrastructure	   of	   coal	   power	   plants,	   offering	   the	   opportunity	   to	  increase	   the	   proportion	   of	   renewables	   in	   the	   primary	   energy	   mix	   and	   reducing	   GHG	  emissions	  associated	  with	  coal	  combustion,	  with	  Scandinavian	  countries,	  Germany,	  Belgium,	  the	  Netherlands	  and	  the	  United	  Kingdom	  being	  leaders	  in	  this	  application	  (Al-­‐Mansour	  and	  Zulawa,	  2010).	  	  The	  three	  basic	  systems	  that	  have	  been	  used	  to	  co-­‐fire	  biomass	  with	  coal	  are	  direct,	  indirect	  and	  parallel	  co-­‐firing,	  all	  of	  which	  have	  been	  proven	  and	  are	  currently	  used	  at	  the	  industrial	   scale	   (IEA,	   2009).	   In	   direct	   co-­‐firing,	   biomass	   is	   combusted	   with	   coal	   in	  proportions	  ranging	  from	  5-­‐10%,	  simply	  by	  mixing	  the	  two	  fuels.	  Direct	  co-­‐firing	  requires	  only	  a	  minor	  capital	  investment	  for	  biomass	  pretreatment	  and	  feed-­‐in	  systems	  (IEA,	  2013d).	  However,	  in	  this	  application	  relatively	  homogenous	  feedstocks	  are	  required.	  Forest	  biomass	  in	  the	  form	  of	  industrial	  pellets	  is	  the	  ideal	  feedstock	  for	  direct	  co-­‐firing	  as	  they	  provide	  the	  consistency	   needed	   for	   optimal	   facility	   performance	   (IEA,	   2013d).	   The	   intrinsic	  characteristics	   of	   agricultural	   residues	   create	   challenges	   with	   direct	   co-­‐firing	   operations,	  effectively	  limiting	  their	  suitability	  as	  a	  feedstock	  (IEA,	  2009).	  	  Although	  indirect	  or	  parallel	  co-­‐firing	  techniques,	  in	  which	  biomass	  and	  coal	  are	  fed	  into	  the	  boiler	  separately,	  can	  be	  employed	  to	  abate	  the	  challenges	  of	  agriculture	  feedstocks,	  these	  systems	  are	  more	  capital	  intensive	  than	  direct	  co-­‐firing	  (Fernando,	  2009).	  Indirect	  co-­‐firing	   often	   involves	   the	   gasification	   of	   solid	   biomass	   prior	   to	   its	   combustion	   with	   coal,	  offering	  higher	  feedstock	  flexibility	  and	  the	  ability	  to	  clean	  the	  fuel	  gas	  prior	  to	  combustion,	  minimizing	  its	  effects	  on	  the	  boiler	  and	  improving	  longevity	  of	  the	  infrastructure.	  This	  type	  of	  system	  is	  currently	  employed	  in	  the	  167	  mega-­‐watt	  electric	  (MWe)	  Lahti	  plant	  in	  Finland	  where	  17%	  biomass	  is	  combusted	  with	  a	  mixture	  of	  coal	  and	  natural	  gas	  (Al-­‐Mansour	  and	  Zulawa,	  2010).	  	  	  9	  1.3.2.3	  Co-­‐generation	  of	  heat	  and	  power	  from	  biomass	  Co-­‐generation	  can	  significantly	   increase	   the	  overall	   efficiency	  and	  competitiveness	  of	   a	   stand-­‐alone	  biomass-­‐based	  power	  plant	   or	   industrial	   facilities,	   such	   as	  pulp	  mills,	   by	  employing	  the	  waste	  heat.	  Typical	  overall	   (thermal	  +	  electrical)	  efficiencies	  are	  within	  the	  range	  of	  80-­‐90%	  (IEA,	  2012b).	  In	  stand-­‐alone	  CHP	  facilities,	  the	  low-­‐grade	  steam	  left	  over	  after	  power	  production	   is	  used	  for	  heating	  services	   in	  residential	  or	  commercial	  buildings	  where	   district-­‐heating	   infrastructure	   is	   available.	   Heat	   recycling,	   is	   an	   important	   step	   in	  biomass	  co-­‐generation.	  It	  has	  been	  shown	  to	  reduce	  power	  production	  costs	  by	  40-­‐60%	  in	  those	  stand-­‐alone	  facilities	  within	  the	  1-­‐30	  MWe	  range	  by	  recovering	  the	  exhaust	  heat	  from	  electricity	   generators	   and	   using	   it	   to	   create	   steam	   (IEA,	   2012b).	   For	   domestic	   and	  commercial	  applications,	  the	  scale	  of	  the	  CHP	  facilities	  is	  sometimes	  constrained	  by	  the	  heat	  demand	  within	   the	   region	   it	   is	   servicing	   and	   this	   is	   further	   complicated	   by	   the	   seasonal	  nature	  of	   this	  demand.	  As	   is	   the	  case	  with	  district	  heating,	   interest	   in	  supplementing	  CHP	  systems	   with	   cooling	   technologies	   is	   increasing,	   with	   the	   hope	   of	   further	   improving	   the	  efficiency	  and	  economics	  of	  the	  process.	  Industrial	  biomass-­‐based	  CHP	  facilities	  typically	  combust	  process	  residues,	  such	  as	  black	   liquor	   (a	  by-­‐product	  of	   the	  Kraft	  pulping	  process)	  or	  bagasse	   (a	  waste	   stream	   from	  the	   sugar-­‐cane	   industry)	   to	   generate	   electricity	   and	   low-­‐grade	   steam	   (Sixta,	   2006).	   The	  power	   and	   excess	   steam	   produced	   is	   used	   upstream	   within	   the	   processing	   facility.	   This	  process	   has	   been	   part	   of	   best	   practices	   in	   Kraft	   pulp	   mills	   since	   the	   introduction	   of	   the	  Tomlinson	  recovery	  boiler	  in	  the	  1930s	  (Sixta,	  2006).	  Combustion	  of	  black	  liquor	  originally	  emerged	   as	   a	  way	   to	   recycle	   expensive	   pulping	   chemicals,	  while	   the	   benefits	   of	   heat	   and	  power	  production	  was	  only	  realized	  more	  recently	  (Sixta,	  2006).	  A	  number	  of	  government	  programs	   have	   provided	   subsidies	   and	   grants	   to	   improve	   the	   recovery	   systems	   within	  chemical	   pulp	   mills	   (U.S.	   Department	   of	   Energy	   (DOE),	   2010).	   The	   largest	   share	   of	  bioenergy	   production	   in	   North	   America	   comes	   from	   the	   operation	   of	   recovery	   boilers	   at	  Kraft	  mills.	  In	  the	  United	  States,	  60%	  of	  all	  wood	  used	  for	  bioenergy	  primarily	  occurs	  within	  this	  industry	  (U.S.	  Energy	  Information	  Agency	  (EIA),	  2012).	  	  1.3.3	  Transportation	  biofuels	  Transportation	  biofuels	  are	  generally	  categorized	  as	  either	  conventional	  (also	  called	  first	  generation)	  or	  advanced	  (second	  generation)	   fuels,	  with	   this	  definition	   influenced	  by	  either	  the	  nature	  of	  the	  feedstock	  and	  the	  greenhouse	  gas	  emission	  reductions	  achieved	  (as	  compared	   to	   fossil	   fuels)	   (Schnepf	   &	   Yacobucci,	   2013).	   Conventional	   or	   first	   generation	  	  10	  biofuels	   include	   bioethanol	   based	   on	   sugar	   or	   starch	   and	   biodiesel	   using	   tallow,	   palm	   or	  oilseed.	   Advanced	   biofuels	   can	   be	   defined	   as	   non-­‐food	   feedstock	   derived	   and	   include	  biomass-­‐derived	  diesel,	   cellulosic	  biofuels,	   and	  non-­‐cellulosic	   advanced	  biofuels.	  They	   are	  expected	   to	   show	   improved	   emissions	   reductions	   compared	   to	   conventional	   biofuels	  (typically	  ~50%	  GHG	  reduction	  over	   fossil	   fuels,	  although	  regionally	  specific).	  All	  biomass	  derived	  biofuels	  have	  lower	  conversion	  efficiencies	  as	  compared	  to	  that	  of	  biomass	  used	  for	  combustion	  to	  produce	  heat	  and	  energy	  (Ohlrogge	  et	  al.	  2009).	  Beyond	   these	   first	   (conventional)	   or	   second	   (advanced)	   generation	   classifications,	  transportation	  biofuels	  can	  be	  either	  liquid,	  such	  as	  bioethanol,	  biodiesel	  and	  “drop-­‐in”,	  or	  gaseous	   (biogas)	   fuels.	   Bioethanol	   and	   biodiesel	   are	   the	   principal	   commercially	   available	  biofuels,	  currently	  contributing	  approximately	  3.2%	  by	  volume	  to	  global	  transportation	  fuel	  demand	   (IEA,	   2014).	   These	   fuels	   can	   be	   consumed	   independently	   or	   blended	   with	  conventional	  fuel	  products.	  Blending	  of	  up	  to	  10%	  bioethanol	  with	  90%	  gasoline	  is	  already	  common	  practice	  in	  the	  United	  States	  while	  Brazil	  typically	  blends	  ethanol	  between	  18-­‐25%	  (IEA,	   2013a;	   USDA,	   2013).	   Flex-­‐fuel	   automobiles	   can	   accommodate	   blends	   containing	   as	  much	  as	  85-­‐95%	  ethanol.	  Presently,	  drop-­‐in	  biofuels,	  defined	  as	  biomass-­‐derived	  fuels	  that	  are	   functionally	   equivalent	   to	   petroleum	   fuels	   and	   compatible	   with	   petroleum	  infrastructure,	   represent	   a	   small	   fraction	   (less	   than	   2%)	   of	   global	   biofuel	  markets,	   while	  bio-­‐gas	   is	   even	   smaller	   (less	   than	   1%)	   (IEA,	   2013a;	   Karatzos	   et	   al.	   2014).	   Although	   the	  global	  use	  of	  biofuels	  as	  a	  proportion	  of	  total	  transportation	  fuel	  demand	  is	  small,	  in	  regions	  such	  as	  the	  U.S.	  and	  Brazil,	  biofuels	  contribute	  between	  10-­‐25%	  to	  the	  automobile	  fuel	  mix	  (IEA,	  2014).	  	  Several	   different	   pathways	   exist	   for	   producing	   biofuels.	   Most	   of	   the	   current	  bioethanol	   production	   occurs	   via	   the	   fermentation	   of	   sugars	   into	   ethanol	   using	   enzymes,	  such	  as	  amylase,	  to	  hydrolyze	  the	  starch	  to	  sugar.	  Current	  biodiesel	  production	  proceeds	  via	  chemical	  conversion	  of	  lipids	  into	  fatty	  acid	  methyl	  esters.	  Biogas	  is	  produced	  via	  anaerobic	  digestion.	  Biochemical	  conversion	  of	  biomass	  into	   liquid	  fuels	  typically	   involves	  the	  use	  of	  enzyme	  or	  microbial	  catalysts	  to	  hydrolyse	  carbohydrates	  to	  simple	  sugars.	  Although	  liquid	  fuel	   production	   (ethanol)	   from	   starch	   and	   sugars	   are	   fully	   commercialized	   processes,	  cellulosic	  ethanol	  is	  just	  beginning	  commercialization	  with	  agricultural	  residues	  used	  as	  the	  primary	  biomass	  feedstock	  (Chundawat	  et	  al.	  2011;	  Jorgensen	  et	  al.	  2007;	  Menon	  and	  Rao,	  2012).	   The	   predominant	   use	   of	   agricultural	   residues	   as	   the	   biomass	   feedstock	   has	  	  11	  encouraged	  the	  co-­‐location	  of	  these	  biomass-­‐to-­‐ethanol	  facilities	  with	  existing	  sugar/starch	  to	  ethanol	  facilities.	  As	   mentioned	   earlier,	   drop-­‐in	   biofuels	   are	   currently	   only	   produced	   in	   small	  quantities.	   Technological	   pathways	   to	   produce	   drop-­‐in	   biofuels	   include:	   oleochemical,	  thermochemical	   and	   biochemical	   processes.	   Oleochemical	   based	   processes	   involve	   the	  catalytic	  removal	  of	  oxygen	  from	  the	  fatty	  acid	  chains	  of	  oil-­‐crop	  derived	  lipids	  to	  transform	  them	   to	   diesel-­‐like	   fuels.	   Oleochemical	   fuel	   products	   have	   already	   been	   tested	   for	  commercial	  applications	  in	  the	  aviation	  sector.	  However,	  high	  feedstock	  costs	  (4-­‐8x	  higher	  than	   lignocellulosic	  biomass)	   and	  questions	   surrounding	  oil-­‐crop	   sustainability	   is	   limiting	  their	  growth.	  Thermochemical	  processes	  that	  can	  be	  used	  to	  make	  drop-­‐in	  biofuels	  include	  pyrolysis	   or	   gasification	   which	   also	   require	   a	   subsequent	   upgrading	   step.	   Bio-­‐oils	   from	  pyrolysis	   can	   be	   enhanced	   to	   drop-­‐in	   biofuels	   with	   the	   addition	   of	   hydrogen	   via	  hydrocracking.	  A	  major	   impediment	  to	  development	  of	  pyrolysis-­‐based	  drop-­‐in	  biofuels	   is	  the	   sourcing	   of	   low-­‐cost	   hydrogen.	   Syngas	   products	   of	   gasification	   can	   be	   condensed	   to	  drop-­‐in	   liquid	   biofuels	   by	   Fischer-­‐Tropsch	   synthesis.	   Complications	   arise	   due	   to	   the	   low	  energy	  density	  and	  high	  level	  of	  impurities	  in	  biomass-­‐derived	  syngas,	  making	  the	  process	  capital	  intensive	  (Karatzos	  et	  al.	  2014).	  Biochemical	  processes	  that	  have	  been	  used	  to	  make	  drop-­‐in	   biofuels	   typically	   involve	   the	   fermentation	   of	   sugars	   to	   long-­‐chain	   alcohols,	  isoprenoids	   and	   fatty	   acids.	   The	   microorganisms	   and	   feedstock	   involved	   in	   the	   process	  determine	   the	   possible	   end	   products,	   with	   both	   gasoline	   and	   diesel/jet	   drop-­‐in	   biofuels	  feasible	   (Weber	   et	   al.	   2010).	   For	   more	   detailed	   information	   on	   oleochemical,	  thermochemical	  and	  biochemical	  drop-­‐in	  biofuel	  processing	  please	  refer	   to	  Karatzos	  et	  al.	  (2014).	  1.4	  Biomass	  availability	  Recent	   work	   has	   suggested	   that,	   even	   when	   sustainable	   harvest	   practices	   are	  considered,	   94-­‐150	  EJ/yr	   of	   biomass	  will	   be	   available	   by	  2030,	   and	  200.1-­‐502.4	  EJ/yr	   by	  2050,	   thus	   supply	  will	   remain	   greater	   than	   demand	   projections	   (~108	   EJ	   in	   2035)	   (IEA,	  2009;	  IEA,	  2013a;	  IRENA,	  2014).	  The	  IEA	  and	  IRENA	  projections	  are	  based	  on	  amalgamated	  data	   from	   a	   host	   of	   national	   biomass	   availability	   reports,	   in	   an	   attempt	   to	   condense	   the	  information	   to	   be	   applicable	   at	   the	   global	   scale.	  Despite	   the	   abundance	   of	   biomass	   at	   the	  global	  level,	  unlike	  oil,	  the	  vast	  majority	  is	  used	  locally	  with	  some	  biomass	  rich	  regions	  such	  as	  Scandinavia,	  unable	  to	  keep	  up	  with	  their	  expanding	  domestic	  demand.	  In	  countries	  such	  as	  Denmark	  and	  Sweden,	  where	  biomass/bioenergy	  is	  already	  extensively	  utilized,	  they	  are	  	  12	  encountering	  increasing	  challenges	  in	  sourcing	  sufficient	  biomass	  for	  bioenergy	  or	  biofuels	  (IEA,	  2009;	  Qiu	  et	  al.	  2012).	  In	  contrast,	  countries	  such	  as	  Brazil	  and	  the	  US,	  have	  enough	  of	  a	  feedstock	  supply	  to	  meet	  both	  current	  domestic	  and	  international	  demand	  (Perlack	  et	  al.	  2011).	   Figure	   3	   below	   illustrates	   global	   variation	   in	   potential	   2030-­‐biomass	   supply	   by	  region,	   noteworthy	   differences	   can	   be	   observed	   in	   regional	   biomass	   availability.	   Biomass	  availability	   is	   subject	   to	   influence	   from	   a	   suite	   of	   variables	   including	   but	   not	   limited	   to:	  predominant	   industries,	   biomass	   feedstock	   type,	   climate,	   government	   harvest	   regulations	  and	   geography,	   however	   a	   discussion	   of	   these	   is	   beyond	   the	   scope	   of	   this	   thesis.	   Thus	  biomass	   availability	   is	   drawn	   from	   a	   literature	   review	   of	   key	   studies	   assessing	   potential	  global	  biomass	  supply.	  	  	  Figure	   3:	   Global	   estimates	   for	   biomass	   potential	   in	   2030,	   all	   ranges	   in	   exajoules	   per	   year	  (adapted	  from	  IRENA,	  2014).	  	  	   International	   trade	   of	   biomass	   feedstocks	   and	   energy-­‐dense	   biomass-­‐based	  products	  (i.e.	  pellets	  and	  biofuels)	  has	  become	  an	   important	  supply	  component	   in	  regions	  where	   biomass	   consumption	   exceeds	   domestic	   supply.	   Figure	   4	   outlines	   three	   major	  biomass-­‐based	   energy	   products	   and	   their	   global	   trade	   routes,	   with	   intra-­‐European	   trade	  being	  excluded	   for	   simplicity.	  Trade	  volumes	  of	  modern	  bioenergy	  are	  difficult	   to	  discern	  due	   to	   the	   existence	   of	   a	   variety	   of	   commodity	   codes	   (biofuels	   are	   often	   traded	   as	  agriculture	  products)	  and	  poorly	   reported	   trade	  data.	  Thus,	  estimates	  range	  between	  0.4-­‐1.0	   EJ/yr	   (Lamers	   et	   al.	   2011;	   Lamers	   et	   al.	   2012;	   IEA,	   2013d).	   Despite	   the	   reported	  differences	   in	  trade	  volumes,	   there	   is	  a	  consensus	  that	  the	   international	   trade	  of	  biomass-­‐Asia	  23-­‐41	  EJ/yr	  Europe	  &	  Russia	  20-­‐36	  EJ/yr	  Africa	  	  13	  EJ/yr	  N.	  America	  25-­‐27	  EJ/yr	  Latin	  A.	  	  20-­‐28	  EJ/yr	   OECD	  Pacific	  3-­‐5	  EJ/yr	  	  13	  based	   energy	   products	   is	   increasing.	  When	   comparing	   figure	   3	   and	   4	   it	   is	   apparent	   that	  regions	  with	  high	  global	  estimates	   for	  biomass	  supply	  potential	   in	  2050	  (North	  and	  South	  America	   in	   particular),	   are	   also	   current	   export	   hubs	   for	   biomass-­‐based	   energy	   products,	  while	   those	  with	  a	  potentially	   lower	   future	  supply	   (the	  EU)	  are	   the	  predominant	  biomass	  importers.	  	  	  Figure	  4:	  Trade	  routes	  for	  commonly	  traded	  biomass-­‐based	  energy	  products	  (adapted	  from	  IEA,	  2009).	  	  	   Currently,	   international	   trade	   volumes	   of	   solid	   bioenergy	   products	   such	   as	   wood	  pellets	  and	  chips	  are	  more	  than	  double	  the	  global	  trade	  in	  biofuels	  (300	  petajoules	  (PJ)	  vs	  120	  PJ	  in	  2010).	  However,	  this	  may	  change	  as	  trade	  volumes	  of	  biomass	  products	  increase	  (Lamers	  et	  al.	  2011;	  Lamers	  et	  al.	  2012).	  Some	  biomass	  products,	  such	  as	  liquid	  biofuels	  or	  wood	  pellets,	  are	  more	  easily	  transported	  over	  long	  distances	  (across	  the	  Pacific	  Ocean	  for	  example)	   than	   electricity,	   (which	   cannot	   be	   easily	   transported	   beyond	   the	   reaches	   of	   an	  electricity	   grid)	   (Lamers	   et	   al.	   2011).	   The	   relative	   ease	   with	   which	   biofuels	   can	   be	  transported	  may	  result	  in	  the	  preferential	  allocation	  of	  some	  sources	  of	  biomass	  to	  biofuel	  production	   for	   export	   as	   it	   can	   be	   produced	   in	   regions	  with	   ample	   feedstock	   supply	   and	  consumed	  where	   biofuel	   demand	   is	   high.	   This	   circumstance	   has	   been	   observed	   in	   Brazil	  which,	  until	  recently,	  exported	  ethanol	  to	  the	  U.S.	  (MME,	  2012).	  	  In	   contrast	   to	   the	   limited	   overall	   trade	   in	   biomass	   and	   biofuels,	   coal	   and	   oil	   are	  globally	   traded	   in	   large	   volumes	   (900	  million	   tonnes	   (26.4	   EJ))	   and	   ((196.8	   EJ/d	   or	   34.5	  	   	   	  	   	   	   	  	  Ethanol	  Wood	  Pellets Palm	  oil	  &	   agriculture	  residues 	  	  14	  mb/d)	  in	  2011	  respectively)	  (IEA,	  2012b).	   	  Although	  biomass-­‐based	  energy	  products	  such	  as	  wood	  pellets	  and	  biofuels	  are	   traded	   internationally,	   the	   total	   global	  markets	   for	   these	  products	   (13.5	   Mt	   and	   1.3	  mb/d	   in	   2011	   respectively)	   represent	   only	   a	   fraction	   of	   total	  global	  biomass	  derived	  energy	  demand	  (IEA,	  2013a).	  	  1.5	  Competition	  for	  biomass	  	  Globally,	  sustainable	  biomass	  supply	  is	  projected	  to	  remain	  greater	  than	  total	  global	  biomass	  demand,	  suggesting	  that	  any	  potential	  competition	  between	  bioenergy	  and	  biofuels	  for	  feedstock	  is	  not	   likely	  at	  the	  international	   level.	  However,	  as	  shown	  in	  figures	  3	  and	  4,	  biomass	  supply	  varies	  regionally	  and	  global	  biomass	  trade	  is	  a	  very	  small	  proportion	  of	  the	  total	   global	   biomass	   market.	   Thus	   biomass	   is	   predominantly	   produced	   and	   consumed	  domestically	   or	   locally.	   When	   this	   is	   taken	   into	   account	   against	   the	   broader	   context	   of	  projected	   increases	   in	   biomass	   demand	   outlined	   by	   the	   IEA,	   supply	   shortages	   can	   be	  expected	  in	  some	  regions	  while	  other	  jurisdictions	  will	  have	  a	  surplus	  supply.	  In	  countries	  where	   domestic	   biomass	   supply	   may	   be	   limited,	   regional	   competition	   for	   feedstock	   is	  anticipated	   to	   occur	   between	   bioenergy	   and	   biofuel	   applications.	   This	   could	   result	   in	  competition	  for	  biomass	  for	  either	  bioenergy	  or	  biofuel	  production	  in	  those	  countries	  which	  have	  significant	  bioenergy/biofuels	  markets	   such	  as	  Brazil,	  Denmark,	  Sweden	  and	   the	  US.	  This	  study	  will	  assess	  regional	  biomass	  supply	  and	  demand	  data	  in	  an	  attempt	  to	  discern	  if	  competition	  is	  occurring	  in	  each	  of	  these	  countries.	  	  The	  so-­‐called	  “food	  versus	  fuel”	  debate	  might	  help	  illustrate	  this	  potential	  biomass	  competition	   scenario.	   In	   2007,	   agriculture	   commodity	   prices	   increased	   nearly	   40%	   with	  some	   individuals	   suggesting	   that	   increased	   production	   of	   corn-­‐derived	   ethanol,	   creating	  competition	   for	   food	   and	   fuel,	   was	   the	   primary	   reason	   for	   this	   increase	   in	   food	   prices	  (Rosegrant,	  2008;	  von	  Braun,	  2008).	  However,	  the	  majority	  of	  the	  recent	  literature	  suggests	  that	   the	   food	  vs.	   fuel	   competition	  was	  minimal	  and	   that	  biofuel	  production	   resulted	   in	  an	  increase	   of	   less	   than	   1%	   in	   agriculture	   commodity	   prices	   (Oladosu	   et	   al.	   2012;	   Throstel,	  2008;	  Tyner,	  2013).	  This	  is	  to	  say;	  the	  degree	  to	  which	  this	  competition	  is	  actually	  occurring	  is	  a	  point	  of	  contention.	  Advanced	  biofuels,	  using	  lignocellulosic	  feedstocks,	  have	  been	  touted	  as	  a	  more	  cost	  competitive	  and	  socially	  acceptable	  way	  of	  producing	  renewable	  liquid	  fuels	  as	  it	  avoids	  any	  potential	   competition	   between	   food	   and	   fuel.	   Lignocellulosic	   biomass,	   derived	   from	   the	  non-­‐eatable	  portions	  of	  agriculture	  crops	  or	  biomass	  feedstocks	  such	  as	  wood,	  is	  available	  in	  greater	  abundance	  and	  has	   strong	  potential	   for	  higher	   fuel	  yields	  per	  unit	  of	   land	   than	  	  15	  food	   crops.	   Lignocellulosic	   biomass,	   if	   grown	   and	   harvested	   sustainably	   should	   show	  improved	  GHG	  reductions	  when	  compared	  to	  conventional	  feedstocks	  (Banerjee	  et	  al.	  2010).	  	  As	   the	   push	   towards	   production	   of	   advanced	   fuels	   gains	   traction,	   the	   IEA	   has	  predicted	   that	   the	   forest	   products,	   agriculture,	   bioenergy	   and	   biofuels	   sectors	   will	  encounter	   increasing	   competition	   for	   biomass	   feedstocks	   (IEA,	   2009;	   IEA,	   2012c).	   As	  mentioned	   earlier,	   forest	   and	   agriculture	   derived	   biomass	   can	   be	   used	   for	   a	   variety	   of	  products	   including,	   feed	   and	   fodder,	   lumber,	   paper	   and	   board	   as	   well	   as	   rayon,	  nutraceuticals	   and	   bio-­‐oil.	   As	   the	   biofuel	   and	   bioenergy	   markets	   expand,	   a	   biorefinery	  approach,	  which	  also	  involves	  the	  production	  of	  intermediates	  and	  co-­‐products,	  is	  expected	  to	  increase	  (IEA,	  2009).	  	  Although	  projected	  demand	   for	  biomass	   resources	   is	   expected	   to	   show	  significant	  growth	   through	   to	  2035	   (IEA,	  2013a),	   supply	  of	  biomass	   resources	  will	  be	  constrained	   in	  some	  regions,	  where	  demand	  growth	  outpaces	  supply,	  while	  other	  countries	  will	  remain	  or	  become	  biomass	  exporters.	  Although	  the	  interdependence	  of	  biomass	  processing	  industries	  should	   ultimately	   prove	   beneficial,	   it	   is	   also	   possible	   that	   it	   will	   increase	   competition	  between	  traditional	  and	  evolving	  bioenergy/biofuel	  uses.	  (IEA,	  2009;	  Chum	  et	  al.	  2011).	  	  1.6	  Drivers	  for	  biomass	  allocation	  An	   ongoing	   discussion	   has	   been	   underway	   for	   some	   time	   regarding	   the	   major	  drivers	  that	  might	  be	  used	  to	  promote	  increased	  use	  of	  renewable	  energy	  technologies	  and	  bioenergy	  and	  biofuels	   in	  particular	  (Montalvo,	  2008;	  Aguilar	  et	  al.	  2011;	  Alagappan	  et	  al.	  2011;	  Gan	  and	  Smith,	  2011;	  Timilsina	  and	  Shrestha,	  2011;	  Hultman	  et	  al.	  2012).	  The	  work	  reported	  here	  has	  not	  used	  models	  but	  has	  rather	  looked	  at	  biomass	  allocation	  to	  bioenergy	  or	  biofuels	  through	  a	  qualitative	  assessment	  of	  both	  general	  and	  country-­‐specific	  drivers.	  	  	  Energy	  security	  and	  climate	  change	  mitigation	  were	  identified	  as	  important	  general	  drivers	  that	  have	  promoted	  the	  use	  of	  biomass	  for	  modern	  applications	  at	  the	  global	   level	  (Aguilar	  et	  al.	  2011;	  Hultman	  et	  al.	  2012).	  	  	  Through	   the	   country	   profiles,	   we	   hoped	   to	   determine	   if	   these	   drivers	   influenced	  biomass	   allocation	  decisions	   in	   each	  of	   the	   selected	   countries.	   It	  was	   apparent	   that	   a	   gap	  persists	  with	  regards	  to	  the	  manner	  in	  which	  energy	  security	  and	  climate	  change	  mitigation	  drivers	   actually	   influence	   allocation	   of	   biomass	   to	   bioenergy	   or	   biofuels	   (IEA,	   2009;	  Timilsina	  and	  Shrestha,	  2011)	  as	  bioenergy	  or	  biofuel	  development	  is	  much	  more	  complex	  than	   just	   these	   two	   general	   drivers	   (Gan	   and	   Smith,	   2011).	   	   Countries	   are	   subject	   to	  influence	  by	  far	  more	  than	  energy	  security	  and	  climate	  change	  mitigation.	  Factors	  such	  as	  	  16	  prevailing	  economic	  interests,	  the	  cost-­‐competitiveness	  of	  biomass	  based	  technologies	  and	  the	  government	  policy	  mechanisms	  must	  be	  considered	  (IEA,	  2013a).	  Government	  policies	  are	  not	   treated	  as	   a	   stand	  alone	  driver	  as	   they	   respond	   to,	   and	   influence	  energy	   security,	  climate	  change	  mitigation,	  prevailing	  economic	  interest	  and	  cost-­‐competitiveness	  of	  energy	  technologies.	   Thus,	   the	   collective	   influence	  of	   these	  drivers	  must	  be	   studied	   to	  be	   able	   to	  better	  understand	  how	  biomass	  might	  be	  allocated.	  	  1.6.1	  Energy	  security	  defined	  Energy	  security	  refers	  to	  the	  degree	  of	  energy	  self-­‐sufficiency	  in	  a	  country	  or	  region,	  i.e.	  the	  proportion	  of	  total	  energy	  demand	  fulfilled	  by	  domestic	  energy	  resources.	  A	  higher	  degree	   of	   energy	   self-­‐sufficiency	  means	   greater	   energy	   security	   (Yergin,	   2006).	   Issues	   of	  energy	   security	   affect	   both	   the	   political	   and	   economic	   space	   due	   to	   the	   importance	   of	  energy	  in	  maintaining	  daily	  societal	  functions.	  An	  uncertain	  energy	  supply	  is	  unfavourable	  and	  can	  have	  negative	  socio-­‐economic	  impacts	  on	  a	  region.	  	  Energy	  insecurity	  results	  from	  a	  heavily	  reliance	  on	  foreign	  imports	  with	  the	  degree	  of	  insecurity	  contingent	  upon	  the	  relative	  stability	  of	  the	  energy-­‐exporting	  nation	  as	  well	  as	  the	  ease	  of	  substitutability	  of	  the	  energy	  source	  (Yergin,	  2006).	  Political	  instability	  in	  major	  oil	   exporting	   regions,	   such	  as	   the	  Middle	  East	  or	  Venezuela,	  means	   the	   supply	  of	  oil	   from	  these	  countries	  is	  subject	  to	  volatility,	  as	  seen	  in	  the	  oil	  crisis	  of	  1973	  and	  again	  in	  the	  early	  2000s	   (IEA,	   2013a).	   When	   oil	   supply	   from	   these	   regions	   drastically	   declined	   it	   caused	  spikes	  in	  the	  price	  of	  oil	  that	  rippled	  through	  the	  global	  economy.	  	  The	  ease	  with	  which	  an	  energy	  source	  might	  be	  substituted	  by	  an	  alternative	  should	  lower	   the	   concern	   of	   energy	   security	   associated	   with	   that	   product.	   Although	   there	   are	  considerable	  fossil	  fuel	  and	  renewable	  energy	  sources	  available	  for	  stationary	  energy	  needs,	  transportation	   is	   reliant	   on	   fossil	   fuels	   for	  90%	  of	   its	   energy	  demand	   (see	   table	  1).	   Thus,	  energy	  security	  concerns	  are	  often	  greater	  for	  transportation	  energy	  needs	  than	  stationary,	  especially	   when	   the	   politically	   unstable	   nature	   of	   many	   oil-­‐exporting	   countries	   is	  considered	  (Yergin,	  2006).	  1.6.1.1	  How	  biomass	  energy	  products	  improve	  energy	  security	  Biomass	  is	  a	  ubiquitous	  energy	  source,	  available	   in	  most	  countries	  on	  a	  renewable	  basis,	  either	  specially	  grown	  as	  energy	  crop	  plantations	  or	  as	  a	  by-­‐product	  of,	  forestry	  and	  agriculture	   operations.	   Consuming	   domestic	   biomass	   resources	   for	   bioenergy	   or	   biofuel	  production	   can	   diversify	   a	   nation’s	   energy	   mix,	   thereby	   reducing	   its	   dependence	   on	  imported	   fuel	   sources	   and	   improving	   energy	   security.	   Concerns	   of	   energy	   security	   are	   a	  	  17	  common	  precondition	  for	  the	  emergence	  of	  bioenergy	  or	  biofuels	  in	  a	  country’s	  energy	  mix.	  Examining	   a	   country’s	   energy	   trade	   balance	   and	   government	   documents	   in	   national	   and	  energy	  policy	  spheres	  can	  help	  identify	  energy	  security	  concerns.	  Evaluating	  the	  emergence	  of	  biomass	  utilization	  in	  Brazil,	  Denmark,	  Sweden	  and	  the	  United	  States,	  while	  concurrently	  examining	   the	   importance	   of	   energy	   security	   concerns	   within	   each	   country,	   might	   help	  better	  define	  the	  possible	  role	  that	  energy	  security	  will	  play	  in	  driving	  bioenergy	  or	  biofuel	  development.	  	  1.6.2	  Climate	  change	  mitigation	  and	  biomass	  utilization	  Energy	   security	   has	   been	   a	   shared	   global	   trend	   among	   countries	   that	   consume	  biomass	   for	   biofuels	   or	   bioenergy,	   although	   alone	   it	   does	   not	   explain	   the	   divergence	   in	  technology	   choices	   that	   have	   been	   made.	   The	   influence	   that	   carbon	   reduction	   strategies	  might	  play	   in	   the	  development	  of	  biofuels	  or	  bioenergy	   is	  also	  considered.	  This	  section	  of	  the	   thesis	   weighed	   the	   influence	   of	   government	   energy	   and	   climate	   policy	   on	   the	   use	   of	  biomass	  for	  bioenergy	  and	  biofuels.	  	  1.6.2.1	  How	  climate	  change	  mitigation	  impacts	  biomass	  allocation	  to	  biofuels	  or	  bioenergy	  Historically	   it	  has	  been	  perceived	  that	   the	  substitution	  of	   fossil	   fuels	  with	  biomass	  could	   reduce	  or	  even	  eliminate	   the	  negative	   impacts	  associated	  with	  GHG	  emissions	   from	  fossil	  fuels	  (Rogner,	  2000).	  In	  theory,	  the	  use	  of	  sustainable	  biomass	  is	  carbon	  neutral,	  thus	  its	  consumption	   for	  energy	  or	  conversion	  to	  a	   liquid	   fuel	  can	  act	   to	  reduce	  energy	  and/or	  transportation	  related	  climate	  change	  (Rogner,	  2000;	  IEA,	  2013a).	  	  Combustion	  of	  biomass	  for	  bioenergy	  provides	  improved	  GHG	  emissions	  reductions	  and	   recovers	  more	   of	   the	   intrinsic	   energy	   of	   its	   feedstock	   than	   conversion	   of	   biomass	   to	  biofuels	   (see	   section	   1.2.1).	   Thus,	   if	   climate	   change	  mitigation	   is	   a	   primary	   goal,	   biomass	  will	   be	   preferentially	   used	   to	   make	   bioenergy	   rather	   than	   biofuel	   (IEA,	   2013c).	   The	  importance	   of	   climate	   change	   mitigating	   strategies	   in	   Europe	   has	   led	   governments	   to	  develop	  policies	   and	   regulations	   to	   try	   to	   reduce	  GHG	   emissions.	   These	   carbon	   reduction	  strategies	   have	   tended	   to	   direct	   biomass	   to	   bioenergy	   rather	   than	   biofuel	   applications	  (Hedegaard	  et	  al	  2008;	  Campbell	  et	  al.	  2009;	  Hveplund,	  2011).	  	  Recent	   carbon	   accounting	   work	   has	   confused	   the	   preconceived	   notion	   that	   all	  biomass	  leads	  to	  GHG	  emissions	  reductions	  when	  making	  and	  using	  bioenergy	  and	  biofuels	  (Chum	  et	  al.	  2011).	  Although	  some	  researchers	  believe	  that	  bioenergy	  still	  provides	  better	  GHG	  emissions	  reductions	  when	  compared	  to	  biofuels,	  there	  is	  no	  consensus	  regarding	  the	  	  18	  levels	  of	  GHG	  abatement	  associated	  with	  either	  energy	  product	  (Campbell	  et	  al.	  2009;	  Chum	  et	   al.	   2011;	   IEA	   2009).	   The	   inclusion	   of	   direct	   and	   indirect	   land	   use	   changes	   in	   carbon	  accounting	  have	  further	  complicated	  the	  matter	  (Gnansounou	  et	  al.	  2008).	  Determining	  the	  emissions	  associated	  with	  biomass	  products	   is	   contingent	  not	  only	  upon	  distance	  and	   the	  method	  of	   transport	  but	  also	   the	  harvest	  and	  conversion	  practices	  used	   in	   their	   region	  of	  origin	  (Chum	  et	  al.	  2011).	  Advancements	  in	  modern	  carbon	  accounting	  have	  tried	  to	  include	  as	  many	   of	   these	   variables	   as	   possible	   to	   accurately	   reflect	   the	   real	   carbon	   emissions	   of	  biomass-­‐based	   energy	   products.	   The	   task	   remains	   exceedingly	   difficult	   with	   significant	  variability	  observed	  in	  GHG	  emission	  offsets	  for	  comparable	  products	  depending	  upon	  the	  metrics	  of	  analysis	  (Gnansounou	  et	  al.	  2008;	  Chum	  et	  al.	  2011;	  Bright	  et	  al.	  2012;	  Popp	  et	  al.	  2012).	  	   Within	   the	   past	   decade,	   some	   countries	   striving	   to	   reduce	   their	   carbon	   emissions	  have	   created	   policies	   specifically	   targeting	   transportation	   emission	   reductions.	   The	  introduction	   of	   these	   policies	   adds	   another	   layer	   of	   complexity	   in	   biomass	   utilization	  decisions.	   It	   is	   anticipated	   that	   such	   policies	   do	   effectively	   alter	   biomass	   allocation	   away	  from	   bioenergy	   and	   towards	   biofuels.	   Due	   to	   the	   limited	   energy	   substitutes	   for	  transportation,	  mandates	  that	  strive	  to	  increase	  the	  penetration	  of	  renewables	  in	  transport	  have	   created	   growing	   biofuel	   demand.	   Emerging	   biomass	   consumption	   trends	   suggest	  transportation	  specific	  emission	  policies	  might	  influence	  biomass	  allocation	  differently	  than	  general	  climate	  policies,	  resulting	   in	  the	  use	  of	  biomass	  for	  biofuels	  as	  opposed	  to	  energy.	  Examples	   of	   this	   can	   be	   seen	   in	   Denmark	   and	   Sweden	   and	   are	   discussed	   in	   detail	   in	   the	  country	  profiles.	  	  1.6.3	  Other	  drivers	  beyond	  energy	  security	  and	  climate	  change	  affecting	  biomass	  allocation	  decisions	  	  	   In	   addition	   to	   energy	   security	   and	   climate	   change,	   regional	   and	   local	   variation	   in	  geography,	  climate	  and	  natural	  resource	  endowment	  impacts	  a	  suite	  of	  ancillary	  drivers	  and	  ultimately	  decisions	  of	  biomass	  appropriation	  to	  bioenergy	  or	  biofuels.	  For	  the	  purpose	  of	  this	   thesis,	   discussion	   of	   these	   ancillary	   drivers	   is	   restricted	   to	   prevailing	   economic	  interests	   and	   the	   cost	   competitiveness	   of	   bioenergy	   and	   biofuels.	   The	   influence	   of	   these	  “other”	   drivers	   on	   biomass	   allocation	   to	   bioenergy	   or	   biofuels	   is	   discussed	   to	   illustrate	   a	  further	  level	  of	  complexity	  in	  the	  decision	  process.	  	  	  	  19	  1.6.3.1	  Prevailing	  economic	  interests	  The	  energy	  sector	   is	  an	   important	  source	  of	   revenue	   in	  many	  countries.	  Countries	  that	   are	   able	   to	   foster	   innovation	   in	   biomass	   based	   energy	   systems	   stand	   to	   receive	  enormous	   economic	   benefits	   in	   the	   long	   term.	   The	   advent	   of	   a	   biomass-­‐based	   energy	  industry	  can	  aid	  struggling	  industries,	  improve	  rural	  development,	  cultivate	  new	  industries,	  and	   lead	   to	   job	   creation.	   Emerging	   biomass	   dependent	   markets	   will	   also	   encourage	  economic	   competitiveness	   and	   improve	   export	   potential	   (Danish	   Energy	   Agency	   (DEA),	  2005,	   Lipp,	   2007).	   The	   ability	   of	   prevailing	   economic	   interests	   to	   influence	   government	  policy	  support	  schemes	  for	  bioenergy	  and	  biofuels	  is	  discussed	  for	  each	  country.	  	  In	  agriculture	  intensive	  regions,	  feedstocks	  tend	  to	  be	  more	  suitable	  for	  conversion	  to	  biofuels	  than	  combustion	  for	  bioenergy	  (Karatzos	  et	  al.	  2014).	  Crops	  and	  their	  residues	  that	  can	  be	  directed	  towards	  biofuel	  production	  will	  enhance	  farmer’s	  income.	  As	  a	  result,	  farmer	   and	   forestry	   lobby	   groups	   worldwide	   (such	   as	   the	   U.S.	   National	   Corn	   Growers	  Association,	  Bureau	  of	  Nordic	  Family	  Forestry	  and	  Landbrug	  &	  Fødevarer	  in	  Denmark)	  have	  been	   vocal	   supporters	   of	   the	   biofuel	   industry.	   In	   countries	   where	   the	   forest	   sector	   is	   a	  significant	   part	   of	   the	   rural	   economy,	   such	   as	   in	   Sweden	   and	   Finland,	   the	   biomass	   is	  typically	   directed	   to	   bioenergy.	   Generation	   of	   bioenergy	   from	   wood	   and	   pulp	   waste	  provides	   additional	   revenue	   to	   forestry	   companies,	   increases	   job	   production	   in	   rural	  regions,	  yielding	  positive	  rural	  economic	  benefits.	  Some	  regions,	  such	  as	  Sweden,	  are	  better	  at	  capitalizing	  on	  these	  economic	  opportunities	  than	  others	  (Hillring,	  2002).	  	  1.6.3.2	  Cost	  competitiveness	  of	  bioenergy	  and	  biofuels	  The	   cost	   competitiveness	   of	   bioenergy	   and	   biofuels	   relative	   to	   conventional	   fossil	  fuels	   and	   other	   renewable	   energy	   technologies	   is	   an	   essential	   driver	   in	   determining	   the	  appropriation	  of	  biomass	  feedstocks.	  Within	  the	  context	  of	  this	  thesis,	  cost	  competitiveness	  is	   examined	   with	   respect	   to	   technological	   advancements	   in	   biomass	   conversion	   and	  government	  policy	  measures	  aimed	   to	   improving	   the	  market	  competitiveness	  of	  biomass-­‐based	  technologies.	  The	  status	  of	  development	  for	  technologies	  to	  convert	  biomass	  to	  either	  bioenergy	  or	   biofuels	   affects	   the	   cost	   competitiveness	   of	   their	   production,	   as	   pioneer	   facilities	  experience	   much	   greater	   processing	   costs	   than	   established	   technologies.	   Allocation	   of	  biomass	   to	   either	   bioenergy	   or	   biofuel	   production	   can	   be	   driven	   by	   the	   availability	   of	   a	  given	   cost-­‐competitive	   technology	   for	   conversion.	   Processes	   are	   typically	   optimized	   for	   a	  single	  feedstock	  and	  the	  development	  of	  a	  conversion	  technology	  is	  often	  closely	  related	  to	  the	   availability	   of	   a	   given	   feedstock	   within	   a	   particular	   region.	   Despite	   growing	  	  20	  international	   trade	   of	   biomass-­‐based	   energy	   products,	   biomass	   is	   primarily	   consumed	  locally.	   The	   economics	   of	   bioenergy	   and	   biofuel	   production	   is	   greatly	   improved	   if	   the	  feedstock	  can	  be	  sourced	   locally	  (Stephens	  et	  al.	  2010).	  Availability	  of	  biomass	   feedstocks	  can	  be	  affected	  by	  changes	  in	  seemingly	  unrelated	  spheres	  as	  revealed	  in	  the	  case	  studies	  of	  this	  thesis.	  Economic	  viability	  of	  biomass	  energy	  products	  is	  contingent	  not	  only	  on	  bioenergy	  or	  biofuel	  production	  costs	  but	  on	  fluctuating	  oil	  prices.	  Slow	  economic	  recovery	  in	  much	  of	  the	  world,	  combined	  with	  the	  recent	  advent	  of	  unconventional	  oil	  and	  gas,	  (especially	  in	  the	  United	   States)	   have	   caused	   the	   crude	   oil	   price	   to	   fall	   from	   its	   peak	   of	   ~$140US/	   barrels	  (bbl)	   in	   2008	   to	   ~$60US/bbl	   by	   the	   end	   of	   2014	   (IEA,	   2012b;	   Nasdaq,	   2014).	   In	   some	  regions,	  falling	  oil	  prices	  have	  had	  a	  significant	  impact	  on	  renewable	  energy	  investment	  as	  the	  cost	  per	  unit	  of	  energy	  generated	  has	  increased	  relative	  to	  fossil	  fuels.	  Specifically,	  both	  conventional	   and	   advanced	   biofuels	   have	   experienced	   reduced	   generation,	   causing	  production	  and	  consumption	  of	  biofuel	  products	  to	  decline,	  the	  degree	  of	  which	  remains	  to	  be	  seen	  (IEA,	  2014).	  	  	  Table	  2:	  Estimated	  pre-­‐tax	  costs	  of	  biofuel	  and	  petroleum	  fuels	  (U.S.	  cents/liter).	  (Demirbas,	  2011;	  IEA,	  2013a)	  	   Present	  Costs	  (2011)	   Projected	  Costs	  (2030)	  Bioethanol	  from	  sugarcane	   25-­‐50	   25-­‐35	  Bioethanol	  from	  corn	   60-­‐80	   35-­‐55	  Bioethanol	  from	  lignocellulose	   60-­‐130	   25-­‐65	  Biodiesel	  from	  vegetable	  oil	   70-­‐110	   40-­‐75	  Petroleum	  products	   35-­‐60	   50-­‐56	  	  Government	   policies	   or	   regulations	   have	   the	   ability	   to	   alter	   cost	   competitiveness	   of	  bioenergy	  or	  biofuels.	  A	  broad	  approach	  must	  be	  taken	  when	  considering	  policies	  that	  affect	  the	   competitiveness	   of	   bioenergy	   and	   biofuels,	   considering	   not	   only	   those	   that	   directly	  target	  biomass	  technologies	  but	  including	  government	  programs	  or	  regulations	  that	  impact	  a	   host	   of	   different	   realms,	   including	   (but	   not	   limited	   to):	   fossil	   fuels,	   feedstocks,	   carbon	  emissions,	  alternative	  renewable	  technologies	  and	  even	  corporate	  taxation.	  	  1.6.3.3	  Policy	  drivers	  	   It	  is	  essential	  to	  examine	  the	  role	  of	  policy	  as	  a	  driver	  for	  biomass	  allocation	  to	  bioenergy	  or	  biofuels.	  Within	  the	  context	  of	  this	  thesis,	  policy	  drivers	  are	  assessed	  as	  a	  key	  aspect	  in	  the	  framework	  of:	  climate	  change	  mitigation,	  energy	  security,	  prevailing	  economic	  interests,	  and	  technological	  cost-­‐competitiveness	  due	  to	  the	  intimate	  integration	  of	  policy	  	  21	  with	  these	  four	  drivers.	  A	  stand-­‐alone	  analysis	  quantifying	  the	  effectiveness	  of	  a	  given	  policy	  mechanism	  in	  relation	  to	  another	  is	  beyond	  the	  scope	  of	  this	  thesis	  project.	  Alternatively	  important	  aspects	  of	  government	  policies	  and	  programs	  are	  discussed	  for	  each	  of	  the	  country	  profiles.	  The	  observed	  variation	  illustrates	  how	  diverse	  policy	  mechanisms	  that	  influence	  biomass	  allocation	  can	  be.	  	  1.7	  Problem	  statement	  	  Although	  the	  original	  focus	  of	  the	  proposed	  thesis	  work	  was	  to	  identify,	  “under	  what	  circumstances	   would	   biomass	   be	   more	   valuable	   as	   a	   feedstock	   for	   biofuels	   rather	   than	  bioenergy?”	   it	   became	   apparent	   that	   two	   preceding	   questions	   first	   had	   to	   be	   addressed.	  These	  were,	  “what	  is	  the	  current	  status	  of	  competition	  for	  biomass	  between	  bioenergy	  and	  biofuels?”	   and	   “what	   conditions	   might	   lead	   to	   biomass	   being	   used	   to	   produce	   biofuels	  rather	   than	   bioenergy?”	   Thus,	   the	   latter	   two	   questions	   became	   the	   focus	   of	   the	   thesis.	   	  It	  was	   recognized	   that	   the	   preferred	   allocation	   of	   biomass	   to	   either	   bioenergy	   or	   biofuels	  might	  be	  better	  discerned	  by	  examining	  the	  main	  drivers	  that	  spurred	  the	  development	  of	  these	  renewable	  energy	  applications	  in	  selected	  regions.	  Thus,	  the	  work	  focused	  on	  creating	  profiles	  of	  four	  countries	  that	  were	  either	  significant	  bioenergy	  or	  biofuels	  users,	  (the	  USA,	  Brazil,	  Sweden	  and	  Denmark),	   first	  determining	  their	  main	  sources,	  production	  and	  use	  of	  biomass	  and	  their	  current	  and	  projected	  bioenergy	  and	  biofuels	  use.	  After	  identifying	  the	  predominant	  biomass-­‐based	  energy	  technology	  and	  the	  status	  of	   biomass	   competition	   in	   each	   of	   the	   country	   profiles,	   the	   relative	   importance	   of	   four	  drivers	   which	   included,	   energy	   security,	   climate	   change	   mitigation,	   regional	   economic	  interests,	   and	   the	   cost-­‐competitiveness	   of	   bioenergy/biofuels	   were	   each	   assessed.	   The	  interaction	  of	  each	  of	   the	   four	  drivers	  with	  policy,	  and	   the	  resulting	   influence	  on	  biomass	  allocation	   is	   examined.	  A	  historical	   approach	  was	   taken	  where	   the	   relative	   importance	  of	  each	  driver	  was	  assessed.	  The	  goal	  was	  to	  address	  the	  central	  question	  of	  the	  thesis,	  “under	  what	   conditions	  might	   biomass	   be	   allocated	   to	   biofuel	   production	   rather	   than	   bioenergy	  generation?”	  	  	  	  	  	  	  	  22	  CHAPTER	  TWO:	  METHODS	  2.1	  Rationale	  for	  country	  selection	  Brazil,	  Denmark,	  Sweden	  and	  the	  United	  States	  use	  bioenergy	  and/or	  biofuels	  as	  a	  significant	  component	  of	  their	  national	  energy	  mix	  (IEA,	  2013a;	  IEA,	  2013b;	  IEA	  2014).	  These	  four	  countries	  were	  selected	  due	  to	  their	  extensive	  use	  of	  biomass	  for	  modern	  energy	  applications	  and	  for	  their	  current	  or	  potential	  expanded	  use	  of	  biofuels.	  	  The	  data	  obtained	  for	  each	  of	  the	  four	  countries	  required	  extensive	  regrouping	  before	  it	  was	  suitable	  for	  cross-­‐country	  comparisons.	  	  For	  each	  country,	  current	  biomass	  applications,	  major	  biomass	  feedstock’s,	  and	  (when	  available)	  the	  origins	  of	  the	  biomass	  were	  assessed	  to	  see	  if	  there	  was	  or	  might	  be	  competition	  for	  this	  biomass.	  Biomass	  competition	  in	  the	  context	  of	  this	  thesis	  refers	  to	  a	  scenario	  where	  biomass	  demand	  exceeds	  supply.	  	  The	  country	  profiles	  were	  performed	  to	  determine:	  1. The	  importance	  of	  bioenergy	  and	  biofuels	  in	  the	  current	  national	  energy	  mixes.	  2. The	  major	  biomass	  uses.	  3. To	  what	  extent	  does	  biomass	  competition	  already	  exist	  in	  each	  country?	  4. Drivers	  that	  shaped	  the	  historical	  and	  current	  development	  of	  bioenergy	  and	  biofuels.	  5. How	  these	  drivers	  might	  influence	  future	  biomass	  competition	  and	  utilization.	  Recall	  from	  the	  previous	  background	  section	  that	  the	  four	  drivers	  include:	  	  1. Energy	  security	  concerns	  2. Climate	  change	  mitigation	  desires	  3. Prevailing	  economic	  interests	  4. Cost-­‐competitiveness	  of	  bioenergy/biofuel	  technologies	  2.2	  Benefits	  of	  exploratory	  research	  Exploratory	  research	  is	  performed	  when	  seeking	  to	  describe	  a	  phenomenon	  and	  explore	  its	  dynamics	  (Iacobucci	  &	  Churchill,	  1999).	  This	  research	  methodology	  allows	  broad,	  high	  level	  questions	  to	  be	  addressed	  that	  are	  beyond	  the	  narrow	  focus	  of	  experimental	  or	  lab	  based	  research.	  The	  wide	  research	  scope	  permits	  the	  inclusion	  of	  a	  number	  of	  different	  countries	  in	  the	  analysis.	  This	  is	  approach	  was	  employed	  in	  an	  attempt	  	  23	  to	  capture	  some	  of	  the	  variability	  that	  exists	  internationally	  with	  respect	  to	  biomass	  utilization.	  Furthermore,	  exploratory	  research	  it	  helps	  to	  illustrate	  the	  overall	  complexity	  of	  the	  drivers	  involved	  in	  biomass	  allocation	  decisions	  (Iacobucci	  &	  Churchill,	  1999).	  A	  very	  important	  benefit	  of	  the	  exploratory	  research	  approach	  is	  by	  addressing	  the	  research	  questions	  from	  a	  broad	  perspective,	  it	  highlights	  avenues	  for	  future	  research	  and	  is	  helpful	  in	  focusing	  future	  research	  questions	  (Iacobucci	  &	  Churchill,	  1999).	  2.3	  Limitations	  of	  exploratory	  research	  	   The	  exploratory	  approach	  created	  some	  limitations	  for	  this	  research	  project.	  Although	  the	  assessment	  of	  several	  countries	  was	  valuable	  to	  illustrate	  the	  diversity	  of	  biomass	  utilization	  practices,	  it	  prevented	  a	  thorough	  examination	  of	  every	  driver	  for	  each	  of	  the	  countries.	  The	  system	  of	  drivers	  for	  biomass	  allocation	  is	  too	  complex	  within	  a	  country	  to	  be	  fully	  explained	  within	  the	  span	  of	  an	  MSc	  thesis	  project.	  Additionally	  the	  importance	  of	  a	  single	  driver	  cannot	  be	  quantified,	  nor	  can	  the	  importance	  of	  drivers	  be	  compared.	  	  	   The	  nature	  of	  this	  research	  project	  required	  that	  bounds	  be	  drawn	  on	  the	  products	  considered	  in	  the	  competition	  for	  biomass,	  restricting	  the	  analysis	  to	  only	  bioenergy	  and	  biofuels.	  By	  doing	  so,	  the	  influence	  of	  alternative	  markets	  such	  as	  wood	  products,	  and	  agriculture	  were	  intentionally	  over	  looked.	  Inclusion	  of	  these	  markets	  in	  future	  research	  may	  yield	  different	  findings	  regarding	  the	  status	  of	  biomass	  competition	  both	  globally	  and	  regionally.	  A	  final	  limitation,	  although	  it	  does	  not	  pertain	  to	  the	  methods,	  stems	  from	  the	  limited	  availability	  of	  data	  concerning	  newly	  commercial	  advanced	  biofuel	  technologies.	  The	  recent	  maturity	  of	  cellulosic	  biofuel	  technologies	  and	  the	  high	  level	  of	  secrecy	  regarding	  the	  proprietary	  processes	  make	  it	  difficult	  to	  discern	  their	  potential	  impact	  on	  future	  competition	  for	  biomass.	  	  	  	   	  	  24	  CHAPTER	  THREE:	  COUNTRY	  COMPARISONS	  3.1	  Brazil	  As	  a	  developing	  country,	  Brazil	  experiences	  different	  demands	  on	  its	  energy	  market	  than	  the	  developed	  nations	  examined	  in	  this	  thesis	  as	  it	  is	  faced	  with	  the	  task	  of	  expanding	  access	   to	   electricity,	   supporting	   a	   rapidly	   growing	   economy	   and	   maintaining	   affordable	  energy	  and	  fuel	  prices	  for	  a	  large	  impoverished	  segment	  of	  the	  population.	  Ensuring	  a	  stable,	  reliable	  and	  affordable	  energy	  supply	  is	  problematic	  for	  a	  rapidly	  expanding	  economy	  with	  burgeoning	   energy	   demands.	   In	   Brazil,	   the	   situation	   is	   further	   complicated	   as	   the	   energy	  mix,	  with	  strong	  hydropower	  and	  biomass	  components,	   is	  affected	  by	  policies	   that	  aim	   to	  preserve	   biodiversity	   and	   control	   land/water	   resource	   management.	   Additionally,	   the	  supply	  of	  these	  energy	  sources	  is	  subject	  to	  climatic	  conditions.	  Droughts	  in	  2001	  and	  early	  2014,	   impacted	  hydropower	   inflows,	   lowering	  assured	  energy	   levels	  while	  high	  rainfall	   in	  2011-­‐2012	   negatively	   affected	   sugarcane	   harvests	   and	   resulting	   ethanol	   production	   (The	  Economist,	  2014;	  USDA,	  2013).	  Furthermore,	  government	  policies	  with	  respect	  to	  gasoline	  price	   controls	   effectively	   undermine	   national	   biofuel	   policies.	   Such	   Brazilian	   specific	  conditions	  must	  be	  considered	  in	  order	  to	  assess	  the	  status	  of	  biomass	  competition	   in	  the	  country.	   These	   nationally	   specific	   circumstances	   also	   influence	   the	   drivers	   and	   must	   be	  examined	   in	   conjunction	   with	   general	   drivers	   to	   fully	   understand	   biomass	   allocation	  decisions	  in	  the	  country.	  3.1.1	  The	  Brazilian	  energy	  mix	  Total	   energy	   consumption	   (2011)	   in	   Brazil,	   9.6	   EJ,	   is	   comparable	   to	   that	   of	   the	  Scandinavian	   countries	   examined	   in	   this	   exploratory	   research,	   and	   is	   several	   orders	   of	  magnitude	  smaller	   than	  United	  States	  energy	  consumption	  (MME,	  2012).	  Oil	  products	  are	  the	  single	  largest	  source	  of	  energy,	  accounting	  for	  40%	  of	  TEC.	  Despite	  this,	  Brazil	  has	  one	  of	  the	  least	  carbon	  intensive	  energy	  mixes	  in	  the	  world	  with	  46%	  of	  domestic	  energy	  supply	  met	  by	  renewable	  energy	  sources	  in	  2011	  (MME,	  2012).	  In	  comparison,	  the	  average	  among	  OECD	  nations	  is	  8%	  (USDA,	  2013).	  Brazil’s	  high	  proportion	  of	  renewables	  in	  its	  energy	  mix	  is	  the	  product	  of	  limited	  known	  domestic	  oil	  and	  gas	  resources	  prior	  to	  the	  discovery	  of	  the	  “pre-­‐salt”	  in	  the	  late	  1970s.	  Since	  this	  discovery	  of	  large	  oil	  and	  gas	  deposits,	  the	  economy	  of	  the	   country	   is	   transforming	   as	   Brazil	   emerges	   as	   a	   major	   global	   oil	   and	   gas	   producer,	  although	   a	   strong	   reliance	   on	   hydropower	   for	   electricity	   generation	   and	   biofuels	   in	  	  25	  transportation	  maintain	  the	  low	  emissions	  intensity	  of	  Brazil’s	  energy	  mix	  (USDA,	  2013;	  IEA,	  2013).	  	  Figure	   5	   illustrates	   the	   final	   energy	   consumption	   by	   source	   for	  Brazil	   in	   2011.	   As	  experienced	   in	   each	   of	   the	   other	   profiles,	   variation	   exists	   between	   the	   classifications	   of	  different	  energy	  sources.	  The	  following	  figure	  illustrates	  the	  significant	  diversity	  that	  exists	  within	  the	  Brazilian	  energy	  mix.	  	  	  	  Figure	  5:	  Final	  energy	  consumption	  in	  2011	  by	  source	  in	  Brazil.	  Other	  represents	  the	  sum	  of	  coke	  oven	  gas,	  coal	  coke,	  and	  tar	  (original	  figure,	  data	  source	  MME,	  2012).	  	  	   Industry	   (3.7EJ)	  and	   transportation	   (3.1	  EJ)	  are	   the	   two	   largest	  energy-­‐consuming	  sectors	  in	  Brazil	  while	  the	  remainder	  of	  consumption	  is	  used	  in	  the	  energy	  sector	  (0.93	  EJ),	  residential,	   commercial	   and	   public	   energy	   demand	   (1.4	   EJ)	   and	   agriculture	   and	   livestock	  (0.41	   EJ)	   (MME,	   2012).	   The	   transportation	   sector	   is	   the	   most	   oil	   intensive	   sector	   of	   the	  Brazilian	   economy,	   accounting	   for	   55%	   of	   total	   oil	   consumption.	   Although	   biofuels	   have	  made	  significant	  inroads	  for	  use	  in	  personal	  and	  light	  duty	  vehicle,	  large	  volumes	  of	  diesel	  fuel	  are	  consumed	  for	  long	  haul	  transport	  (MME,	  2012).	  3.1.1.1	  Renewable	  energy	  in	  Brazil	  Brazil	   has	   a	   long	   history	   of	   renewable	   energy	   development,	   investing	   heavily	   in	  renewable	  technologies	  in	  the	  early	  1970s	  after	  the	  OPEC	  oil	  crisis	  sent	  their	  trade	  balance	  into	   a	   serious	   deficit.	   Today,	   Brazil	   is	   one	   of	   the	   largest	   proportional	   users	   of	   renewable	  energy	   in	   the	  world	   (46%	   in	   2011)	   (MME,	   2012).	  Major	   renewable	   energy	   sources	   are	   a	  reflection	   of	   the	   country’s	   domestic	   resources	   and	  major	   industries	   as	   both	   biomass	   and	  hydroelectricity	  play	  a	  prominent	  role	  in	  the	  renewable	  energy	  supply.	  	  7%	  2%	  40%	  29%	  18%	  4%	  Natural	  Gas	  Coal	  Oil	  Products	  Biomass	  Electricity	  Other	  	  26	  	   The	  domestic	  renewable	  energy	  supply	   in	  Brazil	   is	  derived	   from	  hydro/renewable	  electricity,	   (33%),	   biomass	   (58%)	   and	   the	   remaining	   (9%)	   denoted	   as	   “other”	   (no	   clear	  definition	   is	   provided	   by	   MME)	   (MME,	   2012).	   The	   breakdown	   of	   domestic	   renewable	  energy	  supply	   is	  provided	   in	   figure	  6.	  For	  the	  purpose	  of	   this	   figure,	  biomass	   is	  separated	  into	  sugarcane	  products	  and	  firewood/charcoal.	  	  	  Figure	  6:	  Domestic	   renewable	  energy	  supply	  by	  source	   in	  Brazil	   for	  2011	  (original	   figure,	  data	  source	  MME,	  2012).	  	   In	   Brazil,	   hydro	   reservoirs	   play	   an	   important	   role	   in	   energy	   generation,	   acting	   as	  power	  reserves.	  Reservoirs	  are	  held	  full	  in	  case	  the	  price	  of	  energy	  imports	  increases,	  if	  this	  occurs	  the	  water	  is	  released	  to	  enhance	  the	  generation	  of	  electricity.	  Recently,	  droughts	  in	  Brazil	   have	   made	   water	   flow	   increasingly	   unpredictable,	   exposing	   this	   type	   of	   reserve	  system	  to	  risk.	  	  In	   2001-­‐2002	   a	   large	   power	   crisis	   arose	   in	  Brazil	   due	   to	   long	   periods	   of	   drought.	  Energy	   was	   rationed	   for	   8	   months	   to	   cope	   with	   the	   decreased	   electricity	   generating	  capacity;	  at	  the	  time	  Brazil	  depended	  on	  hydropower	  for	  88%	  of	  electricity	  generation	  (The	  Economist,	  2014;	  MME,	  2012).	  Since	  then	  the	  electricity	  mix	  has	  been	  expanded	  to	  include	  coal,	  gas	  and	  oil-­‐fired	  power	  stations,	  yet	  Brazil	  still	  relies	  on	  domestic	  hydroelectric	  dams	  for	  74%	  of	  its	  electricity,	  leaving	  the	  country	  exposed	  to	  energy	  shortages	  (MME,	  2012).	  	  This	   exposure	   was	   made	   evident	   in	   early	   2014	   when	   Brazil	   was	   faced	   with	   the	  driest	   rainy	   season	   since	   2001,	   and	   reservoirs	  were	   at	   a	  mere	   37%	   capacity.	  Meanwhile,	  energy	   consumption	  has	   soared,	  with	  peak	  demand	   reaching	  an	  all	   time	  high	  of	  86GW	   in	  February	  (The	  Economist,	  2014).	  Increasing	  demand	  came	  in	  the	  wake	  of	  new	  government	  policies	   designed	   to	   cut	   household	   electricity	   prices	   and	   heightened	   energy	   consumption	  leading	  up	   to	   the	  FIFA	  World	  Cup	  of	   Soccer,	   as	  Brazil	  was	  hosting.	   Low	  electricity	   supply	  33%	  22%	  36%	  9%	  Hydrolic	  and	  renewable	  electricity	  Firewood	  and	  Charcoal	  Sugarcane	  Products	  	  27	  combined	   with	   heightened	   demand	   caused	   significant	   shortages	   across	   Brazil.	   Further	  expansion	   of	   Brazil’s	   hydroelectricity	   production	   was	   not	   a	   possible	   solution.	   Unutilized	  hydropower	   potential	   is	   severely	   limited	   by	   the	   location	   of	   suitable	   rivers	   within	   the	  Amazon,	  making	  industrial	  development	  politically	  and	  environmentally	  sensitive.	  	  Since	   the	   energy	   crisis	   earlier	   this	   year,	   energy	   security	   and	   diversification	   of	  renewables	   has	   gained	   significant	   political	   traction	   prior	   to	   the	   upcoming	   Presidential	  election	  in	  October	  of	  2014	  (The	  Economist,	  2014).	  Wind,	  solar	  and	  bioenergy	  based	  power	  systems	  are	  all	  being	  heralded	  as	  supplemental	  energy	  sources.	  Biomass,	  unlike	  wind	  and	  solar	   holds	   great	   promise	   as	   it	   is	   the	   only	   non-­‐intermittent	   source	   of	   renewable	   energy,	  allowing	  for	  on-­‐demand	  energy	  generation.	  The	  ability	  of	  biomass	  to	  act	  as	  stored	  energy,	  favorably	  positions	  bioenergy	  as	  a	  potentially	  significant	  renewable	  energy	  source	  in	  Brazil.	  A	  greater	  discussion	  of	  biomass	  for	  energy	  in	  Brazil	  occurs	  in	  the	  subsequent	  section.	  	  3.1.2	  Brazilian	  biomass	  Biomass	   is	   the	   largest	   source	  of	   renewable	  energy	   in	  Brazil,	   accounting	   for	  nearly	  60%	   (2.9	   EJ)	   of	   total	   renewable	   energy	   production	   or	   ~30%	   of	   final	   energy	   production.	  Biomass	  is	  defined	  as	  sugarcane	  products,	  firewood,	  charcoal,	  alcohol	  and	  other	  renewable	  primary	  sources	  (it	  is	  unclear	  from	  the	  Ministry	  of	  Mines	  and	  Energy	  (MME)	  if	  black	  liquor	  and	   biodiesel	   are	   included	   within	   this	   definition)	   (MME,	   2012).	   Sugarcane	   is	   the	  predominant	   biomass	   feedstock,	   contributing	   ~17%	   to	   primary	   energy	   production.	  Firewood	   and	   charcoal	   use	   is	   declining	   in	   Brazil	   as	   access	   to	   electricity	   expands	   but	   still	  accounts	  for	  9%	  of	  primary	  energy	  demand	  in	  2011	  (MME,	  2012).	  Figure	  7	  depicts	  the	  use	  of	  biomass	  for	  both	  biofuels	  and	  bioenergy	  in	  petajoules.	  From	  the	  figure	  it	  is	  apparent	  that	  bioenergy	   generation	   greatly	   exceeds	   biofuel	   production	   and	   that	   currently	   biomass	   is	  allocated	  towards	  bioenergy	  generation	  than	  biofuel	  production.	  	  	  28	  	  Figure	   7:	   Brazilian	   2011	   consumption	   of	   biofuels	   (450	   PJ)	   and	   bioenergy	   (2,292	   PJ),	  expressed	  in	  petajoules	  (original	  figure,	  data	  source	  MME,	  2012).	  	  	  Brazilian	   biomass	   is	   nearly	   all	   domestically	   sourced	   either	   from;	   energy	   specific	  agriculture	  or	  forestry	  operations,	  harvest	  residues	  and	  process	  residues.	  The	  only	  biomass	  imports	   are	   bioethanol,	   25	   PJ	   of	   which	   were	   imported	   in	   2011	   (MME,	   2012).	   Brazilian	  government	  data	  regarding	  the	  origins	  of	  these	  imports	  was	  not	  readily	  available,	  however	  it	  is	  previously	  known	  that	  the	  U.S.	  and	  Brazil	  have	  an	  established	  ethanol	  exchange	  where	  the	  Americans	  ship	  corn-­‐ethanol	  to	  Brazil	  in	  exchange	  for	  sugarcane-­‐ethanol.	  This	  exchange	  occurs	   due	   to	   the	   U.S.	   Environmental	   Protection	   Agency’s	   favourable	   classification	   of	  Brazilian	   sugar-­‐derived	   bioethanol	   as	   an	   advanced	   biofuel	   under	   the	   Renewable	   Fuels	  Standard	  (Schnepf	  &	  Yacobucci,	  2013).	  How	   biomass	   is	   employed	   in	   transportation,	   electricity	   and	   heating/cooling	   is	  examined	  in	  the	  subsequent	  sections	  to	  illustrate	  how	  biomass	  feedstocks	  are	  consumed	  in	  Brazil	  and	  the	  major	  conversion	  technologies	  employed.	  3.1.2.1	  Biomass	  for	  heat	  and	  power	  Although	   the	  Brazilian	   biofuel	   program	   is	   recognized	  worldwide,	   bioenergy	   is	   the	  predominant	   biomass-­‐based	   energy	   technology	   in	   Brazil	   (as	   highlighted	   in	   figure	   7)	  accounting	   for	   almost	  25%	  of	  primary	   energy	  demand	   in	  2011	   (MME,	  2012).	   	  The	  use	  of	  bioenergy	  within	  industrial,	  residential,	  commercial	  and	  electricity	  applications	  is	  shown	  in	  figure	  8.	  	  0	   500	   1000	   1500	   2000	   2500	  Bioenergy	  Biofuels	  Petajoules	  	  29	  	  Figure	   8:	  Use	   of	   biomass	   for	   energy	   generation	   by	   sector	   for	   2011	   in	  Brazil	   expressed	   in	  petajoules	  (original	  figure,	  data	  source	  MME,	  2012).	  	  	   Unlike	   other	   developing	   countries	   where	   traditional	   bioenergy	   accounts	   for	   an	  average	   of	   35%	   of	   the	   final	   energy	   demand	   (or	   as	   high	   as	   60%	   in	   sub-­‐Saharan	   Africa),	  bioenergy	   generation	   in	   Brazil	   is	   dominated	   by	   modern	   bioenergy	   applications	   (MME,	  2012).	   In	   figure	   8,	   only	   the	   “residential”	   category	   includes	   traditional	   bioenergy	  applications.	   Information	   regarding	   the	   applications	   of	   biomass,	   either	   traditional	   or	  modern,	   within	   the	   residential	   sector	   is	   unavailable,	   however	   even	   if	   all	   293	   PJ	   were	  consumed	  traditionally	  this	  amounts	  to	  only	  11%	  of	  total	  bioenergy	  generation,	  well	  below	  the	  35%	  global	  average	  (MME,	  2012).	  	  It	   is	  apparent	   from	  figure	  8	   that	   industrial	  applications	  dominate	  bioenergy	  use	   in	  Brazil.	   Industrial	   applications	   of	   bioenergy	   include	   combustion	   of	   sugarcane	   bagasse	   for	  heat	  and	  power	  production	  (1.1	  EJ),	  black	  liquor	  combustion	  in	  pulp	  mills	  (0.2	  EJ)	  and	  the	  use	   of	   firewood	   and	   charcoal	   for	   industrial	   energy	   generation	   (MME,	   2012;	   IEA,	   2013a).	  Industries	   in	  Brazil	   rely	  heavily	  on	  biomass	  as	  an	  energy	  source	  as	  many	   large	   sugar	  and	  pulp	   mills	   are	   situated	   in	   remote	   locations,	   often	   not	   connected	   to	   the	   power	   grid.	  Combustion	   of	   biomass	   for	   heat	   and	   power	   generation	   allows	   industrial	   facilities	   to	   be	  largely	   energy	   self-­‐sufficient,	   preventing	   the	   need	   to	   install	   capital-­‐intensive	   grid	  connections.	  	  In	   2011,	   sugarcane	   bagasse,	   the	   only	   biomass	   feedstock	   employed	   by	   the	   energy	  sector,	  was	  responsible	  for	  46.5%	  (436	  PJ)	  of	  the	  sector’s	  total	  energy	  consumption	  (MME,	  2012).	   	   It	   should	   be	   noted	   that	   electricity	   generation	   is	   awarded	   its	   own	   category	   by	   the	  Brazilian	  MME,	  and	   thus	   these	   figures	  do	  not	   include	  electricity	  production	   (MME,	  2012).	  Limited	  information	  exists	  regarding	  the	  types	  of	  conversion	  facilities	  that	  employ	  bagasse.	  	  1,453	  293	  8	  436	  0	  200	  400	  600	  800	  1000	  1200	  1400	  1600	  Industrial	   Residential	   District	  Heat	   Energy	  Petajoules	  	  30	  3.1.2.2	  Transportation	  biofuels	  Brazil	  was	  one	  of	   the	  first	  countries	  to	  commercialize	  the	  fermentation	  of	  sugar	  to	  fuel	   grade	   ethanol	   and	  was	   the	  world’s	   largest	   ethanol	   producer	   until	   2005	  when	   it	  was	  surpassed	  by	   the	  United	  States	   (MME,	  2012).	  Brazil’s	  biofuel	   success	   can	  be	  attributed	   to	  their	   widely	   available	   and	   easily	   fermentable,	   sugarcane	   feedstock.	   Brazil	   produced	   588	  million	   tons	   of	   sugarcane	   in	   2012/2013,	   making	   it	   the	   leading	   global	   producer	   (UNICA,	  2014).	   Today,	  Brazil	  is	  the	  second	  largest	  producer	  and	  consumer	  of	  biofuels	  in	  the	  world,	  the	  vast	  majority	  of	  which	  is	  sugar-­‐derived	  bioethanol.	  Bioethanol	  production	  is	  estimated	  to	  reach	  28.9	  BL	  in	  2014,	  while	  total	  exports	  are	  forecast	  at	  3.65	  BL	  (USDA,	  2013).	  In	  2011	  Brazil	  imported	  25	  PJ	  (1.1	  BL)	  of	  ethanol.	  Domestic	  biofuel	  production	  is	  supported	  by	  the	  large	   fuel-­‐ethanol	   market	   existing	   within	   the	   country,	   stimulated	   by	   government	   blend	  mandates	   of	   20-­‐25%	   ethanol	   in	   conventional	   gasoline	   (the	   blend	   is	   known	   as	   gashol	   in	  Brazil)	   and	   up	   to	   100%	   blends	   for	   flex-­‐fuel	   vehicles.	   The	   high	   percentage	   of	   flex-­‐fuel	  vehicles	   is	   a	   unique	   aspect	   of	   the	   Brazilian	   case.	   This	   significantly	   impacts	   the	   country’s	  biofuel	  markets	  and	  it	  is	  discussed	  in	  more	  detail	  in	  section	  3.3.3.	  	  In	  comparison	  to	  ethanol,	  biodiesel	  production	  and	  consumption	  is	  less	  prolific,	  2.8	  BL	   in	   2013	   (USDA,	   2013).	   Biodiesel	   blend	   mandates	   have	   recently	   been	   approved	   for	  increases	  up	  to	  7%	  by	  the	  end	  of	  2014.	  As	  a	  result,	  biodiesel	  consumption	  is	  anticipated	  to	  exceed	  its	  2.9	  BL	  estimate	  for	  the	  end	  of	  that	  year	  (USDA,	  2013).	  The	  notable	  government	  programs	   supporting	   the	   emergence	   of	   the	   Brazilian	   biofuel	   industry	   are	   reviewed	   in	  greater	  detail	  in	  a	  subsequent	  section	  of	  this	  case.	  	   Brazil,	   with	   the	   US,	   is	   emerging	   as	   a	   leader	   in	   advanced	   biofuel	   production	   from	  agriculture	   residues.	   The	   GranBio	   facility	   was	   opened	   in	   2014	   and	   is	   located	   in	   Alagoas,	  Brazil	  has	  a	  production	  capacity	  of	  82	  million	  liters	  of	  cellulosic	  ethanol	  per	  year,	  making	  it	  the	  largest-­‐known	  project	  of	  its	  kind	  and	  the	  first	  in	  the	  Southern	  Hemisphere.	  The	  facility	  will	  process	  400,000	  tons	  of	  sugarcane	  bagasse	  for	  biofuel,	  heat	  and	  power	  production.	  The	  integrated	  CHP	  facility	  will	  produce	  ~0.5	  PJ	  of	  surplus	  electricity	  (GranBio,	  2014).	  	  3.1.3	  Drivers	  for	  biomass	  allocation	  in	  Brazil	  	   Although	   biomass	   competition	   in	   Brazil	   has	   currently	   not	   precipitated	   any	  significant	   competition	   between	   bioenergy	   and	   biofuels	   the	   increasing	   use	   of	   bagasse	   to	  generate	   heat	   and	   power	   within	   sugar	   mills	   and	   the	   increasing	   transfer	   of	   generated	  electricity	  into	  the	  grid	  implies	  that	  this	  might	  occur	  in	  the	  future.	  The	  sugar	  from	  sugarcane,	  	  31	  the	   predominant	   biofuel	   feedstock,	   is	   used	   to	   make	   ethanol	   and	   is	   not	   used	   to	   make	  bioenergy.	  However,	  competition	  for	  sugarcane	  bagasse,	  a	  byproduct	  of	  sugar	  production,	  is	  expected	  to	  intensify.	  Many	  of	  the	  newer	  mils	  exporting	  electricity	  into	  the	  grid.	  Companies	  such	   as	   Raizen	   and	   Granbio	   are	   also	   assessing	   bagasse’s	   potential	   as	   a	   cellulosic	   ethanol	  feedstock.	   However,	   the	   domestic	   supply	   of	   bagasse	   currently	   dwarfs	   any	   potential	  competition	   for	   bagasse	   in	   the	   near	   future	   (IEA,	   2013a).	   Although	   technologies	   for	  converting	  biomass	   to	   liquid	  biofuels	   are	   approaching	   commercialization,	   competition	   for	  biomass	  feedstock	  for	  bioenergy	  and	  biofuels	  is	  unlikely	  to	  occur	  in	  the	  near	  term.	  	  	  	   	  3.1.3.1	  Energy	  security	  and	  the	  emergence	  of	  biomass-­‐based	  energy	  The	  allocation	  of	  biomass	  to	  bioenergy	  or	  biofuels	  in	  an	  attempt	  to	  mitigate	  energy	  security	   concerns	  has	  been	  an	  essential	   and	   reoccurring	  energy	   strategy	   in	  Brazil.	  During	  the	  Second	  World	  War,	  ethanol	  production	  from	  sugar	  took	  off	  as	  a	  way	  to	  offset	  gasoline	  consumption.	  Ethanol	  blending	  with	  gasoline	  peaked	  at	  50	  percent	  when	  oil	  was	  scarce,	  but	  this	  quickly	  decreased	  after	  the	  war	  ended	  as	  the	  country	  was	  inundated	  with	  low	  cost	  oil	  (Kovarik,	  2006).	  	  Several	   decades	   later,	   skyrocketing	   oil	   prices	   drove	   import	   payments	   for	   oil	   from	  500	  million	   to	   4	   billion	   dollars	   annually	   as	   a	   result	   of	   the	  OPEC	   oil	   crisis	   (Hultman	   et	   al.	  2012).	   The	   Pró-­‐Álcool	   program	  was	   a	   national	   initiative	   developed	   during	   this	   period	   of	  heightened	  energy	  security	  concerns.	  The	  program	  aimed	  to	  stimulate	  domestic	  production	  of	  ethanol	  to	  replace	  imported	  gasoline.	  Details	  of	  the	  policies	  initiated	  under	  the	  Pró-­‐Álcool	  program,	   and	   its’	   influence	   on	   the	   allocation	   of	   biomass	   towards	   biofuels	   is	   discussed	   in	  section	  3.2.2.	  The	  expansion	  phase	  of	  Pró-­‐Álcool	  ended	  around	  1986	  as	  global	  oil	  prices	  fell	  and	  domestic	  oil	  resources	  were	  discovered.	  Together	  these	  events	  ended	  energy	  security	  concerns	  thus	  reducing	  government	  support	  for	  ethanol	  (Hultman	  et	  al.	  2012).	  	  Energy	   security	   concerns,	   although	   usually	   driven	   by	   oil	   and	   petroleum	   supply,	  demand	   and	   costs,	   can	   occur	   in	   other	   energy	   systems,	   depending	   on	   the	   energy	  mix	   of	   a	  given	  region.	  Brazil’s	  large	  reliance	  on	  hydroelectricity	  leaves	  the	  country	  highly	  susceptible	  to	   climate	   variations	   that	   influence	  water	   flow.	   Severe	   droughts	   in	   2001	   and	   early	   2014,	  impacted	  hydropower	  inflows,	  lowering	  electricity	  generation	  and	  creating	  energy	  security	  issues	  with	   regards	   to	  electricity	   supply.	   	   (USDA,	  2013)	   In	   these	   instances,	   combustion	  of	  biomass,	   particularly	   sugarcane	   bagasse,	   for	   electricity	   generation	   has	   been	   seen	   as	   a	  suitable	   complementary	   renewable	   energy	   source.	   Combustion	   of	   bagasse	   for	   energy	  generation	   increased	   by	   56%	   from	   2002-­‐2011	   (calculated	   from	   MME,	   2012	   dataset).	  	  32	  However,	   it	   is	   unlikely	   that	   as	   a	   driver,	   energy	   security	   is	   sufficient	   to	   explain	   the	   total	  increase	  in	  bagasse	  combustion	  for	  energy	  generation	  observed	  over	  the	  past	  decade.	  Other	  drivers	  that	  have	  potentially	  influenced	  bagasse	  allocation	  to	  bioenergy	  must	  be	  considered.	  	  3.1.3.2	  Energy	  related	  climate	  change	  concerns	  and	  biomass	  allocation	  In	   Brazil,	   climate	   change	   has	   held	   a	   prominent	   place	   in	   government	   policy	   since	  2008,	  after	  a	  series	  of	  extreme	  weather	  events	  lead	  to	  the	  formation	  of	  the	  National	  Plan	  on	  Climate	   Change	   (NPCC)	   (Government	   of	   Brazil,	   2008).	   The	  NPCC	   set	   voluntary	   goals	   that	  aimed	   to	   increase	   energy	   efficiency,	   encourage	   increased	   biofuels	   and	   decrease	  deforestation.	  In	  2010	  the	  voluntary	  goals	  outlined	  by	  the	  NPCC	  were	  made	  law.	  Included	  in	  this	   law	   was	   a	   landmark	   mandate	   for	   GHG	   emissions	   reductions.	   However,	   a	   provision	  within	   the	   law	   calling	   for	   a	   gradual	   decline	   in	   fossil	   fuel	   consumption	  was	   vetoed	   by	   the	  President	  at	   the	   time	  and	  was	  not	   included	  with	   the	  passage	  of	   the	  NPCC	  (Government	  of	  Brazil,	  2008).	  Despite	  Brazilian	  climate	  change	  initiatives,	  it	  is	  unlikely	  that	  these	  voluntary	  emissions	   reduction	   targets	   had	   any	   influence	   on	   the	   allocation	   of	   biomass	   to	   either	  bioenergy	   or	   biofuels.	   The	   lack	   of	   punitive	  measures	   for	   non-­‐compliance	   in	   the	   Brazilian	  system	   leaves	   the	   NPCC	   policies	   of	   low	   impact	   (Government	   of	   Brazil,	   2008).	   The	  importance	   of	   government	   mandates	   and	   punitive	   measures	   in	   biomass	   allocation	   is	  discussed	   in	   reference	   to	  Danish	   and	  U.S.	   biofuels	   policy	   in	   each	   of	   those	   respective	   case	  studies.	  	  3.1.3.3	  Prevailing	  economic	  interests	  	   As	   seen	   in	   figure	   8,	   industry	   is	   an	   essential	   consumer	   of	   biomass	   for	   energy	  generation	   in	   Brazil	   thus	   this	   section	   focuses	   on	   how	   major	   Brazilian	   industries	   and	  government	  policies	  sway	  biomass	  allocation	  in	  the	  country.	  	  Agriculture,	   predominantly	   sugar	   production,	   is	   a	   major	   player	   in	   the	   Brazilian	  economy,	   accounting	   for	   25%	   of	   GDP	   and	   employing	   35%	   of	   the	   labour	   force	   in	   2008	  (Morgera	  et	  al.	  2009).	  Together	  with	  forestry	  operations,	  these	  industries	  are	  key	  players	  in	  biomass	  allocation	  decisions.	  The	  sugar	  industry	  is	  of	  particular	  importance	  as	  Brazil	  is	  the	  world’s	  leading	  producer	  of	  sugar	  (IEA,	  2013a).	  	  The	  significance	  of	  the	  sugarcane	  industry	  to	   the	   Brazilian	   economy	   situates	   it	   as	   a	   dominant	   lobby	   group	   in	   the	   country	   and	   a	  powerful	  driver	  making	  key	  biomass	  allocation	  decisions.	  Sugar	  is	  both	  a	  global	  commodity,	  traded	   at	   an	   established	  world	   price,	   and	   the	  major	   domestic	   feedstock	   for	   biofuels.	   This	  makes	   biofuels	   and	   sugar	   production	   in	   Brazil	   competing	   industries.	   When	   world	   sugar	  prices	   are	   low	   biofuel	   production	   from	   sugarcane	   acts	   to	   supplement	   the	   industry.	   As	   a	  consequence,	  when	  world	  sugar	  prices	  are	  high,	  the	  sugar	   industry	  maximizes	  revenue	  by	  	  33	  preferentially	  producing	  sugar	  (De	  Freitas	  &	  Kaneko,	  2011).	  	  Although	  competition,	  beyond	  bioenergy	  and	  biofuels	  is	  not	  discussed	  in	  other	  case	  studies,	  as	  it	  is	  beyond	  the	  scope	  of	  the	  thesis,	   competition	   between	   sugar	   and	   biofuels	   production	   cannot	   be	   overlooked	   in	   the	  Brazilian	   case.	   This	   competition	   is	   responsible	   for	   significant	   annual	   variation	   in	   biofuel	  production	  over	  the	  last	  decade	  (MME,	  2012;	  IEA,	  2013a).	  	  Sugar	   extraction	   from	   raw	   sugarcane	   is	   an	   energy	   intensive	   process,	   requiring	  significant	  mechanical	  attrition	  to	  remove	  the	  sugar	  from	  the	  stalk	  and	  subsequent	  boiling	  to	   purify	   the	   sugar.	   Large	   energy	   demands,	   combined	  with	   the	   remote	   locations	   of	  many	  sugar	  mills,	  means	  the	  more	  modern	  facilities	  are	  designed	  to	  be	  principally	  self-­‐sufficient	  in	  energy	  generation.	  Combustion	  of	  bagasse	  in	  co-­‐generation	  facilities	  is	  required	  to	  meet	  energy	  demand.	   If	   grid	  connections	  are	  available,	   surplus	  energy	   is	  often	  sold	  back	   to	   the	  grid.	   Bagasse	   represents	   ~80%	   (1.1	   EJ	   in	   2011)	   of	   industrial	   energy	   consumption	   from	  biomass	   and	   provides	   more	   than	   five	   times	   the	   energy	   than	   the	   next	   largest	   biomass	  feedstock,	  black	  liquor	  (0.2	  EJ	  in	  2011)	  (MME,	  2012;	  IEA,	  2013a).	  The	  institutionalized	  use	  of	   bagasse	   as	   an	   energy	   source	   integrated	   within	   sugar	   production	   facilities	   means	  competition	  for	  this	  feedstock	  will	  intensify	  as	  advanced	  biofuel	  production	  increases.	  	  Forest	  operations,	  although	  not	  as	  economically	  significant	  as	  sugar	  production,	  are	  a	  notable	  consumer	  of	  biomass	  in	  Brazil	  and	  must	  be	  considered	  when	  discussing	  biomass	  allocation	  decisions.	  The	  Brazilian	  forest	  industry	  is	  based	  heavily	  on	  the	  production	  of	  pulp	  and	  paper	  from	  fast	  growing	  hardwoods	  such	  as	  eucalyptus.	  Combustion	  of	  pulp	  and	  paper	  biomass	  waste,	   including	  black	  liquor,	  amounts	  to	  0.2	  EJ	  of	   industrial	  energy	  consumption	  (2011)	  (MME,	  2012).	  Similar	  to	  sugarcane	  mills,	  modern	  pulp	  mills	  are	  largely	  energy	  self-­‐sufficient	  by	  combusting	  their	  waste	  streams	  for	  energy	  generation,	  and	  where	  connections	  to	   the	   grid	   exist;	   any	   surplus	   energy	   is	   sold	   (IEA,	   2013a).	   The	  widespread	   combustion	   of	  wood	   and	   pulp	   waste	   for	   energy	   is	   an	   important	   driver	   allocating	   biomass	   towards	  bioenergy	  generation.	  The	   second	   coming	   of	   the	  modern	   Brazilian	   ethanol	   industry	   emerged	   out	   of	   the	  manufacturing	  sector	  with	   limited	  government	   incentives	   for	  ethanol	  producers	  (Hultman	  et	  al.	  2012).	  Domestic	  car	  manufactures	  were	  given	  policy	  support	  in	  the	  form	  of	  tax	  breaks	  to	   produce	   flex-­‐fuel	   vehicles	  with	   additional	   purchase	   incentives	   passed	   onto	   the	   buyers	  (Hultman	  et	  al.	  2012).	  As	  a	  result	  of	  these	  incentives,	  in	  2003	  flex-­‐fuel	  vehicles	  entered	  the	  Brazilian	   car	   market.	   Capable	   of	   accepting	   pure	   gasoline,	   pure	   bioethanol	   or	   any	  proportional	  mixture	  of	   the	   fuels,	   these	  vehicles	  created	  a	  renewed	  consumer	  enthusiasm	  	  34	  for	  ethanol	  (Matsukoa	  et	  al.	  2009).	  Introduction	  of	  flex-­‐fuel	  cars	  was	  sufficient	  to	  stimulate	  consumption	   of	   pure,	   unblended	   (hydrated)	   bioethanol	   and	   created	   opportunities	   for	   an	  expansion	   of	   the	   domestic	   sugar	   industry.	   Flex-­‐fuel	   vehicles	   rapidly	   gained	   popularity,	  becoming	   the	   predominant	   passenger	   vehicle	   in	   Brazil,	   accounting	   for	   over	   50%	   of	   total	  passenger	   vehicles	   and	   90%	   of	   annual	   new	   car	   sales	   (IEA,	   2013a).	   Adoption	   of	   flex-­‐fuel	  vehicles,	  combined	  with	  the	  existing	  E100	  vehicle	  stock,	  caused	  more	  bioethanol	  to	  be	  sold	  at	  the	  pump	  than	  gasoline	  in	  2008	  and	  2009	  (Matsukoa	  et	  al.	  2009;	  IEA,	  2013).	  	  In	   recent	   years	   the	   consumption	   of	   bioethanol	   in	   road	   transport,	   specifically	  hydrous	  bioethanol,	  has	  dropped	  off	  significantly,	  as	  can	  be	  observed	  in	  figure	  9.	  Although	  not	   included	   in	   the	   figure	   below,	   the	   consumption	   of	   both	   anhydrous	   and	   hydrous	   fuel	  ethanol	   experienced	   an	   upswing	   in	   2013	   and	   early	   2014	   (Brazilian	   Sugarcane	   Industry	  Association	   (UNICA),	   2014).	   Cost	   competitiveness	   is	   a	   major	   factor	   influencing	   the	  consumption	   of	   biofuels	   and	   gasoline	   in	   Brazil	   and	   are	   contingent	   upon	   a	   number	   of	  variables,	  explored	  in	  further	  detail	  in	  the	  subsequent	  section.	  	  Figure	  9:	  Brazilian	   consumption	  of	   gasoline	   and	  bioethanol	   in	   road	   transport	   from	  2005-­‐2012	  in	  million	  cubic	  meters	  (IEA,	  2013a).	  	  3.1.3.4	  Cost	  competitiveness	  of	  Brazilian	  bioenergy	  and	  biofuels	  	   Biomass	   allocation	   in	   Brazil	   is	   less	   dependent	   upon	   the	   cost	   competitiveness	   of	  biomass-­‐based	   energy	   production	   with	   existing	   energy	   technologies	   than	   the	   Danish,	   or	  Swedish	   profiles	   examined	   in	   this	   thesis.	   The	   Brazilian	   case	   experiences	   advantages	  compared	  to	  the	  other	  country	  profiles	  due	  to	  the	  simplicity	  of	  technologies	  to	  convert	  the	  nation’s	  available	   sugarcane	   to	  biofuels.	  However,	   the	  allocation	  of	   sugarcane,	   to	   sugar	  or	  	  35	  biofuel	  production	  is	  a	  factor	  of	  both	  global	  sugar	  prices,	  and	  world	  oil	  prices	  as	  discussed	  further	  below.	  Cost	  competitiveness	  is	  important	  to	  consider	  within	  this	  context.	  	  	  	  	  	  3.1.3.4.1	  Technological	  advancements	  in	  biomass-­‐based	  energy	  	   In	  Brazil,	  sugar,	  not	  starch	  or	  biomass	  is	  used	  to	  make	  bioethanol,	  a	  biofuel.	  The	  ease	  with	   which	   sugar	   can	   be	   fermented	   to	   biofuels	   proves	   advantageous	   when	   compared	   to	  starch	   or	   lignocellulosic	   biomass.	   This	   technological	   advantage	   is	   unique	   to	   the	   Brazilian	  case.	   At	   the	   time	   of	   the	   oil	   crisis,	   technologies	   to	   ferment	   sugar	   into	   biofuels	   were	  commercially	   available	   and	   in	   the	   mid-­‐to-­‐late,	   1970’s,	   the	   product	   was	   cost	   competitive	  with	  oil	  and	  gas	  prices.	  This	  cost	  competitiveness	  of	  Brazilian	  biofuels	  with	  gasoline	  was	  a	  major	  driver	  for	  the	  rapid	  expansion	  of	  ethanol	  production	  by	  the	  sugar	  industry	  (Hultman	  et	   al.	   2012).	   	   The	   low	   cost	   of	   bioethanol	   resulted	   in	   the	   increased	   production	   of	   a	   100%	  ethanol	   (E100)	   fueled	   cars	   (Rosillo-­‐Calle	   and	   Cortez,	   1998).	   Today,	   Brazilian	   bioethanol	  benefits	  from	  the	  lowest	  pre-­‐tax	  cost	  of	  all	  biofuels,	  approximately	  25-­‐50	  cents	  US/L,	  nearly	  half	  the	  cost	  of	  U.S.	  corn-­‐based	  biofuels	  (Demirbas,	  2011;	  IEA,	  2013a).	  	  	   As	   discussed	   in	   section	   3.2.2,	   Brazil	   is	   emerging	   as	   a	   pioneer	   in	   advanced	   biofuel	  production	   from	   lignocellulosic	   materials.	   The	   nature	   of	   the	   widely	   available,	   low	   cost,	  sugarcane	   bagasse	   feedstock	   makes	   it	   more	   easily	   convertible	   to	   biofuels	   than	   more	  recalcitrant	  woody	  biomass	  feedstocks	  available	  in	  other	  parts	  of	  the	  world.	  It	  is	  also	  likely	  that	   the	   relative	   ease	   by	  which	   agriculture	   feedstocks	   can	   be	   converted	   to	   biofuels	  when	  compared	   to	  woody	   residues	  helps	   to	   improve	   the	   cost	   competitiveness	  of	  bagasse	  based	  advanced	  biofuels.	  	  	  	   Despite	   the	  potential	   logistical	  advantages	  of	  cellulosic	  derived	  biofuels	  being	  able	  to	   be	   integrated	   with	   sugar-­‐derived	   ethanol,	   cellulosic	   biomass	   is	   still	   preferentially	  allocated	   to	   bioenergy.	   Newer	   sugar	   cane	   processing	   facilities	   rely	   heavily	   on	   the	   energy	  generated	   by	   their	   waste	   recycling	   systems	   to	   ensure	   the	   cost-­‐competitiveness	   of	   their	  energy	  intensive	  operations.	  Additionally,	  the	  geographical	  location	  of	  many	  sugar	  and	  pulp	  mills	   in	  Brazil	   often	  means	   they	   are	  not	   connected	   to	   the	   electricity	   grid,	   and	   thus	  would	  have	  to	  burn	  expensive	  fossil	  fuels	  as	  an	  alternative	  to	  biomass	  for	  energy	  generation.	  	  	  3.1.3.4.2	  Policies	  affecting	  cost	  competitiveness	  of	  biofuels	  and	  bioenergy	  As	  introduced	  in	  section	  3.3.2,	  Brazil’s	  climate	  policy	  is	  outlined	  in	  the	  National	  Plan	  on	   Climate	   Change.	   The	   NPCC	   set	   voluntary	   goals	   that	   aim	   to	   increase	   energy	   efficiency,	  encourage	   increased	  biofuels	   and	  decrease	  deforestation.	   	  However,	   the	  President	   vetoed	  	  36	  the	   provision	   within	   the	   law	   calling	   for	   a	   gradual	   decline	   in	   fossil	   fuel	   consumption	  (Government	   of	  Brazil,	   2008).	   The	   lack	  of	   punitive	  measures	   for	   those	  not	   reducing	   their	  use	  of	  fossil	  fuels	  leaves	  the	  NPCC	  policies	  ineffective.	  	  The	   Pró-­‐Álcool	   program	   was	   the	   key	   Brazilian	   biofuel	   policy	   that	   provided	  incentives	  to	  replace	  traditional	  oil	  based	  transportation	  fuels	  with	  domestically	  produced	  sugarcane	   ethanol.	   By	   doing	   so,	   Brazil	   moved	   closer	   to	   achieving	   energy	   independence,	  improve	  rural	  income	  and	  maintained	  economic	  growth	  by	  providing	  an	  alternative	  energy	  source	   to	   oil,	   although	   domestic	   energy	   security	   and	   the	   reactionary	   policy	   mechanisms	  were	   imperative	   to	   biofuel	   development	   (Rosillo-­‐Calle	   and	   Cortez,	   1998).	   Support	   was	  derived	  from	  a	  bank	  of	  policies	  including:	  quotas,	  price	  floors	  and	  ceilings,	  tax	  incentives	  to	  produce	   E100	   cars,	   blend	  mandates,	   preferential	   financing,	   higher	   taxes	   on	   gasoline	   cars	  and	  subsidies	  for	  transporting	  ethanol	  (Rosillo-­‐Calle	  and	  Cortez,	  1998).	  	  During	   the	  1970s	  ethanol	  use	   increased	  dramatically	  as	   the	   relatively	   low	  ethanol	  blend	   mandate	   (below	   20%)	   meant	   that	   the	   current	   vehicle	   stock	   could,	   without	   any	  modification,	   use	   ethanol-­‐gasoline	   blends	   in	   the	   existing	   infrastructure.	   By	   1978,	   sugar	  capacity	   was	   fully	   employed	   and	   ethanol	   blends	   were	   approaching	   the	   20%	   target.	  Subsequently	   the	   government	   began	   to	   investigate	   replacing	   gasoline	   with	   pure	   alcohol.	  This	  required	  a	  new	  transportation	  fleet	  and	  fueling	  infrastructure	  and	  significant	  funding	  commitments	  from	  the	  government	  to	  support	  their	  development.	  It	  wasn’t	  until	  1979	  that	  the	  Brazilian	  government	  announced	  new	  ethanol	  production	  targets	  of	  10.6	  BL	  by	  1985,	  up	  from	  the	  goal	  of	  2.9	  BL	  for	  1980	  (Hira	  and	  de	  Oliveira,	  2009).	  Additionally	  the	  government	  announced	  it	  would	  invest	  $5	  billion	  over	  the	  next	  6	  years	  to	  support	  fuel	  production	  and	  distribution	  centers.	  Government	  departments	  were	  formed	  to	  oversee	  ethanol	  production	  and	  monitor	   a	   variety	   of	   support	   policies	   that	   included:	   higher	  minimum	   ethanol	   blends	  (progressive	  increase	  to	  25%),	  capped	  ethanol	  price	  at	  65%	  of	  gasoline	  price,	  price	  floor	  for	  bioethanol	  producers,	  improving	  lines	  of	  credit	  for	  sugar	  mill	  expansions,	  ethanol	  required	  at	   all	   gas	   stations	   and	   the	  maintenance	  of	   reserves	   to	   stabilize	   supply	   (BNDES	  and	  CGEE,	  2008).	   A	   number	   of	   policies	  were	   set	   up	   to	   specifically	   push	   production	   of	   alcohol-­‐based	  cars	  (known	  as	  E100):	  registration	  taxes	  were	  reduced	  relative	  to	  gasoline	  cars	  and	  easier	  payment	   plans	   introduced	   with	   lower	   down	   payments	   and	   longer	   payment	   periods.	   The	  programs	  were	   a	  wild	   success	   as	   E100	   car	   sales	   increased	   from	   1%	   of	   total	   car	   sales	   in	  January	   of	   1980	   to	   73%	  by	  December	   of	   that	   year	   and	   85%	  by	   1985	   (BNDES	   and	   CGEE,	  2008;	  Hira	  and	  de	  Oliveira,	  2009).	  	  37	  The	  Pró-­‐Álcool	  program	  was	  highly	  successful	  in	  making	  sugarcane-­‐derived	  biofuels	  highly	   cost-­‐competitive	   with	   gasoline	   during	   this	   period	   of	   high	   oil	   prices.	   Yet,	   in	   the	  subsequent	   decades,	   Pró-­‐Álcool	   became	   ineffective	   at	   supporting	   bioethanol	   due	   to	   a	  number	   of	   changing	   variables.	   As	   a	   result,	   the	   Brazilian	   biofuel	   industry	   experienced	   a	  decline.	  The	  mid	  1980s	  marked	   the	  end	  of	   the	   expansion	  phase	  of	  Pró-­‐Álcool	   as	   global	  oil	  prices	   fell	   and	   domestic	   oil	   resources	   were	   discovered,	   together	   ending	   energy	   security	  concerns	  and	  with	  that	  came	  reduced	  government	  support	  for	  ethanol.	  Concurrently,	  world	  sugar	  prices	  began	   to	  rise	  due	   to	  several	  years	  of	  poor	  sugar	  harvest	  and	  sugarcane	  mills	  began	   to	   direct	   more	   of	   their	   crop	   towards	   sugar	   production	   than	   ethanol	   to	   maximize	  revenue	   (Hira	   and	  de	  Oliveira,	   2009;	  Hultman	  et	   al.	   2012).	  By	  1989	   suppliers	  were	   faced	  with	   unpredictable	   biofuel	   supplies,	   this	   enraged	   consumers	   and	   the	  market	   saw	   a	  move	  away	   from	  E100	  vehicles.	  By	  1990	  E100	  represented	  only	  11.4%	  of	  new	  vehicle	   sales,	  by	  2000	   they	  were	  available	  by	  special	   request	  only	   (BNDES	  and	  CGEE,	  2008;	  Hultman	  et	  al.	  2012).	   Simultaneously	   the	   government	   was	   restructuring	   their	   support	   for	   ethanol.	  Beginning	   in	   1991,	   the	   government	   systematically	   removed	   ethanol	   subsidies	   and	   price	  controls	   to	  move	   towards	   free-­‐market	  pricing.	   It	   took	  until	  1999	   for	   this	   to	  be	  completed	  but	  effectively	  signaled	  the	  end	  of	  the	  Pró-­‐Álcool	  program	  (BNDES	  and	  CGEE,	  2008).	  The	  ability	  of	   flex-­‐fuel	  vehicles	   to	  accept	  either	  pure	  bioethanol	  or	  gasoline	  blends	  means	   consumers	   are	   very	   responsive	   to	   fuel	   prices,	   drivers	   regularly	   select	   the	   cheaper	  option	   since	   bioethanol	   and	   gasoline	   are	   essentially	   perfect	   substitutes	   (Matsukoa	   et	   al.	  2009).	  The	  ability	  of	  drivers	  to	  select	  fuel	  based	  on	  price	  helps	  to	  explain	  the	  transportation	  fuel	   trends	   observed	   in	   figure	   9,	   however	   understanding	   price	   competition	   between	  biofuels	   and	   gasoline	   in	   Brazil	   is	   complex.	   Technological	   advancements	   in	   ethanol	  production	   have	   made	   the	   fuel	   cost-­‐competitive	   with	   gasoline,	   despite	   the	   country’s	  discounted	   gas	   prices	   (Hultman	   et	   al.	   2012).	   However	   the	   price	   of	   ethanol	   fluctuates,	  regularly	  between	  50-­‐70%	  of	  gasoline	  prices	  (Matsukoa	  et	  al.	  2009).	  Price	  fluctuations	  are	  a	  factor	  of	  sugar	  harvest,	  world	  sugar	  prices	  and	  the	  controlled	  gasoline	  price.	  	  Petrobras,	  the	  largest	  oil	  and	  gas	  company	  in	  Brazil,	   is	  a	  semi-­‐public	  company	  that	  controls	   the	   price	   of	   gasoline	   on	   behalf	   of	   the	   Brazilian	   government.	   Imported	   gasoline,	  purchased	  at	  world	  prices,	  has	  been	  subsidized	  and	  sold	  at	  a	  loss	  in	  Brazil	  since	  2011	  in	  an	  attempt	  by	   the	  government	   to	  curb	   inflation	   (Romero	  and	  Thomas	   Jr.,	  2014;	  Valle,	  2014).	  This	  practice	  has	  made	  Petrobras	   the	  most	   indebted	  publically	   traded	  oil	   company	   in	   the	  	  38	  world,	  2013	  losses	  amounted	  to	  $U.S.	  8	  billion	  (Romero	  and	  Thomas	  Jr.,	  2014;	  Valle,	  2014).	  As	  Petrobras	  looks	  to	  lower	  gas	  subsidies,	  there-­‐by	  increasing	  prices,	  ethanol	  consumption	  can	   be	   expected	   to	   increase.	   However,	   as	   hopefully	   revealed	   by	   this	   chapter,	   factors	  affecting	  ethanol	  demand	  extend	  beyond	  just	  gasoline	  prices.	  3.1.4	  Brazilian	  conclusions	  	  	   Renewable	   energy	   contributes	   to	   46%	   of	   the	   Brazilian	   energy	   mix	   with	   biomass	  being	   the	  predominant	   renewable	   energy	   source.	  Ethanol	  derived	   sugar	   and	  bagasse	   that	  has	  been	  combusted	  are	   the	  predominant	  resources	  of	   this	  energy,	  accounting	   for	  58%	  of	  Brazil’s	  bioenergy	  production.	  Although	  Brazil	   is	   the	  world’s	   second	   largest	  producer	  and	  consumer	   of	   biofuels	   five	   times	  more	   energy	   is	   derived	   from	   the	   combustion	   of	   biomass,	  primarily	  bagasse,	  than	  is	  derived	  from	  bioethanol	  and	  biodiesel	  (figure	  8).	  If	  there	  ever	  is	  to	  be	  a	  Brazilian	  biomass	  competition,	   it	   is	   likely	  that	  bioenergy	  will	  remain	  the	  preferred	  use	  of	  biomass	  resources.	  	  The	  main	  driver	  behind	  early	  biofuel	  development	  was	  concerns	  of	  energy	  security,	  and	  the	  government	  support	  mechanisms	  and	  policies	  including	  but	  not	  limited	  to:	  ethanol	  mandates,	  -­‐subsidies,	  and	  the	  development	  of	  the	  flex-­‐fuel	  vehicle	  industry	  to	  address	  this	  were	   imperative	   for	   biofuel	   advancement.	   Compared	   to	   energy	   security,	   climate	   change	  mitigation	  desires	  have	  played	  a	  limited	  role	  in	  biomass	  allocation	  decisions	  in	  Brazil.	  	  Historically,	   there	   has	   been	   no	   competition	   for	   biomass	   between	   bioenergy	   and	  biofuels	  in	  Brazil.	  However,	  this	  trend	  might	  change	  as	  bioenergy	  and	  cellulosic	  ethanol	  can	  be	   produced	   from	   sugarcane	   bagasse,	   which	   is	   currently	   combusted	   for	   bioenergy	  generation	  at	  sugar	  mills.	  Despite	  this	  possibility,	  it	  is	  unlikely	  that	  competition	  will	  occur,	  due	   to	  ample	  domestic	   feedstock	  availability.	   It	   is	  more	   likely	   that	  bioenergy	  and	  biofuels	  will	  become	  co-­‐products	  with	  power	  contracts	  providing	  a	  more	  assured	  source	  of	  income	  for	  biofuels	  producers,	  help	  offsetting	  the	  cost	  of	  making	  the	  biofuel,	  thus	  improving	  its’	  cost	  competitiveness	  with	  gasoline.	  This	  notion	  is	  supported	  by	  examining	  the	  end	  products	  of	  several	  of	  the	  commercial	  scale	  cellulosic	  ethanol	  facilities	  operating	  world-­‐wide,	  including	  GranBio’s	  plant	   in	  Brazil.	   Surplus	  bioenergy	  generation	   in	   this	   facility	  amounts	   to	  17MWe	  per	  year	  (GranBio,	  2014).	  	  Woody	   biomass	   in	   Brazil	   is	   currently	   used	   for	   bioenergy	   generation	   and	   is	   of	  particular	   importance	   in	   industrial	   operations	  where	   black	   liquor,	   firewood	   and	   charcoal	  are	  combusted	  for	  heat	  and	  power	  generation.	  Although	  technologies	  exist	  at	  the	  pilot	  scale	  	  39	  to	   transform	   woody	   biomass	   to	   liquid	   biofuels,	   it	   is	   unlikely	   that	   this	   feedstock	   will	   be	  allocated	  towards	  biofuel	  production	  in	  the	  near	  future	  in	  Brazil.	  	  3.2	  Denmark	  	   In	  the	  1980s	  Denmark	  was	  reliant	  on	  fossil	  fuels	  for	  nearly	  90%	  of	  its	  total	  energy	  needs.	   Today,	   Denmark	   begun	   a	   transition	   to	   renewable	   energy	   technologies,	  which	   now	  provide	   22%	   of	   the	   country’s	   energy	   demand,	   biomass	   being	   the	   predominant	   source	  (Nikolaisen,	   2012;	   Danish	   Energy	   Agency	   (DEA),	   2012)	   Historically	   the	   country	   has	  predominantly	  combusted	  biomass	  (wheat	  straw	  and	  wood)	  in	  DH	  and	  CHP	  facilities	  with	  these	  technologies	  being	  a	  focal	  point	  of	  Danish	  energy	  policy	  since	  the	  1980s	  (Hvelplund,	  2011).	   The	   past	   and	   current	   use	   of	   biomass	   for	   biofuels	   production	   is	   insignificant	  compared	  with	  its	  use	  to	  generate	  bioenergy.	  This	  section	  looks	  at	  the	  conditions	  that	  have	  and	  might	   influence	  biomass	  utilization	  decisions	   regarding	   their	  possible	  use	   to	  produce	  biofuels	  or	  bioenergy.	  	  3.2.1	  The	  Danish	  energy	  mix	  In	   Denmark,	   the	   national	   energy	   portfolio	   includes	   almost	   exclusively	   fossil	   fuels	  and	   renewable	   energy	   (RE),	   as	   nuclear	   power	   was	   banned	   by	   the	   government	   in	   1985	  (Hvelplund,	  2011).	   In	  2011,	  total	  energy	  consumption	  (TEC)	  was	  0.80	  EJ,	  of	  which	  0.17	  EJ	  (22%)	   was	   from	   renewable	   energy	   (DEA,	   2012).	   	   Figure	   10	   below	   illustrates	   the	   2011	  Danish	  energy	  mix.	  	  	  	  Figure	  10:	  Denmark’s	  2011	  energy	  mix	  (original	  figure,	  data	  Source:	  DEA,	  2012).	  	  	   Despite	  the	  mounting	  use	  of	  renewables,	  Denmark	   is	  still	  reliant	  on	   fossil	   fuels	   for	  energy.	  In	  2011,	  oil	  (0.30	  EJ),	  natural	  gas	  (0.15	  EJ)	  and	  coal	  (0.13	  EJ)	  represented	  38%,	  20%	  38%	  20%	  18%	  2%	  22%	  Oil	  Natural	  gas	  Coal	  and	  coke	  Waste,	  non-­‐renewable	  Renewable	  energy	  	  40	  and	   18%	   respectively	   of	   the	   country’s	   final	   energy	   consumption	   (DEA,	   2012).	  Transportation	   accounted	   for	   the	   largest	   share	   of	   fossil	   fuel	   use,	   0.2	   EJ	   (69%)	  of	   total	   oil	  consumption	  that	  year,	  followed	  by	  industry	  0.04	  EJ	  (14%)	  and	  households	  0.02	  EJ	  (6%).	  As	  recently	   as	   the	   1970s,	   the	  majority	   (90%)	   of	  Danish	   fossil	   fuel	   resources	  were	   imported.	  However,	   the	   discovery	   of	   domestic	   oil	   and	   gas	   deposits	   in	   the	   North	   Sea	   in	   the	   1980s	  transformed	  Denmark	  from	  a	  major	  fossil	  fuel	  importer	  to	  a	  net	  exporter	  (Meyer,	  2004).	  	  	  3.2.1.1	  Renewable	  energy	  in	  Denmark	  When	  the	  oil	  crisis	  of	  1973	  occurred,	  Denmark’s	  economy	  experienced	  a	  significant	  downturn	  as	  no	  known	  domestic	  fossil	  fuel	  resources	  were	  available.	  This,	  combined	  with	  a	  strong	   stance	   against	   nuclear	   power	   left	   the	   country	   in	   an	   energy	   shortage.	   Concerns	   of	  energy	   security	   arose	   out	   of	   the	   crisis,	   sparking	   a	   transformation	   of	   the	   Danish	   energy	  system,	   with	   an	   introduction	   of	   clear	   national	   energy	   policies	   spurring	   the	   move	   to	  renewable	   energy	   and	   energy	   efficient	   technologies	   (Meyer,	   2004).	   Success	   of	   these	  measures	   has	   facilitated	   the	   increased	   penetration	   of	   renewables,	   improved	   energy	  efficiency,	   shifted	   the	   balance	   of	   trade	   and	   decoupled	   economic	   growth	   from	   energy	  consumption	   (IEA,	   2013b).	   	   Figure	   11	   below	   illustrates	   the	   growth	   of	   renewable	   energy	  from	  1990-­‐2011.	  By	  1997	  Denmark	  was	   energy	   self-­‐sufficient	   and	   in	  2000,	   emerged	   as	   a	  net-­‐energy	   exporter	   (IEA	   Task	   40	   Report,	   2012).	   Since	   1990,	   energy	   consumption	   has	  remained	  constant	  and	  CO2	  emissions	  have	  declined	  7.2%,	  all	  while	  the	  economy	  expanded	  35%	  (IEA,	  2011).	  	   	  Figure	  11:	  Denmark’s	  energy	  matrix	  for	  1990-­‐2011	  (original	  figure,	  data	  source:	  DEA,	  2012).	  	   Biomass	  is	  the	  largest	  source	  of	  renewable	  energy	  in	  Denmark,	  accounting	  for	  68%	  of	   all	   renewables	   or	   15%	   of	   the	   total	   energy	   supply	   in	   2011.	  Wind	   power	   is	   the	   second	  0	  2	  4	  6	  8	  10	  12	  14	  16	  18	  20	  1990	   1993	   1996	   1999	   2002	   2005	   2008	   2011	  Megatonnes	  Oil	  Equivalence	  Renewables	  Fossil	  Fuels	  	  41	  largest	  renewable	  source	  and	  contributes	  20%	  to	  renewable	  energy	  generation	  in	  Denmark.	  Biofuels	   were	   absent	   from	   the	   Danish	   energy	   mix	   until	   2006,	   but	   have	   experienced	  significant	  growth	  as	  they	  accounted	  for	  ~4%	  of	  renewables	  by	  2011,	  the	  vast	  majority	  of	  which	   is	   imported.	   Solar	   and	   hydroelectric	   capacity	   in	   Denmark	   is	   negligible.	   A	   detailed	  breakdown	  of	  renewable	  energy	  sources	  is	  available	  in	  figure	  12.	  	  	  Figure	  12:	  Renewable	  energy	  by	  source	  in	  Denmark	  in	  2011.	  Liquid	  fuel	  denotes	  bioethanol	  and	  biodiesel.	  Heat	  pumps	  are	  classified	  as	  renewable	  by	  the	  DEA.	  Other	  denotes	  the	  sum	  of	  geothermal	  and	  solar	  power	  generation	  (original	  figure,	  data	  source:	  DEA,	  2012)	  3.2.2.	  Danish	  biomass	  For	  the	  purpose	  of	  this	  case,	  the	  DEA’s	  (2012)	  definition	  of	  biomass	  is	  used,	  where	  biomass	  refers	  to	  solid	  biomass	  combusted	  for	  bioenergy	  generation.	  The	  DEA	  provides	  separate	  categories	  for	  biofuels	  (bioethanol,	  and	  biodiesel),	  bio-­‐oil	  and	  biogas	  (DEA,	  2012).	  Within	  biomass,	  wood	  is	  the	  principal	  feedstock	  (61%	  of	  biomass)	  although	  straw,	  and	  renewable	  waste	  provide	  significant	  contributions	  (16%	  and	  17%	  respectively).	  Figure	  13	  outlines	  the	  breakdown	  of	  feedstock	  consumption	  in	  Denmark.	  The	  wide	  array	  of	  feedstocks	  available	  imparts	  flexibility	  in	  potential	  energy	  products	  from	  biomass.	  	  68%	  4%	  20%	  5%	  1%	  2%	  Biomass	  Liquid	  Fuels	  Wind	  Heat	  Pumps	  Other	  Biogas	  	  42	  	  Figure	  13:	  Danish	  2011	  biomass	  consumption	  by	  feedstock,	  wood	  (62%)	  is	  further	  categorized	  into	  chips,	  firewood,	  pellets	  and	  waste	  (original	  figure,	  data	  source	  DEA,	  2012).	  	  In	   contrast	   to	   the	   U.S.	   and	   Brazil	   where	   biomass	   resources	   exceed	   demand,	  Denmark’s	   domestic	   biomass	   supply	   is	   limited.	   Both	   domestic	   forest	   and	   agriculture	  derived	  biomass	  contribute	  to	  meeting	  Denmark’s	  biomass	  based	  energy	  demand.	  The	  total	  annual	   production	   from	   agriculture	   and	   forestry	   amounts	   to	   approximately	   18	   million	  tonnes	   of	   dry	   matter.	   Only	   a	   fraction	   of	   this	   (less	   than	   3	   Mt)	   is	   available	   for	   bioenergy	  production,	  and	  even	  less	  is	  suitable	  for	  biofuels	  (Gylling	  et	  al.	  2012).	  This	  limited	  domestic	  supply	  means	  Denmark	  relies	  on	   imports	   for	   large	  quantities	  of	  biomass.	  Table	  1	  outlines	  the	  domestic	  production,	  import	  and	  export	  of	  different	  biomass	  feedstocks	  in	  Denmark	  in	  2011	  (DEA,	  2012).	  	  	  	  	  	  	  	  	  	  	  	  Straw	  16%	  Waste	  Renewable	  17%	  Bio	  oil	  1%	  Bioethanol	  1%	  Biodiesel	  3%	  Wood	  chips	  13%	  Firewood	  19%	  Wood	  pellets	  24%	  Wood	  Waste	  6%	  Other	  62%	  	  43	  	  Table	   3:	   Danish	   domestic	   production,	   import	   and	   export	   of	   different	   biomass	   sources	   in	  2011	  displayed	  in	  petajoules	  (calculations	  based	  on	  data	  source	  DEA,	  2012).	  	  Contributions	   of	   biomass	   to	   electricity,	   heating/cooling	   and	   transportation	   are	  examined	   in	   the	   subsequent	   sections	   to	   provide	   a	   better	   understanding	   of	   how	   biomass	  feedstocks	  are	  consumed	  and	  which	  predominant	  conversion	  technologies	  used	  in	  Denmark.	  	  3.2.2.1	  Biomass	  for	  heat	  and	  power	  The	  majority	  of	  biomass	   in	  Denmark	  is	  combusted	  for	  heat	  and	  power	  production,	  integrated	   within	   industrial	   operations,	   in	   stand-­‐alone	   heat,	   power	   or	   CHP	   facilities	   and	  residential	   stoves	   and	   boilers.	   Biomass	   provided	   13%	   of	   the	   country’s	   total	   electricity	  generation	  and	  23%	  of	  its	  heating	  requirements	  in	  2010	  (IEA,	  2011).	  	  	   Pellets,	   firewood,	   wood	   chips	   and	   wood	   waste	   are	   the	   predominant	   biomass	  feedstocks	   for	   bioenergy	   in	  Denmark	   and	   account	   for	  ~62%	  of	   total	   biomass	   used	   in	   the	  country	   (figure	  13)	   (DEA,	  2012).	   In	  2010,	  30.1	  PJ	  of	  pellets	  were	  consumed,	   representing	  nearly	  a	  quarter	  of	   all	  biomass	  used	   that	  year	   in	  Denmark	   (Nikolaisen,	  2012),	   and	   thus	   it	  Bio-­‐mass	  Source	  (PJ)	  Straw	   Wood	  chips	   Fire-­‐wood	   Wood	  pellets	   Wood	  waste	   Bio-­‐gas	   Waste	   Bio-­‐diesel	   Bio-­‐ethanol	   Total	  biomass	  Produ-­‐ction	   19.75	   11.29	   20.47	   2.41	   7.52	   4.1	   21.20	   2.96	   0	   89.7	  Import	   0	   5.81	   2.1	   27.73	   0	   0	   0	   3.42	   2.10	   41.16	  Export	   0	   0	   0	   0	   0	   0	   0	   1.99	   0.96	   2.95	  Total	   19.75	   17.1	   22.57	   30.14	   7.52	   4.1	   21.20	   4.39	   1.14	   127.91	  Percent	  Imported	   0	   34%	   9%	   92%	   0	   0	   0	   78%	   100%	   32%	  	  44	  relies	  on	  imports	  to	  satisfy	  part	  of	  its	  national	  biomass	  demand.	  As	  outlined	  in	  table	  3,	  some	  firewood	  (9%)	  is	   imported,	  a	  significant	  proportion	  of	  wood	  chips	  (34%)	  and	  nearly	  all	  of	  its	  wood	  pellets	  (92%).	  Almost	  half	  of	  the	  pellets	  that	  are	  combusted	  in	  Denmark	  are	  used	  in	   large	   power	   plants	   (15.2	   PJ),	   residential	   pellet	   stoves	   consume	   10	   PJ	   of	   pellets	   and	  district	  heating	  plants	   consume	  2.9	  PJ	   (Nikolaisen,	  2012).	   Firewood	   is	  used	  exclusively	   in	  private	  households	  to	  produce	  22.5	  PJ	  of	  energy,	  while	  17	  PJ	  of	  wood	  chips	  are	  combusted	  predominantly	  in	  large	  power	  plants,	  CHP	  and	  DH	  facilities	  (Nikolaisen,	  2012).	  	  Wood	  waste	  generated	  7.5	  PJ	  of	  energy,	  60%	  of	  which	  was	  used	  by	  industry	  (Nikolaisen,	  2012).	  	  Unlike	  the	  other	  jurisdictions	  examined	  in	  this	  thesis	  (with	  the	  exception	  of	  Brazil),	  combustion	   of	   agriculture	   residues	   is	   common	   in	   Denmark.	   Large	   volumes	   of	   straw	   are	  burnt	   for	  bioenergy	  annually	  (23.6	  PJ	   in	  2010)	  (IEA,	  2012	  Task	  40)	  with	  most	  combusted	  for	  heat	  and	  power	  services	  in	  large	  power	  (10.3	  PJ),	  DH	  (4.9	  PJ)	  and	  CHP	  (3.6	  PJ)	  facilities,	  although	  straw	   is	  also	  used	   in	  private	  households	  and	   farms	   for	  heat	  production	   (2.9	  and	  1.9	  PJ	  respectively)	  (Nikolaisen,	  2012).	  Straw,	  not	  wood	  was	  Denmark’s	  original	  bioenergy	  feedstock	   and	   the	   role	   of	   straw	   in	   helping	   establish	   the	   Danish	   bioenergy	   industry	   is	  discussed	  further	  in	  section	  4.3.2.	  	  Widespread	  district	  heating	  infrastructure	  is	  the	  key	  aspect	  of	  the	  Danish	  bioenergy	  market	  and	  an	  important	  component	  contributing	  to	  its	  success	  in	  the	  national	  energy	  mix.	  	  District	  heating	  supplies	  60%	  of	  domestic	  household	  heating	  services	  (45%	  of	  total	  heating	  requirements)	   with	   75%	   of	   this	   heat	   generated	   in	   CHP	   facilities,	   improving	   the	   overall	  efficiency	  of	  conversion	  (IEA,	  2013b).	  Unlike	  Sweden	  where	  DH	  and	  CHP	  are	  dominated	  by	  biomass,	  Denmark	  relies	  on	  both	  fossil	  fuels	  and	  biomass	  (approximately	  50/50)	  feedstocks.	  Over	  200	  district	  heating	  plants,	  and	  15	  CHP	  facilities	  rely	  on	  solid	  biomass	  as	  fuel,	  while	  30	  bio-­‐gas	   fired	  CHP	  plants	   are	   in	   operation	   (IEA,	   2011).	   Together,	   straw,	  wood	   and	  bio-­‐gas	  produced	  56.63	  PJ	  of	  electricity	  and	  district	  heat	  in	  2011	  (DEA,	  2012).	  	  The	  industrial	  use	  of	  biomass	  in	  Denmark	  is	  not	  as	  common	  as	  in	  the	  other	  profiles	  examined	  in	  this	  thesis.	  In	  2010,	  biomass	  contributed	  approximately	  10	  PJ	  of	  energy,	  mainly	  for	  heating	  purposes	  on	  farms	  and	  within	  the	  forest	  sector	  (Nikolaisen,	  2012).	  The	  minimal	  contributions	  of	  biomass	  to	  industrial	  energy	  generation	  is	  a	  factor	  of	  Denmark’s	  prevailing	  economic	  interests,	  how	  these	  interests	  influence	  biomass	  allocation	  is	  covered	  in	  detail	  in	  section	  4.3.3.	  	  3.2.2.2	  Transportation	  biofuels	  As	   outlined	   in	   figure	   14,	   biodiesel	   and	   bioethanol	   are	   the	   two	   biofuels	   consumed	  commercially	  for	  transportation	  in	  Denmark	  (DEA,	  2012).	  No	  transportation	  biofuels	  were	  	  45	  consumed	  in	  Denmark	  until	  2006	  when	  gasoline	  blending	  with	  bioethanol	  began,	  and	  even	  then,	  bioethanol	  has	   seen	   slow	  expansion	  when	  compared	   to	  Brazil,	   the	  U.S.	   and	  Sweden.	  Consumption	  only	  reached	  2	  PJ	  in	  2011.	  	  It	  took	  until	  2008	  for	  biodiesel	  to	  be	  consumed	  in	  Denmark,	  since	  then	  it	  has	  emerged	  as	  the	  principal	  biofuel	  with	  4.4	  PJ	  consumed	  in	  2011	  (figure	  14).	  	  Today,	   Denmark	   has	   one	   of	   the	   smallest	   shares	   of	   renewable	   energy	   in	  transportation	   in	   all	   of	   Scandinavia	   (Larsen,	   et	   al.	   2012).	   Compared	   to	   bioenergy	   that	  amounts	  to	  68%	  of	  renewables,	  biofuels	  account	  for	  only	  4%	  (figure	  12).	  As	  a	  proportion	  of	  transportation	  fuel	  demand,	  biofuels	  accounted	  for	  only	  0.3%	  in	  2011	  (IEA,	  2013b).	  Nearly	  all	  biofuels	   consumed	   in	  Denmark	  are	   imported	   (table	  1).	  Meanwhile,	  Danes	   rely	  on	   road	  transportation	   more	   than	   their	   European	   neighbors,	   with	   final	   energy	   consumption	   per	  capita	  in	  transport	  sitting	  30%	  above	  the	  EU	  average	  (Larsen	  et	  al.	  2012).	  	   	  	  	  Figure	   14:	   Danish	   bioethanol	   and	   biodiesel	   demand	   from	   2005-­‐2011.	   No	   biofuels	   were	  consumed	  prior	  to	  2006	  in	  Denmark	  (original	  figure,	  data	  source	  DEA,	  2012).	  	  	   Bioethanol	  is	  only	  available	  in	  low,	  E5,	  blends	  in	  Denmark,	  as	  opposed	  to	  the	  higher	  blends	   available	   in	   most	   countries	   examined	   in	   this	   thesis	   (Cansino	   et	   al.	   2012).	   By	  comparing	   total	   demand	   volumes	   of	   gasoline	   to	   demand	   volumes	   of	   ethanol	   for	   2011	   as	  presented	  by	  the	  DEA,	  it	  can	  be	  noted	  that	  the	  lack	  of	  higher	  blends	  is	  not	  limiting	  ethanol	  consumption	   in	  Denmark.	   	  Not	  all	  gasoline	  sold	   is	  consumed	  as	  an	  E5	  blend.	  (DEA,	  2012).	  Currently	  all	  of	   the	  bioethanol	   consumed	   in	  Denmark	   is	   imported,	  but	   information	  on	   the	  origins	   of	   this	   fuel	   was	   not	   readily	   available	   (DEA,	   2012).	   According	   to	   the	   DEA,	   no	  domestically	   produced	   bioethanol	   is	   commercially	   available	   in	   Denmark.	   However,	   a	  cellulosic	   ethanol	   demonstration	   facility	   has	   been	   in	   operation	   since	   2009	   in	   Kalundborg	  0.00	  0.50	  1.00	  1.50	  2.00	  2.50	  3.00	  3.50	  4.00	  4.50	  5.00	  2005	   2008	   2011	  Petajoules	  Bioethanol	  Biodiesel	  	  46	  employing	  wheat	   straw	  as	   the	  predominant	   feedstock	   (Larsen	  et	  al.	  2012).	   It	   is	  unclear	   if	  this	   facility	   is	   operating	   at	   a	   scale	   where	   the	   biofuels	   produced	   are	   fed	   into	   the	   Danish	  transportation	   fuel	   supply,	   or	   if	   the	   produced	   ethanol	   is	   not	   yet	   commercially	   available.	  Further	   development	   of	   cellulosic	   biofuels	   in	   Denmark	   may	   cause	   a	   shift	   in	   biomass	  allocation	  trends;	  the	  nature	  of	  this	  shift	  is	  discussed	  further	  in	  section	  4.3.4.	  	  	  	   Despite	   biodiesel	   not	   being	   consumed	   in	   Denmark	   until	   2008,	   it	   has	   experienced	  rapid	   growth	   since	   then,	   quickly	   surpassing	  bioethanol	   as	   the	  predominant	   biofuel	   in	   the	  country	  (figure	  14).	  	  Biodiesel	  is	  consumed	  only	  in	  B5	  blends	  in	  Denmark,	  although	  this	  low	  blend	   is	   not	   currently	   limiting	   biodiesel	   consumption	   as	   no	  blend	  wall	   has	   been	   reached.	  The	   more	   rapid	   growth	   of	   biodiesel	   when	   compared	   to	   bioethanol	   is	   likely	   due	   to	   the	  favourable	   consumption	   of	   diesel	   fuel	   over	   gasoline	   in	   Denmark	   (DEA,	   2012).	   Similar	   to	  ethanol,	   Denmark	   relies	   on	   imports	   for	   biodiesel	   supply	   (3.4	   PJ	   in	   2011),	   the	   origins	   of	  which	   are	   unknown	   (IEA,	   2012	   task	   40).	   Interestingly,	   Denmark	   exports	   a	   comparatively	  large	  volume	  of	  biodiesel	  (nearly	  2	  PJ	  in	  2011).	  The	  IEA	  suggests	  this	  is	  a	  result	  of	  high	  fuel	  taxes,	  although	  they	  fail	  to	  elaborate	  as	  to	  the	  mechanism	  behind	  this	  (Nikolaisen,	  2012).	  	  3.2.3	  Drivers	  for	  biomass	  allocation	  in	  Denmark	  	   Biomass	  utilization	  trends	  in	  Denmark	  provide	  a	  unique	  case	  when	  examined	  within	  the	   context	   of	   biomass	   competition.	   Given	   the	   limited	   domestic	   biomass	   supply,	   it	   is	   no	  surprise	   that	  Denmark	   is	  heavily	  reliant	  on	   imports	   to	  meet	  national	  demand.	  Despite	   the	  country’s	  dependence	  on	  imports,	  current	  practices	  of	  biomass	  utilization	  in	  Denmark,	  with	  their	  strong	  bioenergy	  focus,	  have	  limited	  competition	  for	  biomass	  between	  bioenergy	  and	  biofuels.	  A	  heightened	  appetite	   for	   lignocellulosic	  biofuels	   in	  Denmark	  could	   influence	   the	  allocation	  of	  biomass	  and	  increase	  competition,	  particularly	  for	  straw	  and	  woody	  biomass,	  to	  biofuels	  or	  bioenergy.	  	  	   For	  the	  purpose	  of	  this	  thesis	  I	  focused	  on	  the	  drivers	  for	  both	  forest	  and	  agriculture	  biomass	   allocation	   in	   an	   attempt	   to	   provide	   a	   complete	   picture	   of	   biomass	   utilization	   in	  Denmark.	  General	  energy	  security	  and	  climate	  change	  mitigation	  drivers,	  in	  addition	  to	  the	  influence	   of	   Danish	   economic	   interests	   and	   the	   cost	   competitiveness	   of	   biomass-­‐based	  energy	  technologies	  are	  explored	  within	  the	  context	  of	  how	  they	  direct	  biomass	  allotment.	  	  3.2.3.1	  Energy	  security	  and	  the	  emergence	  of	  biomass-­‐based	  energy	  As	  discussed	   in	   section	  2.1.1,	   energy	   security	   concerns	  arising	  out	  of	   the	  OPEC	  oil	  crisis	  were	  sufficient	  to	  spark	  investment	  in	  renewable	  energy	  technologies,	  however	  wind	  turbines	   emerged	   as	   the	   technology	   of	   focus,	   not	   biomass-­‐based	   energy	   (Lipp,	   2007).	   It	  	  47	  wasn’t	   until	   the	   early	   1980s	   that	   biomass-­‐based	   energy	   emerged	   in	   Denmark,	   at	   which	  point,	  the	  importance	  of	  fossil	  fuel	  related	  energy	  security	  had	  declined	  as	  domestic	  oil	  and	  gas	   reserves	   had	   been	   discovered	   in	   the	   North	   Sea	   (Meyer,	   2004).	   Researchers	   have	  postulated	  that	  energy	  security	  may	  have	  opened	  the	  door	  for	  renewable	  energy	  generation,	  which	  in	  turn,	  provided	  easier	  penetration	  of	  biomass	  based-­‐energy	  in	  Denmark.	  However,	  this	  type	  of	  analysis	  is	  beyond	  the	  scope	  of	  this	  study	  (Meyer	  &	  Koefoed,	  2003;	  Hvelplund,	  2011).	  	  	   Fossil	   fuel	  supply	   is	  satisfied	  by	  domestic	  production,	   thus	   in	   the	   traditional	  sense	  energy	   security	   is	   a	   non-­‐issue	   in	   Denmark.	   However,	   the	   country’s	   reliance	   on	   imported	  biomass	  products	  creates	  an	  energy	  security	  issue	  that	  is	  unique	  to	  this	  case.	  Recall	  table	  1,	  a	   significant	   proportion	   of	   wood	   chips	   (34%),	   wood	   pellets	   (92%),	   biodiesel	   (78%)	   and	  bioethanol	   (100%)	   are	   imported.	   This	   creates	   a	   scenario	  where	   energy	   security	   of	   these	  biomass-­‐products	   is	   low.	   How	   secure	   the	   imported	   biomass	   supply	   is	   in	   Denmark	   is	  uncertain,	   as	   clear	   information	   regarding	   the	   origins	   of	   the	   biomass	   is	   unavailable.	  Problems	   could	   be	   expected	   to	   arise	   if	   this	   biomass	   is	   sourced	   from	   politically	   unstable	  regions,	   such	   as	   Russia,	   or	   from	   neighboring	   European	   countries	  whose	   biomass	   exports	  may	  dwindle	  as	  they	  too	  increase	  the	  use	  of	  biomass	  for	  energy	  production.	  	  3.2.3.2	  Energy	  related	  climate	  change	  concerns	  and	  biomass	  allocation	  Combustion	  of	  biomass	  for	  energy	  began	  in	  Denmark	  during	  the	  late	  1980s.	  At	  this	  time,	   mounting	   concerns	   regarding	   air	   quality	   and	   emissions	   problems	   associated	   with	  burning	   excess	   straw	   in	   farmer’s	   fields	   had	   the	   Danish	   Government	   searching	   for	  alternative	  methods	  of	  removing	  this	  waste	  (Schwarz	  et	  al.	  2012).	  Concurrently,	  adoption	  of	  new	   renewable	   energy	   technologies	   in	   Denmark	  was	   underway	   due	   to	   the	   emergence	   of	  concerns	   regarding	   energy	   related	   emissions	   and	   their	   negative	   impact	   on	   the	   climate	  (Hvelplund,	   2011).	   Conversion	   of	   coal-­‐fired	   heat	   plants	   to	   straw	   fueled	   co-­‐generation	  facilities	   emerged	   as	   an	   appropriate	   solution	   (Meyer	   and	   Koefoed,	   2003;	   Mendoca	   et	   al.	  2009	  and	  Hvelplund,	  2011).	  Acceptance	  of	  CHP	  was	  quick	  in	  Denmark,	  by	  1988,	  all	  Danish	  cities	   with	   populations	   greater	   than	   60,000	   inhabitants	   were	   employing	   CHP	   facilities	  (Hvelplund,	   2011).	   It	   is	   important	   to	   understand	   however	   that	   the	   volumes	   of	   biomass	  consumed	   remained	   limited	   as	   other	   drivers	   were	   eliciting	   their	   influence	   on	   biomass	  allocation	  decisions.	  These	  drivers	  are	  discussed	  in	  more	  detail	  in	  section	  3.3.3	  and	  3.3.4.	  	  Experts	   suggest	   that	   despite	   the	   additional	   GHG	   emissions	   associated	   with	  transportation,	  the	  combustion	  of	  imported	  bioenergy	  products	  (namely	  wood	  pellets)	  still	  achieves	   emissions	   reductions	   compared	   to	   fossil	   fuel	   alternatives	   (Dwivedi	   et	   al.	   2014).	  	  48	  However	  a	  flaw	  exists	  within	  many	  of	  these	  GHG	  emission	  analyses	  as	  they	  fail	  to	  recognize	  the	  emissions	  associated	  with	  direct	  or	   indirect	   land	  use	  changes	  and	  the	  depletion	  of	   the	  carbon	   stock.	  A	   further	  discussion	  of	   these	   facets	   of	   biomass-­‐associated	   emissions	   can	  be	  found	   in	  Schulze	  et	  al.	  2012.	  As	  reviewed	   in	   further	  detail	   in	  section	  3.3.4,	  current	  Danish	  policies	   have	   outlined	   ambitious	   emissions	   targets	   of	   a	   carbon-­‐neutral	   economy	   by	   2050	  (IEA,	  2013b).	  	  3.2.3.3	  Prevailing	  economic	  interests	  Agriculture	  is	  the	  major	  industry	  within	  Denmark	  in	  contrast	  to	  Sweden	  where	  the	  forest	  based	  industries	  predominate.	  This	  puts	  the	  agriculture	  industry	  as	  a	  dominant	  lobby	  group	  in	  the	  Danish	  case.	  As	  seen	  in	  these	  two	  profiles,	  industry	  has	  a	  significant	  impact	  on	  feedstock	   availability,	   bioenergy	   conversion	   technologies	   and	   applications.	   Only	   10	   PJ	   of	  biomass-­‐derived	  energy	  was	  consumed	  in	  the	  Danish	  industrial	  sector,	  compared	  to	  220	  PJ	  in	  Sweden	  (DEA,	  2012;	  SEA,	  2013).	  The	  absence	  of	  a	  large	  forest	  sector	  helps	  explain	  why	  Danish	   industry	   is	   not	   a	   major	   biomass	   consumer,	   as	   waste	   burning	   is	   not	   as	   prevalent	  within	   agriculture	   as	   it	   is	   in	   forestry	   or	   pulp	   and	   paper	   (Nikolaisen,	   2012).	   The	   differing	  energy	  demands	  of	  agriculture	  operations	  when	  compared	  to	  pulp	  and	  paper	  inhibit	  waste	  recycling	  from	  making	  headway	  into	  the	  agriculture	  industry.	  	  The	   Danish	   biotechnology	   industry	   had	   a	   key	   role	   in	   the	   emergence	   of	   biofuels	  within	   Denmark.	   During	   the	   early	   2000s,	   two	   prominent	   Danish	   biotech	   companies,	  Novozymes	  and	  Danisco	  (now	  a	  subsidiary	  of	  DuPont)	  voiced	  their	  concern	  that	  the	  country	  may	  fall	  behind	  the	  rest	  of	  Europe	  in	  moving	  towards	  a	  bioeconomy	  should	  they	  not	  act	  on	  developing	  biofuels.	  It	  was	  argued	  that	  moving	  towards	  a	  more	  diverse	  bioeconomy	  aligned	  well	   with	   the	   innovative	   capacity	   of	   the	   country.	   The	   collaboration	   of	   Novozymes	   and	  Danisco	   with	   DONG	   Energy	   (the	   largest	   energy	   provider	   in	   Denmark)	   and	   Landbrug	   &	  Fødevarer,	  (an	  agriculture	  and	  food	  trade	  association	  representing	  Danish	  farmers	  and	  food	  companies)	   lead	   to	   successful	   lobbying	   of	   the	   government	   (Teknologirådet,	   2006).	   The	  results	  of	  this	  lobbying	  effort	  were	  realized	  in	  2005	  as	  the	  DEA	  set	  in	  motion	  legislation	  to	  develop	  liquid	  biofuels	  in	  Denmark	  (Teknologirådet,	  2006).	  The	  legislation	  provided	  energy	  and	  carbon	  tax	  exemptions	  for	  all	  biofuels,	  sufficient	  incentives	  to	  commence	  the	  blending	  of	  bioethanol	  with	  gasoline,	  as	  observed	  in.	  The	  meager	  blend	  volumes	  achieved	  as	  a	  result	  of	   the	   tax	   incentives	  were	  not	   enough	   to	   stifle	   criticism	   from	   the	   scientific	   and	   industrial	  communities.	   Many	   groups	   claimed	   biased	   preference	   for	   existing	   biomass	   applications	  were	  stifling	   innovation	  and	  Danish	  competitiveness	  within	  the	  emerging	  EU	  bioeconomy,	  demanding	  more	   be	   done	   to	   aid	   biofuel	   development	   (Teknologirådet,	   2006).	   Eventually,	  	  49	  Denmark	   adopted	   the	   biofuel	  mandates	   as	   outlined	   by	   the	   EU	   Biofuel	   Directive,	   creating	  binding	   volumetric	  mandates	   for	   biofuel	   consumption.	   The	   specifics	   of	   these	   policies	   and	  how	  they	  directed	  biomass	  allocation	  in	  Denmark	  is	  covered	  in	  the	  subsequent	  section.	  	  3.2.3.4	  Cost	  competitiveness	  of	  Danish	  bioenergy	  and	  biofuels	  This	   section	   considers	   how	   technologies	   and	   policies	   for	   bioenergy/biofuels	  influence	  cost	  competitiveness	  and	  ultimately	  biomass	  allocation	  decisions	  in	  Denmark.	  In	  Denmark,	   the	   lignocellulosic	  nature	  of	   the	   first	   feedstocks	  employed	  restricted	  conversion	  feasibility	   to	   bioenergy	   generation,	   largely	   influencing	   biomass	   allocation.	   As	   advanced	  biofuel	   technologies	   commercialize,	   this	   may	   change.	   The	   presence	   of	   district	   heating	  infrastructure,	  combined	  with	  the	  absence	  of	  a	  forest	  sector	  comparable	  in	  scale	  to	  Sweden	  or	  the	  United	  States,	  has	  caused	  bioenergy	  generation	  to	  be	  largely	  restricted	  to	  residential	  and	   commercial	   heat	   and	   power	   applications,	   rather	   than	   industrial	   energy	   generation.	  Furthermore,	   strong	   policies	   favoring	   biomass	   allocation	   to	   bioenergy	   have	   largely	  influenced	  biomass	  competition	  in	  Denmark.	  	  3.2.3.4.1	  Technological	  advancements	  in	  biomass-­‐based	  energy	  	   In	   Denmark,	   straw	   was	   the	   first	   major	   biomass	   feedstock	   employed	   for	   modern	  energy	  generation.	  When	  the	  straw	  emerged	  as	  a	  suitable	  bioenergy	  feedstock	  in	  the	  1980s,	  a	  lack	  of	  available	  conversion	  technologies	  restricted	  the	  use	  of	  straw	  to	  combustion,	  as	  its	  conversion	  to	  biofuels	  was	  not	  yet	  possible.	  Combustion	  was	  considered	  suitable	  as	  district-­‐heating	  infrastructure	  was	  prominent	  in	  Denmark,	  and	  the	  substitution	  of	  coal	  for	  straw	  in	  district	  heating	  was	  an	  attractive	  option	  (Hvelplund,	  2011).	  	  	   By	  the	  1990s	  strong	  government	  mandates	  set	  targets	  for	  volumes	  of	  biomass	  to	  be	  combusted.	   However,	   biomass	   consumption	   did	   not	   grow	   as	   quickly	   as	   the	   government	  outlined	   (Schwarz	  et	  al.	  2012).	  Part	  of	   latent	  growth	   in	  biomass	   consumption	  stems	   from	  the	   properties	   of	   straw	   biomass,	   as	   the	   combustion	   of	   straw	   creates	   more	   ash	   when	  compared	   to	   wood	   (Biedermann	   &	   Obernberger,	   2005).	   High	   ash	   content	   can	   increase	  levels	  of	  particulate	  emission	  (an	  expensive	  gas	  scrubber	  is	  required	  to	  reduce	  emissions),	  cause	  corrosion,	  and	  decrease	  thermal	  efficiency	  (Biedermann	  &	  Obernberger,	  2005).	  These	  negative	   consequences	   associated	   with	   straw	   combustion	   delayed	   the	   expansion	   of	  bioenergy	  in	  Denmark.	  	  	   When	  the	  Danish	  government	  first	  explored	  the	  use	  of	  biomass	  as	  an	  energy	  source,	  production	  of	  biofuels	   from	  the	  domestically	  available	  straw	  and	  wood	  residues	  were	  not	  yet	   technologically	   feasible.	   The	   lack	   of	   domestic	   sugar	   or	   starch	   feedstocks,	   whose	  conversion	  to	  biofuels	  was	  possible	  in	  the	  1980s,	  meant	  biofuels	  were	  not	  considered	  as	  a	  	  50	  renewable	   energy	   option.	   Today,	   cellulosic	   ethanol	   technologies	   that	   employ	   agriculture	  residues	  as	  a	  feedstock	  are	  operating	  at	  the	  commercial	  scale	  in	  countries	  around	  the	  globe,	  including	   the	   United	   States,	   Italy	   and	   Brazil.	   The	   technological	   limitations	   in	   terms	   of	  lignocellulosic	   biofuels	   are	   no	   longer	   an	   impediment	   to	   biofuel	   development	   in	  Denmark.	  Commercialization	   of	   lignocellulosic	   biofuels	   in	   Denmark	   may	   create	   competition	   for	  limited	   domestic	   agriculture	   residues.	   Production	   of	   advanced	   biofuels	   from	  wood-­‐based	  biomass	  remains	  at	  the	  pilot	  scale	  worldwide.	  If	  commercialization	  of	  woody-­‐based	  biofuels	  were	   to	   occur	   in	   Denmark,	   the	   country	   would	   continue	   to	   rely	   on	   imports	   for	   biomass	  supply,	   increasing	   the	   feedstock	   cost	   and	   decreasing	   the	   GHG	   emissions	   reduction.	   This	  predicament	  has	  driven	  major	  biofuel	  producing	  companies	  based	  in	  Denmark	  to	  set	  their	  sights	  on	  other	  more	   favourable	   countries	   to	  build	   commercial	   scale	   facilities	   such	  as	   the	  U.S.	  and	  Brazil.	  	  3.2.3.4.2	  Policies	  affecting	  cost	  competitiveness	  of	  biofuels	  and	  bioenergy	  	   As	   a	  member	   of	   the	   European	  Union,	   Denmark	   is	   subject	   to	   both	   EU	   Commission	  and	  national	  energy	  and	  climate	  policies	  that	  have	  an	  influence	  on	  the	  cost	  competitiveness	  of	  biofuels	  and	  bioenergy,	  thus	  directing	  biomass	  allocation.	  For	  the	  purpose	  of	  this	  thesis	  Danish	  national	   policies	   alone	   are	   considered	   as	   they	   either	   contradicted	  or	   exceeded	  EU	  policy	  and	  can	  be	  considered	  a	  more	  dominating	  force	  than	  EU	  sanctioned	  policies.	  Danish	  national	   policies	   include:	   complex	   combinations	   of	   renewable	   energy	   mandates,	   carbon,	  energy,	  sulfur	  and	  environment	  taxes	  and	  tax	  exemptions	  (IEA,	  2013b).	  Deciphering	  exactly	  how	  these	  policies	  affect	  the	  cost	  competitiveness	  of	  biomass-­‐based	  energy	  technologies	  is	  essential	  to	  understanding	  the	  complete	  picture	  of	  drivers	  for	  biomass	  allocation	  decisions	  in	  Denmark.	  As	  reviewed	  in	  section	  3.3.2,	  co-­‐combustion	  of	  straw	  with	  coal	  began	  in	  the	  1980’s	  in	   response	   to	   concerns	   of	   climate	   change	   and	   policies	   that	   aimed	   to	   reduce	   emissions	  related	   to	   the	   open	   burning	   of	   straw.	   In	   1990	   the	  Heating	   Supply	   Law	   passed	   by	  Danish	  parliament	   further	  supported	  biomass-­‐based	  energy	  generation	  by	  providing	   the	  Minister	  for	  Energy	  with	   the	   regulatory	   authority	   to	  dictate	   fuel	   choices	   for	  DH	  and	  CHP	   facilities.	  The	  policy	  increased	  integration	  of	  biomass	  (particularly	  straw)	  co-­‐firing	  with	  coal	  in	  large-­‐scale	   heating	   facilities,	   and	   total	   conversion	   to	   biomass	   combustion	   facilities	   for	   smaller	  district	  heating	  plants	  (Skott,	  2011).	  	  The	   Biomass	   Agreement	   ratification	   in	   1993	   strengthened	   government	   policy	  support	  of	  bioenergy.	  It	  was	  the	  first	  policy	  agreement	  on	  biomass	  and	  marked	  the	  start	  of	  large-­‐scale	   use	   of	   bioenergy	   in	   Denmark	   by	  mandating	   1.2	  million	   tons	   of	   straw	   and	   0.2	  	  51	  million	  tons	  of	  wood	  to	  be	  combusted	  annually	  by	  2000	  (Schwarz	  et	  al.	  2012).	  However,	  a	  disconnect	  occurred	  between	  mandates	  and	  the	  actual	  implementation	  and	  consumption	  of	  biomass.	  Despite	  the	  government’s	  mandates	  for	  straw	  and	  wood	  combustion,	  in	  early	  2000	  only	  half	  of	  the	  planned	  volumes	  of	  biomass	  were	  being	  consumed	  (Meyer	  &	  Koefoed,	  2003).	  Following	   this	   realization,	   the	   Biomass	   Agreement	   was	   amended	   in	   2000,	   extending	   the	  target	  year	  to	  2005.	  Changes	  also	  included	  increased	  support	  for	  wood	  chip	  combustion	  by	  building	  new	  CHP	  facilities	  engineered	  specifically	  for	  burning	  wood	  (Schwarz	  et	  al.	  2012).	  Expanding	  support	   for	  woody	  biomass	  was	  a	  result	  of	  a	  major	  storm	  that	  destroyed	   large	  areas	  of	   forest,	   creating	  another	  waste	   feedstock	   in	  need	  of	  use	   (Meyer	  &	  Koefoed,	  2003;	  Schwarz	  et	  al.	  2012).	  	  In	   the	   same	   year	   as	   the	   ratification	   of	   the	   original	   Biomass	   Agreement,	   Danish	  parliament	   implemented	   a	   carbon	   tax	   originally	   valued	   at	   DKK	   50/tonne	   CO2	   (present	  value).	  The	  tax	  has	  risen	  steadily,	  and	  has	  been	  marked	  at	  DKK	  150/tonnes	  CO2	  since	  2008	  (approximately	   26	   USD/tonne	   present	   value)	   (IEA,	   2013b).	   The	   carbon	   tax	   was	   an	  important	   driver	   for	   the	   use	   of	   biomass	   in	   electricity	   generation	   as	   electricity	   generated	  from	  biomass	  was	   exempt	   from	   the	   carbon	   tax,	   increasing	   its	   cost	   competitiveness	  when	  compared	  to	  oil,	  coal	  or	  natural	  gas.	  In	  1996,	  the	  addition	  of	  a	  sulfur	  tax	  in	  Denmark	  further	  encouraged	   a	   transition	   from	   sulfur-­‐rich	   fuels	   such	   as	   coal,	   and	   natural	   gas	   to	   low-­‐sulfur	  fuels	  like	  biomass	  (IEA,	  2013b).	  Until	  it	  expired	  in	  2000,	  the	  sulfur	  tax,	  in	  combination	  with	  the	  carbon	  tax,	  made	  fossil	  fuel	  energy	  sources	  (particularly	  coal	  due	  to	  its	  high	  carbon	  and	  sulfur	   emissions)	   expensive	   relative	   to	   alternatives.	   The	   presence	   of	   a	   tax	   exemption	   for	  biomass	  made	  the	  fuel	  source	  attractive	  for	  energy	  producers	  when	  compared	  to	  fossil	  fuel	  alternatives,	   especially	   when	   combined	   with	   the	   government	   mandates	   for	   biomass	  combustion	  in	  DH	  and	  CHP.	  In	  addition	  to	  the	  carbon	  and	  sulfur	  tax,	  all	  energy	  products	  are	  subject	   to	  an	  energy	   tax	   (IEA,	  2013b).	   In	  Denmark	   this	   tax	   is	   restricted	  predominantly	   to	  fossil	  fuels	  for	  heating	  purposes	  and	  electricity	  consumption	  in	  households	  and	  the	  service	  sector	  (IEA,	  2013b).	  These	  measures	  provide	  a	  significant	  incentive	  to	  both	  consumers	  and	  producers.	  Energy	  producers	  are	  motivated	   to	  use	  renewable,	   tax	  exempt,	  energy	  sources	  for	  heating,	  such	  as	  biomass.	  Consumers	  are	  driven	  to	  purchase	  electricity	  from	  renewable	  sources,	  and	  reduce	  their	  energy	  consumption	  to	  avoid	  high	  electricity	  prices	  (IEA,	  2013b).	  These	   policies,	   when	   combined	   with	   the	   previously	   mentioned	   technological	  limitations,	   energy	   security	   and	   climate	   change	   drivers	   effectively	   directed	   biomass	  allocation	   towards	   bioenergy	   generation.	   Equivalent	   incentives	   for	   transportation	   biofuel	  	  52	  generation	   were	   absent	   in	   Denmark	   until	   the	   mid-­‐2000s,	   leaving	   bioenergy	   open	   as	   the	  most	  suitable	  option	  for	  biomass	  allocation.	  	  In	  2003,	  the	  European	  Commission	  issued	  the	  Biofuels	  Directive	  to	  promote	  biofuels	  in	   transportation	   by	   introducing	   blending	   targets	   of	   2.0%	   and	   5.75%	   by	   2005	   and	   2010	  respectively	   (Hveplund,	   2011).	   In	   opposition	   to	   the	   Commission’s	   mandates,	   the	   Danish	  Government	   had	   set	   no	   targets	   for	   biofuels	   based	   on	   the	   assessment	   that	   bioethanol	  blending	   was	   not	   a	   cost-­‐effective	   method	   of	   GHG	   reduction	   (Hedegaard	   et	   al	   2008;	  Hveplund,	  2011).	  It	  wasn’t	  until	  2005	  that	  the	  Danish	  Energy	  Agency	  put	  forward	  a	  motion	  to	  develop	  liquid	  biofuels.	  Transportation	  biofuel	  consumption	  was	  promoted	  by	  exemption	  from	   energy	   and	   carbon	   taxes,	   although	   no	   blend	   mandates	   were	   instituted.	   The	  corresponding	   introduction	   of	   bioethanol	   by	   way	   of	   blending	   with	   gasoline	   lead	   to	   the	  consumption	   of	   bioethanol	   from	   2006,	   as	   observed	   in	   figure	   14,	   however	   all	   bioethanol	  consumed	  in	  Denmark	  remains	  imported.	  	  In	   2006	   the	   EU	   Commission	   expanded	   their	   mandates	   for	   renewable	   fuels	   in	  transportation,	  requiring	  5.75%	  and	  10%	  by	  2010	  and	  2020	  respectively	  (Teknologirådet,	  2006).	  The	  Danish	  government	  did	  not	   immediately	  adopt	   these	  mandates	  as	   it	   took	  until	  2009	   for	   Denmark	   to	   agree	   to	   the	   EU	   scheduled	   mandates	   (Danish	   Government,	   2011).	  Agreement	  came	  following	  the	  passage	  of	  the	  EU	  Commission’s	  Renewable	  Energy	  Directive	  (RED)	   as	   it	   changed	   their	   definition	   of	   renewables	   for	   transportation,	   opening	   it	   up	   from	  biofuels	  specific	  to	  one	  accepting	  any	  renewable	  energy	  technology	  (Directive	  2009/28/EC).	  Despite	   the	  passage	  of	  RED,	   expanding	   renewable	   transportation	  beyond	  biofuels,	  Danish	  development	  of	  biofuels	  continued	  to	  grow.	  In	  lieu	  of	  the	  2009	  RED,	  the	  Danish	  government	  announced	   it	   would	   keep	   its	   10%	   biofuels	   mandate	   for	   2020,	   choosing	   not	   to	   open	   the	  mandate	  up	  to	   include	  other	   transportation	  alternatives	  until	  2020.	  Blending	  targets	  have	  been	  slowly	  introduced	  so	  that	  biofuels	  account	  for	  0.75%	  in	  2010,	  3.3%	  in	  2011	  and	  5.75%	  in	  2012	  and	  a	  target	  of	  10%	  by	  2020	  (Danish	  Government,	  2011).	  Unlike	  the	  US,	  it	  is	  unclear	  how	   these	   mandates	   are	   monitored	   and	   whether	   the	   Danish	   government	   has	   punitive	  measures	   for	   non-­‐compliance.	   Without	   clear	   policy	   incentives	   (or	   disincentives	   for	  compliance	   failure)	   it	   is	  difficult	   to	  see	  how	  biomass	  allocation	  to	  biofuels	  will	   increase	   in	  Denmark.	  The	  Danish	  government	  has	  continually	   failed	   to	  meet	   the	  outlined	  government	  mandates	  for	  biofuels.	  Government	  mandates	  such	  as	  the	  U.S.	  RFS	  typically	  operate	  on	  the	  premise	   that	   the	   failure	   to	   comply	   is	   more	   costly	   than	   compliance,	   thus	   driving	   biofuels	  production	  regardless	  of	  their	  cost-­‐competitiveness.	  In	  2011,	  the	  government	  announced	  an	  	  53	  expansion	   in	   renewable	   energy	   mandates	   in	   the	   Energy	   Strategy	   2050,	   outlining	   that	  Denmark	  will	  de-­‐carbonize	  transportation	  by	  2050.	  Although,	  biofuels	  appear	  to	  remain	  the	  predominant	  focus	  until	  2020,	  at	  which	  point	  the	  government	  suggests	  electric	  vehicles	  will	  become	  more	   significant	   after	   this	   date	   (Danish	   Government,	   2011).	   However,	   similar	   to	  RED,	   the	   latest	   policies	   fail	   to	   outline	   any	  punitive	  measures	   for	   non-­‐compliance.	  Despite	  the	  ambitious	  mandates,	  biofuels	  represented	  only	  0.3%	  of	   the	  Danish	   transportation	   fuel	  mix	  in	  2012	  and	  it	  is	  unclear	  how	  and	  if	  the	  mandates	  will	  be	  achieved	  (IEA,	  2013b).	  	  3.2.4	  Danish	  conclusions	  Renewable	  energy	  accounts	  for	  22%	  of	  the	  Danish	  energy	  mix,	  with	  bioenergy	  constituting	  the	  largest	  source.	  Domestic	  biomass	  supply	  is	  mainly	  restricted	  to	  straw,	  wood	  chips	  and	  firewood	  while	  significant	  proportions	  wood	  pellets	  and	  biofuels	  are	  imported.	  Currently,	  nearly	  all	  of	  the	  biomass	  is	  used	  to	  produce	  bioenergy	  as	  it	  accounted	  for	  70%	  of	  total	  renewable	  energy	  in	  2011.	  Thus	  competition	  for	  biomass	  for	  use	  as	  a	  biofuel	  feedstock	  does	  not	  and	  will	  not	  likely	  occur.	  	  The	  main	  drivers	  behind	  bioenergy	  development	  began	  as	  climate	  change	  and	  emissions	  concerns	  in	  the	  1980s.	  In	  response	  to	  this	  concern,	  support	  schemes	  and	  policies	  supporting	  bioenergy	  generation	  expanded,	  and	  as	  a	  result	  bioenergy’s	  contribution	  to	  total	  energy	  grew.	  	  Although	  targets	  for	  biofuels	  were	  introduced	  in	  Denmark	  in	  2006,	  the	  country	  continues	  to	  import	  nearly	  all	  of	  its	  biofuels.	  Although	  major	  Danish	  companies	  such	  as	  Novozymes	  are	  involved	  in	  the	  research	  to	  commercialize	  and	  improve	  advanced	  biofuels	  derived	  from	  agriculture	  residues	  and	  wood,	  domestic	  production	  is	  very	  limited.	  If	  advanced	  biofuels	  are	  ever	  produced	  in	  significant	  volumes	  they	  will	  likely	  have	  to	  compete	  for	  biomass	  feedstocks	  with	  existing	  bioenergy.	  Domestic	  production	  of	  oil	  and	  gas	  means	  energy	  security	  is	  not	  pushing	  biomass	  to	  be	  allocated	  towards	  transportation	  fuels.	  As	  climate	  change	  mitigation	  is	  an	  important	  driver	  this	  reinforces	  the	  allocation	  of	  biomass	  to	  bioenergy	  based	  on	  the	  premise	  that	  greater	  GHG	  emissions	  can	  be	  avoided	  by	  directing	  biomass	  to	  bioenergy	  rather	  than	  biofuels.	  	  The	  Danish	  biofuel	  policy	  is	  structured	  in	  such	  a	  manner	  that	  renders	  it	  rather	  ineffective.	  National	  mandates	  for	  biofuel	  consumption	  lack	  punitive	  measures	  for	  non-­‐compliance	  and	  have	  been	  largely	  unsuccessful	  at	  improving	  the	  penetration	  of	  biofuels,	  only	  0.3%	  of	  total	  transportation	  fuel	  demand	  despite	  5.75%	  mandate.	  To	  meet	  their	  mandate	  of	  emissions	  free	  transportation	  by	  2050,	  the	  Danish	  government	  has	  strong	  	  54	  targets	  for	  penetration	  and	  promotion	  of	  electric	  vehicles	  that	  seem	  to	  dominate	  their	  renewable	  transportation	  portfolio	  beyond	  2020.	  	  	   Based	  on	  this	  analysis,	  biomass	  allocation	  in	  Denmark	  will	  continue	  to	  favour	  bioenergy	  rather	  than	  seeing	  it	  used	  as	  a	  feedstock	  to	  produce	  transportation	  biofuels.	  3.3	  Sweden	  Sweden	   is	   a	   global	   leader	   in	   renewable	   energy	   technologies	   as	   nearly	   half	   of	   the	  country’s	   energy	   mix	   is	   derived	   from	   renewable	   energy	   sources.	   Biomass	   is	   the	   most	  important	   source	   of	   renewable	   energy	   in	   Sweden,	   accounting	   for	   ~34%	   of	   the	   country’s	  total	  energy	  consumption	  (in	  2013),	  the	  highest	  proportion	  of	  any	  OECD	  country.	  Similar	  to	  Denmark,	   bioenergy	   is	   the	   predominant	   use	   of	   biomass,	   accounting	   for	   33%	  of	   Sweden’s	  final	  energy	  mix	  (0.46	  EJ	  in	  2013)	  (SVEBIO,	  2013).	  The	  strong	  forest	  sector	  and	  prevalence	  of	   DH	   and	   CHP	   infrastructure	   in	   Sweden	   have	   influenced	   the	   rapid	   development	   of	  bioenergy.	  It	  should	  also	  be	  noted	  that	  Sweden	  has	  been	  one	  of	  the	  most	  successful	  European	  countries	   in	   promoting	   the	   use	   of	   renewable	   transportation	   fuels.	   Biofuels	   accounted	   for	  9.8%	  of	  total	  transportation	  energy	  demand	  in	  2013	  (SEA,	  2014).	  Although	  bioethanol	  and	  biodiesel	  dominate	  the	  renewable	  fuels	  market,	  Sweden	  was	  the	  first	  country	  where	  biogas	  is	   commercially	   available	   for	   transport	   applications.	   Agriculture	   residues	   remain	   the	  principle	   biofuel	   feedstocks,	   but	   the	   prominence	   of	   the	   Swedish	   forest	   sector	   means	   the	  country	   is	   a	   leader	   in	   research	   and	   development	   of	   technologies	   to	   transform	   forest	  biomass	   into	   transportation	   fuels.	   Forest	   derived	   biofuels	   have	   been	   on	   the	  market	   since	  2011,	  and	  have	  an	  annual	  capacity	  of	  1	  million	  liters	  (Holmgren,	  2012).	  The	   goals	   of	   this	   exploratory	   research	   remain	   the	   same	   as	   those	   covered	   in	   the	  previous	   section.	   To	   better	   understand	   why	   biomass	   is	   the	   largest	   source	   of	   renewable	  energy,	  how	  the	  resource	  is	  being	  consumed,	  the	  status	  of	  biomass	  use	  in	  Sweden	  and	  what	  factors	   influence	   the	  allocation	  of	  biomass	   to	  bioenergy	  or	  biofuels.	  Although	  Sweden	   is	  a	  major	   biomass	   producer,	   because	   it	   uses	   a	   lot	   of	   biomass,	   demand	   surpasses	   domestic	  supply.	  Thus,	  unlike	  the	  US,	  and	  Brazil,	  but	  just	  like	  Denmark,	  Sweden	  is	  reliant	  on	  imported	  biomass	  to	  meet	  demand,	  especially	  for	  biofuels	  (SEA,	  2013).	  3.3.1	  The	  Swedish	  energy	  mix	  Sweden	  is	  known	  for	  their	  successful	  integration	  of	  renewable	  energy	  technologies	  in	   their	   energy	  mix.	   Renewables	   accounted	   for	   49%	  of	   total	   energy	   demand	   in	   2013,	   the	  	  55	  highest	  proportion	   in	   the	  developed	  world.	  Biomass	   is	   the	   largest	   single	  energy	  source	   in	  Sweden,	   surpassing	   even	   oil	   (34%	   of	   TEC	   or	   468.7	   PJ),	   and	   a	   unique	   feature	   among	   the	  countries	   examined	   (SVEBIO,	   2013).	   	  The	   emergence	   of	   biomass	   for	   energy,	   leading	  feedstocks	  and	  the	  conversion	  technologies	  used	  are	  discussed	  in	  detail	  in	  section	  3c.2.	  The	   absence	   of	   appreciable	   domestic	   fossil	   fuel	   resources	   in	   Sweden	   means	   the	  country	  relies	  on	  imports	  for	  most	  of	  it	  oil	  supply.	  During	  the	  1970s,	  oil	  accounted	  for	  77%	  of	  the	  country’s	  energy	  mix	  and,	  as	  in	  the	  other	  countries	  examined,	  Sweden	  reacted	  to	  the	  1973	   OPEC	   oil	   crisis	   by	   seeking	   to	   reduce	   oil	   dependence.	   However,	   unlike	   the	   other	  profiles,	  Sweden	  has	  continued	  to	  steadily	  reduce	  its	  reliance	  on	  fossil	  fuels	  since	  the	  crisis.	  Today,	  as	  well	  as	  biomass,	  Sweden	  uses	  hydropower	  (198.7	  PJ	  or	  14%),	  nuclear	  (208	  PJ	  or	  15%)	  and	  oil	  (369PJ	  or	  26%)	  for	  most	  of	  their	  energy	  demand	  (figure	  15).	  Together,	  all	  of	  the	   fossil	   fuels	   that	   are	   used	   including	   coal,	   oil	   and	   natural	   gas,	   only	   account	   for	   34%	   of	  Sweden’s	  final	  energy	  mix.	  This	  is	  the	  lowest	  of	  any	  IEA	  member	  country,	  and	  significantly	  lower	  than	  the	  IEA	  average	  of	  81%	  (IEA,	  2013e).	  	  Figure	  15:	  Final	  domestic	  energy	  consumption	   in	  Sweden	   in	  2013	  (adapted	   from	  SVEBIO,	  2013).	  	   Nuclear	  power	  has	  been	  a	  hotly	  debated	   topic	   in	  Sweden	  since	   the	  post	  WWII	  era	  when	   the	  country	  began	   to	  exploit	   its	  uranium	  reserves,	  which	  are	   some	  of	   the	   largest	   in	  Europe	   (Hultman	   et	   al	   2012).	   The	   first	   reactor	   came	   online	   in	   1971,	   with	   10	   more	  constructed	  over	  the	  following	  decade	  (SEA,	  2012;	  Hultman	  et	  al.	  2012).	  By	  the	  late	  1970s	  however	  a	  strong	  public	  voice	  against	  nuclear	  emerged,	  effectively	  curbing	  further	  Swedish	  development.	  Government	  officials	  called	  for	  a	  total	  phase	  out	  of	  nuclear	  by	  2010,	  although	  little	   action	   was	   instituted	   as	   nuclear	   was	   responsible	   for	   nearly	   50%	   of	   electricity	  generation	   in	   the	  1980s.	   Finally	   a	  moratorium	  on	  nuclear	   capacity	   expansion	  was	  passed	  34%	  14%	  2%	  15%	  26%	  5%	  3%	   1%	  Biomass	  Hydropower	  Wind	  Nuclear	  Oil	  Coal	  Natural	  Gas	  	  56	  and	  two	  reactors	  were	  closed.	  However,	  nuclear	  power	  remained	  a	  significant	  proportion	  of	  Sweden’s	   energy	   mix	   (Hultman	   et	   al.	   2012;	   SVEBIO,	   2013).	   In	   2010	   the	   moratorium	   on	  construction	   was	   lifted	   and	   in	   2011	   nuclear	   power	   generated	   over	   40%	   of	   Sweden’s	  electricity	  supply	  (IEA,	  2013b).	  3.3.1.1	  Renewable	  energy	  in	  Sweden	  Sweden’s	   renewable	   energy	   mix	   is	   comprised	   primarily	   of	   biomass	   (65%)	   and	  hydroelectricity	   (27%)	   while	   wind	   (4.5%)	   and	   heat	   pumps	   in	   district	   heating	   (3.5%)	  account	   for	   the	   remainder	   (SEA,	   2013).	  As	   stated	   above,	   renewable	   energy	   investment	   in	  Sweden	  arose	  predominantly	   from	  energy	  security	  concerns	  during	   the	  1970s.	  Since	   then	  reducing	  oil	  dependence	  became	  a	  cornerstone	  of	   the	  country’s	  energy	  policy	  agenda	  and	  has	   remained	   such	   since	   (Ericsson	   et	   al.	   2004;	   SEA,	   2013).	   In	   the	   years	   following	   the	   oil	  crisis,	   hydroelectricity	   capacity	   expanded	   rapidly	   and	   generation	  nearly	  doubled	  between	  1970	   and	   1985	   (0.14EJ	   to	   0.26EJ)	   (SEA,	   2013).	   By	   this	   point,	   Sweden	   had	   almost	   fully	  exploited	  their	  hydropower	  capacity	  and	  it	  has	  remained	  relatively	  stable	  over	  the	  last	  two	  decades.	   However,	   generation	   has	   fluctuated	   due	   to	   annual	   hydro-­‐flow	   variation.	   At	   this	  point	   the	  Swedish	  government	  realized	  additional	  energy	  alternatives	  must	  be	  considered	  (Hultman	  et	  al.	  2012;	  SEA,	  2013).	  A	  research	  program	  was	  launched	  in	  1975	  with	  the	  ultimate	  goal	  of	  finding	  durable,	  domestic	  energy	  sources	  to	  replace	  imported	  fossil	  fuels	  (Haegermark,	  2001).	  The	  program	  identified	  both	  nuclear	  power	  and	  biomass	  as	   the	   two	  strongest	  candidates	   for	   increasing	  oil	   independence	   in	   Sweden.	   At	   the	   time,	   skepticism	   surrounding	   nuclear	   power,	   and	   a	  pending	  moratorium	   on	   reactor	   construction	   put	   additional	   focus	   on	   biomass	   for	   energy	  generation	  (Haegermark,	  2001;	  Bjorheden,	  2006).	  Figure	  16	  outlines	  renewable	  energy	  development	  by	  source	  in	  Sweden	  from	  1990	  to	   2011,	   the	  date	  was	   obtained	   from	   the	   Swedish	  Energy	  Agency	   (2013).	   Their	   reporting	  methods	  for	  renewable	  sources	  differ	  slightly	  from	  the	  other	  organizations	  employed	  in	  this	  thesis,	   hence	   the	  different	   categorization.	  Despite	   the	  different	   categories,	   it	   is	   clear	   from	  figure	   16	   that	   biomass	   is	   the	   largest	   source	   of	   renewable	   energy	   in	   Sweden,	   and	   has	  experienced	  the	  fastest	  growth	  in	  the	  past	  two	  decades.	  	  	  57	  	  Figure	  16:	  Renewable	  energy	  development	  by	  source	  in	  Sweden	  from	  1990-­‐2011	  (original	  figure,	   data	   source	   Swedish	   Energy	   Agency,	   2012).	   Hydropower	   and	   wind	   were	   not	  reported	  separately	  until	  1996.	  3.3.2	  Swedish	  biomass	  In	  Sweden,	  biomass	  is	  the	  predominant	  energy	  source,	  accounting	  for	  ~34%	  of	  total	  energy	  demand	   in	  2013	  (SVEBIO,	  2013).	   	  Forest-­‐derived	  biomass	   is	   the	  principle	  biomass	  feedstock	   although	  peat,	   cereal	   grains,	  municipal	   solid	  waste	   and	   rapeseed	   oil	   are	  widely	  employed	  for	  biomass-­‐based	  energy	  products.	  How	  these	  feedstocks	  are	  allocated	  to	  biofuel	  or	  bioenergy	  generation	  is	  explored	  in	  further	  detail	  in	  each	  of	  the	  subsequent	  sections.	  3.3.2.1	  Biomass	  for	  heat	  and	  power	  Combustion	   of	   biomass	   for	   heat	   and	   power	   generation	   accounts	   for	   the	   bulk	   of	  biomass	   based	   energy	   consumed	   in	   Sweden.	   Forest	   biomass,	   including	   black	   liquor,	  supplies	  upwards	  of	   90%	  of	   the	  bioenergy	   feedstock,	  while	  peat	   and	  agriculture	   residues	  make	   up	   the	   balance	   (Ericsson	   et	   al.	   2004).	   Similar	   to	   Denmark,	   bioenergy	   generation	   is	  integrated	  within	  industrial	  operations,	   in	  stand-­‐alone	  heat,	  power	  or	  CHP	  facilities	  and	  in	  residential	  stoves	  and	  boilers.	  District	   heating	   systems	   have	   been	   enormously	   influential	   in	   the	   advancement	   of	  bioenergy	   in	  Sweden,	  providing	  93%	  and	  83%	  of	  heating	   services	   in	  apartment	  buildings	  and	  commercial	  spaces	  respectively	  (SEA,	  2013).	  In	  2010	  biomass	  contributed	  ~0.17	  EJ	  to	  district	   heating	   production,	   compared	   to	   only	   ~0.03	   EJ	   for	   electricity	   production.	   Unlike	  Denmark,	   Sweden’s	   production	   of	   electricity	   from	   CHP	   has	   been	   underutilized,	   primarily	  because	  of	  competing,	   low-­‐cost	  alternatives	  such	  as	  nuclear	  and	  hydropower	  (SEA,	  2013).	  In	  2003	  the	  Swedish	  government	  introduced	  Green	  Electricity	  Certificates	  (GEC)	  to	  support	  0.00	  100.00	  200.00	  300.00	  400.00	  500.00	  600.00	  1990	   1993	   1996	   1999	   2002	   2005	   2008	  Petajoules	   Biomass	  Hydro	  Wind	  District	  Heating	  Co-­‐Gen.	  	  58	  the	  production	  of	  renewable	  energy	  (Westholm	  and	  Lindahl,	  2012).	  The	  implementation	  of	  GEC	  has	  helped	  to	  spur	  a	  transition	  from	  district	  heating	  to	  CHP	  as	  only	  electricity	  qualifies	  for	   GECs.	   By	   2015	   installed	   CHP	   capacity	   in	   Sweden	   is	   expected	   to	   reach	   1250	  MWe,	   or	  ~15%	   of	   electricity	   generation	   (Salomón	   et	   al.	   2011).	   The	   role	   of	   GECs	   as	   a	   driver	   for	  biomass	  allocation	  will	  be	  discussed	   in	   further	  detail	   in	  a	   later	   section	  of	   this	   exploratory	  research.	  	  	  Despite	   prominence	   of	   Swedish	   forest	   bioenergy	   in	   residential	   and	   commercial	  applications,	  biomass	  combustion	  in	  industrial	  facilities	  generates	  the	  majority,	  50%,	  of	  the	  country’s	   bioenergy.	   In	   2011,	   approximately	   42%	   (~0.22	   EJ)	   of	   total	   industrial	   energy	  demand	   originated	   from	   biomass	   including	   black	   liquor	   (0.14	   EJ),	   other	   pulp	   residues	  (~0.04	   EJ)	   and	   sawmill	   residues	   (~0.01	   EJ)	   (SEA,	   2013).	   The	   pulp	   and	   paper	   sector	  accounts	   for	   90%	   of	   industrial	   bioenergy	   (~0.18	   EJ	   excluding	   biomass	   based	   electricity	  from	   the	   grid)	   (SEA,	   2013).	   These	   trends	   are	   easily	   observed	   in	   figure	   17	   that	   displays	  bioenergy	  generation	  by	  source	  within	  industry	  from	  1990-­‐2010.	  	  Figure	   17:	   Industrial	   bioenergy	   generation	   in	   Sweden	   by	   source	   in	   PJ	   from	   1990-­‐2010	  (original	   figure,	  data	   source	  SEA,	  2013).	  The	   secondary	  y-­‐axis	  on	   the	   right	   represents	   the	  energy	  generation	  by	  black	  liquor	  in	  pulp	  industry	  only.	  	  3.3.2.2	  Transportation	  biofuels	  Sweden	  has	  one	  of	  the	  highest	  proportions	  of	  biofuels	  in	  their	  transportation	  energy	  mix	  of	  any	  country	  in	  Europe,	  9.7%	  of	  total	  transportation	  fuel	  demand	  in	  2013	  (SEA,	  2014).	  The	   Swedish	   biofuel	   market	   is	   dominated	   by	   bioethanol,	   biodiesel	   and	   biogas,	   2011	  0	  20	  40	  60	  80	  100	  120	  140	  160	  0	  5	  10	  15	  20	  25	  30	  35	  40	  1990	   1993	   1996	   1999	   2002	   2005	   2008	  Pulp	  Industry,	  black	  liquor	  generation	  in	  petajoules	  Petajoules	  Pulp	  industry,	  other	  byproducts	  Sawmill	  industry	  byproducts	  Biomass/peat	  	  for	  electricity	  production	  Other	  sectors	  Pulp	  industry,	  black	  liquors	  	  59	  consumption	   volumes	   of	   which	  were	   8.9	   PJ,	   11.3	   PJ	   and	   2.6	   PJ	   respectively	   (SEA,	   2013).	  Figure	  18	  illustrates	  consumption	  volumes	  of	  these	  three	  transportation	  biofuels	  in	  Sweden	  since	  2000.	  Since	  2007	  the	  use	  of	  bioethanol	  has	  stagnated	  while	  consumption	  of	  biogas	  and	  biodiesel	  have	  increased	  rapidly.	  Biodiesel	  is	  now	  the	  predominant	  transportation	  biofuel	  in	  Sweden,	  accounting	  for	  49%	  of	  biobased	  motor	  fuels	  consumed	  in	  2011	  (SEA,	  2013).	  	   	  Figure	   18:	   Consumption	   of	   transportation	   biofuels	   in	   Sweden	   from	   2000-­‐2011	   (original	  figure,	  data	  source	  SEA,	  2013).	  	  	   Ethanol	   was	   the	   first	   biofuel	   to	   make	   a	   significant	   contribution	   to	   the	   Swedish	  transportation	   mix.	   Bioethanol	   is	   consumed	   blended	   with	   gasoline	   in	   either	   a	   low	   (5%	  ethanol,	   95%	   gasoline)	   or	   high	   (85%	   ethanol,	   15%	   gasoline	   or	   E85)	   blend.	   Half	   of	   total	  consumed	  ethanol	   volume	   is	   consumed	  as	  E85	  while	   the	   other	  half	   is	   consumed	  as	   a	   5%	  blend	  (SEA,	  2013;	  Holmgren,	  2012).	  	  Historically,	  the	  majority	  of	  bioethanol	  in	  Sweden	  has	  been	   imported	  (nearly	  90%	  in	  2009),	  predominantly	   from	  Brazil.	  However,	  more	  recently	  bioethanol	   imports	   have	   declined	   as	   domestic	   production	   has	   increased,	   although	   some	  Swedish	   producers	   rely	   on	   imported	   raw	   bioethanol	   feedstocks	   (SEA,	   2012).	   Two	  major	  facilities	   produce	   bioethanol	   in	   Sweden;	   Agrotanol’s	   210	   ML/yr	   cereal	   grain	   facility	   and	  SEKAB’s	   pilot	   lignocellulosic	   facility	   producing	   11	   ML/yr	   (Holmgren,	   2012).	   Currently,	  bioethanol	   that	   is	   imported	   typically	  originates	   from	  other	  EU	  states	  as	  opposed	   to	  Brazil	  (Holmgren,	  2012;	  SEA,	  2012).	  Biodiesel	   in	   Sweden	   is	   comprised	   of	   both	   fatty	   acid	   methyl	   esters	   (FAME)	   and	  hydrogenated	   vegetable	   oil	   (HVO).	   FAME	   is	   the	   predominant	   biodiesel	   and	   5%	   blends	  0	  2	  4	  6	  8	  10	  12	  2000	   2002	   2004	   2006	   2008	   2010	  Petajoules	  Ethanol	  Biogas	  Biodiesel	  	  60	  account	  for	  80%	  of	  biodiesel	  consumed	  within	  Sweden.	  Unlike	  FAME,	  HVO	  can	  be	  blended	  up	   to	   100%,	   a	   property	   that	   has	   helped	   HVO	   to	   quickly	   penetrate	   the	   Swedish	   biodiesel	  market.	   HVO	   was	   only	   introduced	   in	   2011	   but	   it	   accounted	   for	   20%	   of	   biodiesel	  consumption	  that	  year	  (Holmgren,	  2012).	  Unlike	  bioethanol	  that	  relies	  on	  imports	  to	  satisfy	  demand,	   60%	   of	   biodiesel	   consumed	   in	   Sweden	   in	   2011	   was	   domestically	   produced;	  information	  on	  the	  origins	  of	  the	  feedstock	  is	  currently	  unavailable	  (SEA,	  2011).	  Swedish	  biogas	   is	   produced	  via	   anaerobic	  digestion	  of	   food	  waste,	   sewage	   sludge,	  manure	  energy	  crops	  and	  other	  organic	  waste	  in	  230	  units	  located	  around	  the	  country	  (SEA,	  2011).	   Biogas	   is	   primarily	   consumed	   locally,	   often	   used	   for	   municipal	   transit	   fleets	   in	  regions	   with	   digester	   units,	   however	   upgrading	   is	   required	   before	   the	   biogas	   can	   be	  employed	   as	   a	   transportation	   fuel.	   Current	   biogas	   supply	   is	   often	   insufficient	   to	   meet	  demand	   and	   natural	   gas	   must	   be	   substituted.	   Gasification	   of	   woody	   biomass	   is	   being	  explored	  to	   increase	  the	  domestic	  supply	  of	  biogas.	  Construction	  of	  a	  demonstration	  scale	  facility	   at	   Göteburg	   was	   scheduled	   to	   be	   producing	   20	   MWgas	   via	   gasfication	   of	   wood	  pellets	  or	  chips	  in	  2013	  (Holmgren,	  2012;	  Karatzos	  et	  al.	  2014).	  Biogas	  from	  the	  facility	   is	  fed	  into	  a	  specialized	  grid	  used	  to	  service	  the	  local	  fleet	  of	  40,000	  gas-­‐powered	  automobiles	  (Karatazos	  et	  al.	  2014).	  Although	   not	   yet	   produced	   at	   the	   commercial	   scale,	   biojet	   fuels	   are	   experiencing	  increasing	   attention	   and	   growth	   in	   Sweden	   as	   integration	  of	   biojet	   production	  within	   the	  pulp	   and	  paper	   industry	   is	   possible.	   Since	   2007,	   Sun	  Pine’s	   facility	   in	   Piteå	   has	   produced	  biojet	  using	  woody	  biomass	  derived	  tall	  oil,	  current	  production	  is	  100	  ML/yr	  (Karatzos,	  et	  al.	  2014).	  In	  June	  of	  2014,	  biofuel	  powered	  flights	  began	  operation	  out	  of	  the	  Karlstad	  Airport	  on	  select	  flights,	  annual	  consumption	  volumes	  are	  not	  yet	  available.	  The	  airport,	  with	  their	  partner	  Statoil,	  has	  installed	  a	  permanent	  biojet	  storage	  facility,	  offering	  50%	  bio-­‐jet	  blends	  for	  sale	  to	  all	  aircraft	  departing	  from	  Karlstad	  by	  2015	  (Lane,	  2014).	  3.3.3	  Drivers	  for	  biomass	  allocation	  in	  Sweden	  Forest	   derived	   biomass	   feedstocks	   supply	   nearly	   all	   of	   Sweden’s	   biomass	   based	  energy	  demand.	  The	  use	  of	  woody	  biomass	   for	  both	  bioenergy	  and	   transportation	  biofuel	  production	  is	  increasing	  within	  the	  country	  as	  domestic	  production	  of	  forest-­‐based	  biogas,	  biodiesel	   and	   biojet	   are	   on	   the	   rise	   (Holmgren,	   et	   al.	   2012;	   Karatzos	   et	   al.	   2014).	   This	  scenario	  positions	  Sweden	  as	  an	  ideal	  candidate	  for	  biomass	  competition.	  However,	  despite	  these	  increases,	  competition	  for	  biomass	  between	  bioenergy	  and	  biofuels	  is	  largely	  absent,	  as	   advanced	   biofuel	   production	   is	   not	   yet	   at	   commercial	   scale	   and	   current	   biofuels	   are	  	  61	  largely	  imported.	  Imports	  are	  also	  relied	  upon	  to	  satisfy	  demand	  of	  bioenergy	  demand	  (SEA,	  2013).	   The	   following	   sections	   assess	   the	   importance	   of	   individual	   drivers	   in	   biomass	  allocation	  decisions	  in	  Sweden	  in	  an	  attempt	  to	  discern	  why	  biomass	  is	  largely	  directed	  to	  bioenergy	  rather	  than	  biofuels.	  	  3.3.3.1	  Energy	  security	  and	  the	  emergence	  of	  biomass-­‐based	  energy	  Swedish	   development	   of	   modern	   renewable	   energy	   was	   initially	   sparked	   in	  response	  to	  the	  energy	  security	  threats	  posed	  by	  the	  1973	  OPEC	  oil	  crisis.	   Imported	  fossil	  fuels	   constituted	   77%	   of	   Swedish	   energy	   demand	   prior	   to	   the	   crisis,	   leaving	   the	   country	  susceptible	  to	  shortages	  in	  energy	  supply	  (Ericsson	  et	  al.	  2004).	  Although	  two	  technological	  pathways	   emerged	   to	   aid	   Sweden	   in	   improving	   domestic	   energy	   sources,	   nuclear	   and	  biomass,	  biomass	  was	  considered	  favorable	  due	  to	  emerging	  anti-­‐nuclear	  sediments	  within	  the	  country.	  	  Research	  to	  develop	  domestic	  energy	  sources	  was	  launched	  in	  1975	  and	  became	  the	  second	  largest	  program	  in	  Sweden	  with	  the	  main	  aim	  to	  develop	  durable	  domestic	  energy	  sources	   (Bjorheden,	   2006).	   In	   the	   1980s	   and	   90s,	   despite	   a	   fall	   in	   oil	   prices	   and	  consequently	   declining	   salience	   of	   energy	   security	   concerns,	   bioenergy	   continued	   to	  experience	   strong	   growth	   in	   Sweden.	   Persistent	   growth	   of	   bioenergy	   in	   Sweden,	   despite	  declining	   salience	   of	   energy	   security,	   suggests	   this	   driver	   alone	   is	   insufficient	   to	   fully	  explain	  expanding	  bioenergy	  generation.	  	  3.3.3.1	  Energy	  related	  climate	  change	  concerns	  and	  biomass	  allocation	  Concerns	   of	   energy	   related	   carbon	   emissions	   and	   their	   negative	   impact	   on	   the	  climate	  gained	  salience	  in	  the	  late	  1970s	  in	  Sweden	  (Bjorheden,	  2006;	  Hultman	  et	  al.	  2012).	  Local	   environmental	   initiatives	   in	   Växjö	   resulted	   in	   the	   region’s	   district	   heating	   system	  transitioning	   to	  wood	   from	  oil	   (SEA,	   2003).	   The	   ease	  with	  which	   this	   transition	   could	   be	  performed	   resulted	   in	   a	   widespread	   move	   to	   wood	   fuels	   for	   most	   of	   Sweden’s	   district	  heating	   infrastructure.	  During	   the	  early	  years	  of	   the	  environmental	  movement	   in	  Sweden,	  biomass	  experienced	  favourable	  allocation	  to	  bioenergy,	  mainly	  because	  combustion	  was	  a	  suitable	   and	   affordable	  method	   of	   recovering	   the	   energy	   of	   the	   available	   forest	   feedstock	  and	   commercial	   technologies	   were	   unavailable	   for	   converting	   woody	   biomass	   to	   liquid	  biofuels.	   As	   a	   result,	   bioenergy	   was	   the	   focus	   of	   Swedish	   biomass-­‐based	   energy	  development	   into	   the	   early	   2000s,	   at	  which	   point	   liquid	   biofuels	   began	   to	   emerge	  within	  Sweden	  (SEA,	  2003;	  SEA,	  2011;	  Hultman	  et	  al.	  2012).	  	  62	  In	   1999,	   Sweden’s	   energy	   mix	   was	   38%	   renewable,	   however	   these	   energy	  alternatives	  were	  restricted	  to	  providing	  green	  heat	  and	  power	  as	  renewable	  fuels	  had	  yet	  to	   penetrate	   into	   the	   transportation	   market	   in	   the	   country.	   	  Significant	   transitions	   had	  occurred	   since	   the	   1970s	   in	   Sweden	   to	   improve	   energy	   efficiency	   in	   an	   attempt	   to	   curb	  consumption	   in	   stationary	   energy,	   while	   energy	   consumption	   in	   transportation	   had	  experienced	  rapid	  expansion.	  From	  1970	  to	  1999,	  total	  energy	  use	   in	  transportation	  grew	  by	  nearly	  50%	  from~	  0.25	  EJ	  to	  ~0.38	  EJ	  (SEA,	  2013),	  all	  of	  which	  was	  fossil	  fuel	  based.	  This	  heavy	  reliance	  on	  fossil	   fuels,	  and	  the	  related	  poor	  emissions	  profile	  meant	  transportation	  emissions	  became	  a	  target	  for	  climate	  change	  mitigation.	  Despite	  their	  lower	  GHG	  emissions	  reduction	  potential	  when	  compared	   to	  bioenergy,	  biofuels	  were	  seen	  as	   the	  most	  suitable	  alternative	   to	   petroleum	   fuels	   and	   capable	   of	   helping	   Sweden	   achieve	   desired	   emissions	  reductions	  within	  the	  transportation	  sector	  (Silveria,	  2005;	  IEA,	  2008;	  IEA,	  2013c).	  In	   2000,	   biofuels	  were	   introduced	   in	   the	   Swedish	   transportation	   sector,	   although	  these	   biofuels	   were	   derived	   from	   predominantly	   non-­‐forest	   feedstocks	   and	   thus	   did	   not	  compete	  with	  bioenergy	  for	  woody	  biomass	  (Holmgren,	  2012;	  SEA,	  2012).	  Historically,	  the	  large	   reliance	   on	   imported	   biofuels	   in	   Sweden	   (90%	   of	   all	   biofuels	   in	   2009)	  meant	   little	  competition	   occurred	   for	   the	   domestic	   feedstock	   during	   early	   biofuels	   use.	   Since	   2004,	  cellulosic	  ethanol	  from	  lignocellulosic	  material	  (mostly	  pulp	  and	  paper	  residues)	  have	  been	  produced	   in	   Sweden	   at	   the	   SEKAB’s	   Örnsköldsvik	   pilot	   facility	   while	   biogas	   from	   forest	  residues	   has	   been	   manufactured	   in	   Götenborg	   at	   demonstration	   scale	   since	   2013	  (Holmgren,	   2012;	  Karatzos	   et	   al.	   2014).	   Production	  of	   these	   cellulosic	  biofuels	   in	   Sweden	  creates	  the	  potential	  for	  competition	  between	  bioenergy	  and	  biofuels	  for	  forest	  feedstocks	  but	   decisions	   for	   forest	   biomass	   allocation	   to	   either	   biofuels	   or	   bioenergy	   since	   the	  production	   of	   cellulosic	   biofuels	   began	   in	   the	   country	   is	   subject	   to	   more	   than	   energy	  security	  and	  climate	  change	  concerns.	  	  3.3.3.2	  Prevailing	  economic	  interests	  	  Forest	  biomass	   is	   the	   largest	   single	  energy	   feedstock	   in	  Sweden,	  which	  means	   the	  forest	   sector	  has	   a	   vested	   interest	   in	  decisions	   regarding	  biomass	   allocation	   to	  bioenergy	  and	  biofuels.	  The	   influences	  of	   the	   forest	   sector	   in	   the	  development	  of	   the	  bioenergy,	  and	  later	  the	  biofuel	  sector	  is	  imperative	  to	  understanding	  Swedish	  biomass	  allocation	  decisions.	  In	   1974	   the	   Swedish	   forest	   sector	   was	   anticipating	   a	   shortage	   of	   pulpwood	   and	  launched	   a	   research	   program	   aimed	   at	   increasing	   the	   utilization	   of	   small	   diameter	  wood	  and	  stumps	  to	  cope	  with	  the	  impending	  shortage	  (Swedish	  Royal	  College	  of	  Forestry,	  1977).	  	  63	  When	   research	   interest	   in	   bioenergy	   began	   in	   1975,	   focus	   of	   the	  Whole	   Tree	   Utilization	  Program	  shifted	  to	  include	  how	  bioenergy	  could	  be	  integrated	  within	  the	  forest	  sector.	  The	  early	  years	  of	  bioenergy	  development	  in	  Sweden	  were	  very	  calculated	  due	  to	  the	  fears	  of	  an	  impending	   fibre	   shortage.	   This	   concern,	   combined	  with	   the	   low	   value	   of	  wood	   fuels,	  was	  sufficient	  to	  prevent	  specific	  harvesting	  of	  trees	  for	  energy	  or	  the	  widespread	  utilization	  of	  forest	  harvest	  residues	  for	  energy	  generation.	  Alternatively,	  process	  residues	  from	  sawmills	  and	   pulping	   facilities	   were	   the	   focus	   of	   forest	   and	   wood	   energy	   development	   research	  (Ericsson	  et	  al.	  2004).	  Forest	   ownership	   in	   Sweden	   is	   comprised	   predominantly	   of	   small	   private	   forest	  owners,	  who	  own	  half	  of	  the	  forests	  in	  Sweden,	  while	  large	  forest	  companies,	  the	  state	  and	  public	  organizations	  own	  the	  remaining	  half	  (Swedish	  Wood,	  2012).	  The	  high	  proportion	  of	  private	  owners	  has	  been	  a	  key	   feature	  of	   success	   for	  bioenergy	  and	  biofuel	   generation	   in	  Sweden,	   as	   private	   owners	   react	   differently	   to	   drivers	   than	   large	   forest	   companies.	   The	  importance	   of	   private	   forest	   owners	   becomes	   apparent	   later	   in	   this	   exploratory	   research	  when	   discussing	   the	   restructuring	   or	   the	   Swedish	   energy	   market	   and	   the	   influence	   of	  government	  policies	  supporting	  bioenergy	  and	  biofuel	  production.	  Sweden’s	   decentralized	   system	   of	   government	   means	   local	   authorities	   have	  significant	  autonomy	  in	  taxations	  powers	  and	  work	  closely	  with	  local	  businesses	  to	  ensure	  their	   policies	   help	   foster	   strong	   economic	   performance	   of	   companies	   in	   their	   jurisdiction	  (Ericcson	  et	  al.	  2004;	  Hultman	  et	  al.	  2012).	  Municipalities	  realized,	  by	  teaming	  up	  with	  local	  forest	   industries	   and	   owners	   to	   improve	   the	   penetration	   of	   bioenergy	   and	   biofuels	   from	  local	   feedstocks	   they	   would	   induce	   job	   creation	   and	   increase	   revenue	   in	   the	   region.	  Strategic	  cooperatives	  formed	  between	  energy	  service	  providers,	  forest	  sector	  associations,	  city	  planners	  and	  the	  transportation	  sector	  facilitating	  easy	  transfer	  of	  knowledge	  between	  groups	   thus	   improving	   the	   ability	   for	   bioenergy	   and	   biofuels	   to	   enter	   the	   energy	  market	  (Hultman	  et	  al.	  2012;	  Westholm	  and	  Lindahl,	  2012).	  	  	  3.3.3.3	  Cost	  competitiveness	  of	  Swedish	  bioenergy	  and	  biofuels	  This	   section	   examines	   how	   technologies	   and	   policies	   for	   bioenergy/biofuels	  influence	   cost	   competitiveness	   and	   ultimately	   biomass	   allocation	   decisions	   in	   Sweden.	   I	  suggest	  policies	  (predominantly	  taxes),	  increase	  the	  costs	  of	  traditional,	  fossil-­‐based,	  energy	  technologies,	   and	   thus	   influence	   biomass	   allocation	   decisions.	   The	   presence	   of	   district	  heating	  infrastructure	  and	  a	  strong	  national	  forest	  industry	  causes	  competition	  for	  biomass	  between	   these	   two	   energy	   applications.	   However,	   the	   innovative	   capacity	   of	   the	   Swedish	  	  64	  forest	   sector	   has	   contributed	   to	   technological	   developments	   for	   biomass-­‐based	   energy	  production	  and	  efficiency	  gains.	  	  	  3.3.3.3.1	  Technological	  advancements	  in	  biomass-­‐based	  energy	  In	  Sweden,	  during	  the	  1970s	  when	  the	  notion	  of	  using	  biomass	  for	  energy	  emerged,	  forest	  feedstocks	  were	  identified	  the	  most	  suitable	  and	  readily	  available	  feedstock.	  District	  heating	   infrastructure	   existed	   in	   Sweden,	   but	   at	   the	   time	   of	   the	   oil	   crisis,	   these	   facilities	  relied	  predominantly	  on	  fossil	   fuels.	  Between	  1975	  and	  1980	  over	  600	  large-­‐scale	  heating	  systems	  were	  converted	  to	  biomass	  feedstocks	  as	  the	  spike	  in	  oil	  prices	  made	  combustion	  of	   biomass	   for	   heat	   economically	   attractive.	   From	   1980	   to	   2008	   heating	   and	   cooling	   in	  Sweden	  shifted	  from	  a	  system	  based	  on	  90%	  fossil	  fuels	  to	  one	  based	  50%	  on	  biomass	  and	  only	  10%	  on	   fossil	   fuels,	   the	   remaining	  40%	  of	  heat	  demand	   is	   supplied	  by	  garbage,	  peat	  and	   recycled	   heat	   from	   industrial	   processes	   (SEA,	   2012).	   During	   this	   time	   period,	  conversion	   of	   woody	   biomass	   to	   transportation	   biofuels	   was	   not	   cost	   competitive	   with	  fossil	   fuels	  and	   thus	  biomass	  was	  allocated	   to	  combustion	   for	  heat,	  and	  power	  generation	  (SEA,	  2012).	  As	  mentioned	  in	  section	  5.2.2,	   industrial	  applications	  account	  for	  50%	  of	  Sweden’s	  modern	   bioenergy	   production,	   concentrated	   predominantly	   within	   the	   pulp	   and	   paper	  sector	   (90%	   of	   industrial	   bioenergy	   generation).	   Energy	   recovery	   technologies	   were	  introduced	  in	  the	  late	  1930s	  to	  early	  1940s	  with	  the	  industrial	  acceptance	  of	  the	  Kraft	  pulp	  cooking	  process	   (Sixta,	  2006).	   Inclusion	  of	  energy	  recovery	  systems	  as	  an	   integral	   step	  of	  chemical	   pulping	   has	   made	   heat	   and	   power	   generated	   in	   this	   manner	   highly	   cost	  competitive	  with	  fossil	  fuels.	  An	  important	  factor	  of	  the	  cost	  competitiveness	  of	  the	  bioenergy	  generated	  by	  pulp	  and	   paper	   facilities	   is	   the	   fact	   that	   the	   biomass	   feedstock	   is	   considered	   waste	   and	   has	  historically	  had	  limited	  value.	  However	  traditional	  applications	  of	  forest	  residues	  and	  pulp	  waste	   are	   changing.	   Energy	   recovery	   technologies	   in	   chemical	   pulping	   have	   remained	  relatively	  unchanged	  since	  their	  original	  conception	  and	  provide	  a	  unique	  opportunity	   for	  innovation	   to	   create	   new	   higher	   value	   products,	   chemicals	   and	   biofuels	   from	   the	   waste	  fractions	   of	   forestry	   operations,	   a	   concept	   known	   as	   the	   biorefinery	   (Sixta,	   2006).	   As	   the	  number	   of	   high-­‐value	   products	   generated	   from	   pulp	   waste	   streams	   increases,	   biomass	  available	  for	  bioenergy	  generation	  may	  decline	  as	  more	  biomass	  is	  directed	  to	  these	  higher	  valued	  products.	  Although	   conversion	   technologies	   were	   commercially	   available	   to	   convert	   sugar,	  	  65	  starch	  and	  oil	  rich	  crops	  to	  transportation	  grade	  fuels	  during	  the	  1970s,	  transformation	  of	  lignocellulosic	  biomass	   to	   liquid	   fuels	  was	  not	  possible.	   In	   Sweden	   this	   effectively	   limited	  biomass	   allocation	   to	   bioenergy	   generation	   until	   the	   2004	   when	   SEKAB’s	   Örnsköldsvik	  demonstration	  facility	  began	  cellulosic	  ethanol	  production,	  yet	  the	  feedstock	  demands	  of	  a	  demonstration	  scale	  facility	  will	  hardly	  make	  an	  impact	  on	  the	  volumes	  of	  wood	  directed	  to	  bioenergy.	   Since	   the	   opening	   of	   this	   facility,	   several	   other	   breakthroughs	   have	   made	  conversion	   of	   woody	   biomass	   to	   liquid	   and	   gaseous	   transportation	   fuels	   possible	   from	   a	  variety	   of	   technologies,	   as	   covered	   in	   section	   1.2.1.	   Recall	   crude	   tall	   oil	   is	   produced	   from	  pulping	   black	   liquor,	   and	   subsequently	   hydrogenated	   into	   HEFA,	   a	   diesel	   like	   fuel	   in	  SunPine’s	   facility	   in	   Piteå,	   producing	   100ML	   annually	   since	   2007	   (Holmgren,	   2012;	  Karatzos	  et	  al.	  2014).	  	  More	  recently,	  biogas	  production	  via	  gasification	  of	  woody	  biomass	  has	  occurred	  at	  the	   demonstration	   scale	   in	   Göteburg.	   The	   emergence	   of	   these	   conversion	   technologies,	  capable	   of	   transforming	   forest	   biomass	   to	   transportation	   fuels,	   is	   unlikely	   to	   sway	   the	  allocation	   of	   biomass	   away	   from	   bioenergy	   in	   Sweden,	   however	   it	   has	   caused	   a	  restructuring	   of	   the	   Swedish	   bioenergy	   and	   biofuel	   markets.	   Most	   of	   the	   new	   facilities	  discussed	  rely	  on	  the	  integration	  of	  biofuel	  and	  biogas	  production	  within	  the	  pulp	  and	  paper	  sector,	   and	   greater	   incorporation	   is	   anticipated	   as	   these	   technologies	   reach	  commercialization.	   The	   quantity	   of	   biomass	   waste	   suitable	   for	   the	   production	   of	   these	  biofuels	   is	   comparatively	   small	  when	   considering	   the	   volumes	   of	   biomass	   combusted	   for	  bioenergy	  generation,	  for	  example	  tall	  oil	  is	  ~2%	  of	  wood	  feedstocks,	  effectively	  limiting	  the	  allocation	  of	  biomass	  to	  biofuel	  production	  (Karatzos	  et	  al.	  2014).	  	  3.3.3.3.2	  Policies	  affecting	  cost	  competitiveness	  of	  biofuels	  and	  bioenergy	  Sweden,	   as	   an	   EU	   member	   state,	   is	   bound	   by	   European	   legislated	   climate	   and	  renewable	   energy	   mandates,	   the	   country’s	   commitments	   under	   the	   Kyoto	   Protocol	   and	  domestic	  government	  policies.	  Swedish	  government	  targets	  are	  the	  focus	  of	  this	  section	  as	  in	   most	   profiles	   nationally	   mandated	   requirements	   exceed	   those	   of	   the	   European	  Commission,	  as	  outlined	  in	  the	  Swedish	  Renewable	  Energy	  Action	  Plan	  (2010).	  How	  these	  policies	   improve	   the	   cost	   competitiveness	   of	   bioenergy	   and	   biofuels	   is	   crucial	   to	  understanding	  biomass	  allocation	  decisions	  in	  Sweden.	  In	  1991,	  a	  multi-­‐party	  agreement	  was	  reached,	  embracing	  sustainable	  development	  as	  the	  keystone	  feature	  of	  Swedish	  energy	  policy.	  That	  same	  year	  a	  general	  carbon	  tax	  was	  applied	   at	   a	   rate	  of	   $35	  US/t	  CO2	   and	   it	   has	  been	   incrementally	   increased	   since,	   reaching	  	  66	  ~$148	  US/t	  CO2	  for	  households	  and	  services	  and	  ~44	  US/t	  CO2	  for	  industry	  (Ministry	  of	  the	  Environment	  Sweden,	  2011).	  In	  addition	  to	  the	  carbon	  tax,	  Sweden	  also	  has	  an	  energy	  tax	  levied	  on	  fuels	  based	  on	  their	  energy	  content.	  The	  carbon	  and	  energy	  taxes	  are	  applied	  to	  all	  energy	   generated	   and	   transportation	   fuels,	  making	   fossil	   fuels	  more	   expensive	   relative	   to	  bioenergy	  and	  biofuels.	  Within	  transportation,	  the	  Swedish	  government	  has	  a	  mandate	  that	  transportation	  will	  be	   independent	  of	   fossil	   fuel	  by	  2030	  (IEA,	  2013b).	   In	  an	  effort	  to	  meet	  this	  mandate,	  tax	  exemptions	  exist	  for	  biofuels,	  where	  by	  the	  energy	  and	  carbon	  taxes	  are	  not	  applied	  to	  bioethanol,	  biogas	  and	  biodiesel	  (SEA,	  2013).	  Energy	  tax	  exemptions	  also	  exist	   for	  natural	  gas	  employed	  as	  a	  transportation	  fuel,	  however	  a	  carbon	  tax	  is	  still	  applicable	  (IEA,	  2013c).	  In	   a	   2011	   report	   the	   Swedish	   National	   Audit	   Office	   praised	   the	   importance	   of	   the	   tax	  exemptions	   in	   the	  development	  of	  a	  biofuels	  market	   in	  Sweden,	  as	   there	  are	  currently	  no	  blending	   obligations	   currently	   in	   place.	  However	   the	   audit	   found	   the	   tax	   exemption	   is	   an	  expensive	  way	  to	  reduce	  GHG	  emissions	  relative	  to	  other	  policy	  options	  (SNAO,	  2011;	  IEA,	  2013c).	   In	   2014	   the	   government	   has	   been	   considering	   the	   introduction	   of	   a	   quota-­‐based	  system	  for	  low-­‐blend	  fuels	  requiring	  a	  10%	  ethanol	  blend	  in	  gasoline	  and	  7%	  FAME	  blend	  in	  diesel.	   In	  conjunction	  an	  energy	   tax	  would	  be	   introduced	  on	   low-­‐blends	  but	   the	  energy	  and	  carbon	  tax	  exemptions	  will	  remain	  for	  high-­‐blend	  fuels	  such	  as	  E85	  (Holmgren,	  2012;	  IEA,	  2013c).	  This	  policy	  would	  increase	  the	  pump	  price	  of	  fuels	  and	  it	  is	  difficult	  to	  discern	  if	  it	  would	  lead	  to	  an	  increase	  or	  decrease	  in	  biofuel	  demand,	  as	  consumption	  of	  biofuels	  in	  a	  quota-­‐based	  system	  is	  a	  factor	  of	  total	  transportation	  fuel	  demand.	  Introduced	   in	   2003,	   the	   Green	   Certificate	   Market	   (GCM)	   promotes	   production	   of	  renewable	  electricity	   in	  a	   cost-­‐effective	  manner	  and	   in	  2012	   the	  market	  was	  expanded	   to	  include	  Norway.	  	  Electricity	  suppliers	  must	  purchase	  green	  certificates	  based	  on	  electricity	  sales	  and	  use	  from	  the	  previous	  year.	  	  Producers	  of	  renewable	  electricity	  receive	  certificates	  for	   every	   MWh	   of	   electricity	   they	   produce,	   by	   selling	   their	   certificates	   (currently	   valued	  around	  $30US/MWh)	  to	  electricity	  suppliers	  the	  producer	  gains	  additional	  revenue	  beyond	  the	  sale	  of	  electricity	  (IEA,	  2013b).	  The	  GCM	  benefits	  only	  bioenergy	  producers	  generating	  electricity,	  as	  heat	  production	  is	  not	  covered	  under	  the	  GCM	  (IEA,	  2013c).	  3.3.4	  Swedish	  conclusions	  	   Biomass	  is	  the	  largest	  energy	  source	  in	  Sweden,	  accounting	  for	  34%	  of	  the	  country’s	  energy	  mix.	   Domestic	   biomass	   supply	   is	   largely	   forest	   based,	   either	   in	   the	   form	   of	  wood	  chips,	  firewood,	  pellets	  and	  mill	  residues	  while	  significant	  proportions	  of	  wood	  pellets	  and	  	  67	  biofuels	   are	   imported.	   Currently,	   biomass	   is	   preferentially	   allocated	   to	   bioenergy	   as	   it	  accounts	   for	   ~95%	   of	   totally	   biomass	   based	   energy	   generated	   in	   Sweden	   in	   2013.	   The	  proportion	  of	  biofuels	  in	  transportation	  fuels	  in	  Sweden	  is	  one	  of	  the	  highest	  rates	  in	  the	  EU	  at	   9.7%.	  However,	   compared	   to	   the	   country’s	   bioenergy	   generation	   this	   figure	   is	   fleeting,	  accounting	   for	   a	   mere	   5%	   of	   total	   biomass	   based	   energy	   in	   2013.	   Competition	   between	  bioenergy	  and	  biofuels	  for	  biomass	  is	  largely	  absent	  in	  the	  Swedish	  case	  as	  both	  bioenergy	  feedstocks	  (e.g.	  pellets)	  and	  biofuels	  are	  imported	  to	  meet	  domestic	  demand.	  	  The	  predominant	  drivers	  in	  Sweden	  are	  climate	  and	  emissions	  concerns	  that,	  when	  combined	  with	  the	  effective	  policy	  mechanisms,	  such	  as	  carbon,	  emissions	  and	  energy	  taxes	  make	  bioenergy	  and	  biofuels	  cost-­‐competitive	  with	  alternative	  energy	  products.	  	  	   Sweden	  currently	   relies	  on	   imports	   for	   the	  vast	  majority	  of	   the	   country’s	  biofuels.	  Despite	   ongoing	   innovation	   surrounding	   advanced	   biofuels	   in	   Sweden,	  when	   considering	  only	   domestic	   biomass	   and	   the	   allocation	   of	   these	   largely	   wood-­‐based	   feedstocks	   to	  bioenergy	  or	  biofuels,	  it	  is	  unlikely	  that	  these	  resources	  will	  be	  more	  valuable	  as	  a	  feedstock	  for	  biofuels	  rather	   than	  bioenergy.	  Despite	  some	  of	   the	  highest	  carbon	  taxes	   in	   the	  world,	  cost-­‐competitiveness	  of	  advanced	  biofuels	  remains	  unattainable	  in	  the	  near-­‐term.	  Hence	  the	  continued	  dependence	  on	  imported	  biofuels.	  	  Furthermore,	  the	  reliance	  of	  the	  Swedish	  forest	  sector	  on	  the	  industrial	  integration	  of	   bioenergy	   generation	   (~45%	   of	   bioenergy	   generation	   is	   within	   industrial	   operations)	  makes	  the	  transition	  away	  from	  these	  technologies	  very	  difficult.	  It	  is	  plausible	  that	  Swedish	  advanced	  biofuel	  facilities	  will	  piggyback	  on	  existing	  forest	  and	  pulp	  sector	  manufacturing,	  similar	  to	  what	  has	  been	  observed	  in	  U.S.	  and	  Brazilian	  facilities.	  	  3.4	  United	  States	  The	   United	   States	   is	   the	   global	   leader	   in	   energy	   consumption,	   consuming	   102.6	  exajoules	   (EJ)	   in	   2011,	  with	   fossil	   fuels	   dominating	   the	   energy	  mix,	   representing	   82%	   of	  total	   energy	   consumption	   (TEC)	   (U.S.	  EIA,	  2012a).	   Since	   the	  mid	  2000s,	   the	  U.S.	  has	  been	  the	   largest	  biofuels	  producer	   in	   the	  world,	  dominated	  by	  bioethanol	   from	  corn,	  which	  has	  received	   significant	   government	   support	   for	   decades	   (Tyner,	   2008).	   Recently,	   biofuels	  production	  in	  the	  U.S.	  has	  stagnated	  due	  to	  a	  myriad	  of	  factors	  including	  but	  not	  limited	  to:	  declining	  gasoline	  consumption	  creating	  a	  blend	  wall,	  slower	  than	  expected	  development	  of	  advanced	   biofuels,	   the	   expiration	   of	   the	   biodiesel	   tax	   credit	   in	   December	   of	   2013	   and	  uncertainty	   surrounding	   government	   support	   policies,	   principally	   the	   Renewable	   Fuel	  Standard	  (RFS).	  	  	  68	  Although	   it	   receives	   less	   attention	   than	   the	   U.S.	   biofuels	   program,	   bioenergy	  generation	  is	  widespread	  in	  the	  US.	  Wood	  is	  the	  primary	  source	  of	  renewable	  energy	  (21%)	  in	   the	   U.S.	   or	   ~2.1	   EJ	   in	   2011,	   although	   biomass	   waste	   is	   also	   combusted	   for	   energy	  generation	  producing	  0.5EJ	   in	  2011	  (5%	  of	   total	  renewables)	  (U.S.	  EIA,	  2012a).	  Bioenergy	  production	   is	   concentrated	   predominantly	   within	   the	   wood	   products	   industry,	   where	  pulping	   liquors	   and	  mill	   residues	   are	   burnt	   for	   direct	   heat	   and	   electricity	   generation.	   In	  contrast	   to	   Denmark	   and	   Sweden,	   the	   use	   of	   biomass	   for	   residential	   heat	   and	   power	  services	  is	  proportionally	  low,	  however	  researchers	  predict	  the	  use	  of	  bioenergy	  outside	  of	  industry	  will	  increase	  within	  the	  coming	  years	  (Aguilar	  et	  al.	  2011;	  Song	  et	  al.	  2012).	  	  The	  situation	  regarding	  biomass	  allocation	  in	  the	  U.S.	  is	  one	  of	  the	  most	  interesting	  and	  exciting,	  albeit	  complex,	  in	  the	  world.	  Of	  all	  the	  profiles	  examined,	  the	  U.S.	   is	  the	  most	  diverse,	   in	   its:	  populous,	  major	  industries,	  powerful	   interest	  groups	  and	  political	  opinions.	  Within	   the	   US,	   unlike	   the	   Scandinavian	   profiles,	   domestic	   biomass	   supply	   far	   exceeds	  biomass	   demand	   (Perlack	   et	   al.	   2011).	   In	   this	   U.S.	   case	   however,	   it	   will	   be	   important	   to	  consider	   how	   global	   demand	   for	   biomass,	   bioenergy	   and	   biofuels	   as	   well	   as	   the	   rapidly	  changing	   domestic	   energy	   industry,	   will	   influence	   biomass	   competition	   and	   resource	  allocation	  decisions.	  	  3.4.1	  The	  U.	  S.	  energy	  mix	  Fossil	   fuels	   dominate	   the	   U.S.	   energy	   mix,	   representing	   82%	   of	   total	   energy	  consumption	   (TEC)	   in	   2011,	   as	   illustrated	   in	   figure	  19.	   Importance	   of	   different	   fossil	   fuel	  energy	   sources	   is	   radically	   changing	   in	   America;	   consumption	   of	   petroleum	   and	   coal	   is	  declining	  while	  natural	  gas	  is	  increasing.	  Petroleum	  consumption	  falls	  as	  vehicle	  efficiencies	  increase	  and	  slow	  economic	  recovery	  is	  altering	  consumer	  behaviour,	  lowering	  gasoline	  use.	  Since	  1990,	  77%	  of	  new	  electricity	  generation	  capacity	   is	  natural	  gas	   fired,	  as	  opposed	   to	  the	  traditional	  coal.	  The	  recent	  increase	  in	  domestic	  unconventional	  oil	  and	  gas	  since	  2009	  has	  driven	   the	  price	   of	   natural	   gas	  down,	   reaching	  historic	   lows	   in	  2012.	   Low	  gas	  prices,	  combined	  with	   the	  benefits	  of	  higher	  electricity	  generation	  efficiency	   in	  gas	  power	  plants,	  have	   prompted	   a	   transition	   from	   coal	   to	   natural	   gas	   in	   existing	   electricity	   generation	  facilities	  nationwide	  (U.S.	  EIA,	  2013).	  	  	  69	  	  Figure	  19:	  U.S.	  energy	  mix	  in	  2011	  (original	  figure,	  data	  source	  U.S.	  EIA,	  2012a).	  	   Trends	  in	  the	  fossil	  fuel	  energy	  market	  are	  important	  to	  consider	  within	  the	  context	  of	  biomass	  competition	  as	  competition	  between	  fossil	  fuels	  and	  alternatives	  is	  an	  important	  driver	   for	  biomass	  allocation,	  as	  discussed	   in	  chapter	  2.	  Unlike	  Denmark	  and	  Sweden,	   the	  proportion	  of	  renewable	  energy	  in	  the	  U.S.	  energy	  mix	  is	  small,	  9%	  of	  TEC	  (9638	  PJ)	  and	  has	  experienced	   comparatively	   slow	   growth,	   increasing	   by	   only	   2%	   of	   TEC	   since	   1990.	  Understanding	   renewable	   generation	   technologies	   and	   their	   impact	   on	   the	   U.S.	   energy	  market	   is	   necessary	   as	   they	   too	   vie	   with	   biomass,	   more	   directly	   than	   fossil	   fuels,	   for	  government	  funding	  and	  support.	  	  	  3.4.1.1	  Renewable	  energy	  in	  the	  U.S.	  The	  United	  States	  has	  a	  diverse	  renewable	  energy	  portfolio	   including:	  hydro,	  solar	  (PV	  and	  thermal),	  wind,	  geothermal	  and	  biomass.	  .	  In	  2011,	  renewables	  generated	  9638	  PJ	  or	  9%	  of	  U.S.	  total	  energy	  consumption	  (U.S.	  EIA,	  2012a).	  Figure	  20	  provides	  a	  breakdown	  of	  the	  U.S.	  renewable	  energy	  mix	  by	  source.	  The	  diversity	  of	  technologies	  widely	  employed	  in	   the	  U.S.	   is	  noticeable	  when	  compared	  to	   the	  other	  countries	  examined	   in	   this	  case.	  The	  greater	  number	  of	  renewable	  energy	  technologies	  means	  a	  fight	  occurs	  between	  renewable	  sources	   for	  government	  policy	  support	  and	   funding.	  Despite	   this,	  biomass	  was	   the	   largest	  renewable	  energy	  source,	  accounting	  for	  48%	  of	  consumed	  renewables	  or	  4.5%	  of	  TEC	  (U.S.	  EIA,	  2011).	  	  82%	  9%	  9%	  Fossil	  Fuels	  Renewables	  Nuclear	  	  70	  	  Figure	   20:	   The	   proportional	   contribution	   of	   renewable	   technologies	   in	   the	   U.S.	   2011	  renewable	  energy	  mix	  (original	  figure,	  data	  source	  U.S.	  EIA,	  2012a).	  3.4.2	  U.S.	  biomass	  Biomass	   is	   the	   largest	   source	   of	   renewable	   energy	   in	   the	   country,	   accounting	   for	  48%	   of	   total	   renewables	   or	   4.5%	   of	   TEC	   in	   2011.	   The	   U.S.	   Energy	   Information	  Administration	   (EIA)	   classifies	   biomass	   as	   wood,	   waste	   and	   biofuels,	   which	   includes	  bioethanol,	   biodiesel	   and	   production	   co-­‐products	   (U.S.	   EIA,	   2012a).	   	   Of	   these	   biomass	  resources,	   wood	   is	   most	   widely	   consumed,	   followed	   closely	   by	   biofuels.	   Biomass	  consumption	  by	  source	  for	  2011	  is	  summarized	  in	  table	  1.	  The	  U.S.	  EIA	  does	  not	  provide	  as	  detailed	  a	  breakdown	  of	  biomass	  as	  the	  Danish	  Energy	  Agency,	  but	  that	  is	  not	  to	  say	  that	  the	  same	   products	   are	   not	   consumed.	   Although	   not	   reflected	   in	   the	   table	   below,	   there	   are	   a	  number	   of	   biomass	   feedstocks	   available	   for	   energy	   production	   in	   the	   US,	   imparting	  flexibility	  in	  potential	  biomass-­‐based	  energy	  products.	  	  	  	  Table	  4:	  United	   States	  2011	   consumption	  of	   biomass	   sources	   in	  petajoules.	  Their	  percent	  contributions	  to	  total	  biomass	  consumption	  are	  included	  (calculations	  based	  on	  data	  source	  U.S.	  EIA,	  2012a).	  Biomass	   Wood	   Waste	   Biofuels	  Petajoules	   2096.57	   503.52	   2053.93	  %	  Biomass	   45.0	   10.8	   44.2	  	  3.4.2.1	  Biomass	  for	  heat	  and	  power	  According	  to	  the	  U.S.	  EIA,	  wood	  and	  biomass	  waste	  in	  the	  United	  States	  is	  used	  principally	  for	   heat	   and	   power	   production	   in	   residential,	   industrial	   and	   commercial	   operations	   and	  electricity	   production	   in	   stand	   alone	   facilities	   (U.S.	   EIA,	   2012).	   	   Estimates	   for	   wood	   and	  48%	  35%	  2%	   13%	  2%	  Biomass	  Hydro	  Solar	  Wind	  Geothermal	  	  71	  biomass	  waste	   consumption	   by	   sector	   are	   presented	   in	   table	   2.	   	   Biomass	  waste	   includes	  municipal	  solid	  waste,	  landfill	  gas,	  sludge	  waste,	  agricultural	  byproducts	  and	  other	  biomass	  (U.S.	  EIA,	  2011).	  	  	  	  Table	   5:	   EIA	   estimates	   of	   2011	   U.S.	   wood	   and	   biomass	   waste	   consumption	   by	   sector	  (calculations	  based	  on	  data	  source	  U.S.	  EIA,	  2012a).	  	  As	   apparent	   from	   table	   2,	   industrial	   operations	   consumed	   the	   most	   wood	   and	  biomass	  waste	   in	   2011.	   	   Industrial	   utilization	   of	   biomass	   for	   energy	   is	   closely	   associated	  with	  wood,	  pulp	  and	  paper	  production	  levels	  (Nicholls	  et	  al.	  2008).	  The	  use	  of	  wood,	  wood	  waste	  and	  black	  liquor	  available	  for	  on-­‐site	  energy	  generation	  rises	  and	  falls	  with	  the	  levels	  of	  wood	   product	   production.	   At	   the	   time	   of	  writing,	   available	   data	   for	   industrial	   biomass	  energy	  consumption	  by	  industry	  and	  source	  shows	  that	  the	  pulp	  and	  paper	  manufacturing	  was	  the	  largest	  single	  consumer	  of	  biomass	  in	  2009,	  (1039.14	  PJ	  of	  total	  energy,	  879.39	  PJ	  thermal	   and	  159.75	  PJ	   electricity)	   (U.S.	  EIA,	  2009).	  The	  downward	   trend	   in	  U.S.	   pulp	   and	  paper	  production	  is	  heavily	  responsible	  for	  the	  decline	  in	  wood	  based	  energy	  generation	  in	  the	  United	  States	  observed	  since	  2003-­‐2004	  and	  seen	  in	  figure	  21.	  	  	  	  Figure	   21:	   Biomass	   use	   in	   the	   United	   States	   between	   1990-­‐2011	   (original	   figure,	   data	  source	  U.S.	  EIA,	  2012a).	  	  0	  500	  1000	  1500	  2000	  2500	  3000	  1990	   1993	   1996	   1999	   2002	   2005	   2008	   2011	  Petajoules	  Year	  Wood	  Waste	  Biofuels	  	   Residential	   Commercial	   Industrial	   Electric	  Power	  Petajoules	   474.77	   227.84	   1554.73	   460.74	  %	  Total	   18.2	   4.5	   59.6	   17.7	  	  72	  The	   residential	   sector	   is	   the	   2nd	   largest	   consumer	   of	   wood	   for	   energy	   in	   the	   US.	  Combustion	  of	  wood	   for	  energy	   in	   residential	   settings	   typically	  occurs	   in	   traditional	  open	  fireplaces	  for	  heating	  applications.	  Residential	  wood-­‐based	  bioenergy	  competes	  with	  other	  home	  heating	  alternatives	  such	  as	  natural	  gas,	  electricity	  and	  heating	  oil.	  A	  study	  performed	  by	  Aguilar	  and	  colleagues	   in	  2011	  explored	   the	   influence	  of	  alternative	  energy	  prices	  and	  public	  policy	  on	  wood	  energy	  consumption.	  They	  concluded	  that,	  utilization	  of	  wood	  in	  the	  residential	   sector	   is	   affected	   more	   by	   the	   price	   of	   alternative	   energy	   sources	   than	  government	   policies	   to	   promote	   bioenergy.	   Furthermore	   levels	   of	   wood	   combustion	   are	  positively	  correlated	  to	  the	  price	  of	  heating	  alternatives	  (Aguilar	  et	  al.	  2011).	  	  Stand-­‐alone	  biomass	  burning	  for	  electricity	  generation	  in	  CHP	  facilities	  makes	  up	  a	  small	   proportion	   of	   the	   U.S.	   renewable	   energy	   mix,	   4.7%,	   when	   compared	   to	   the	  Scandinavian	  countries	  examined	  in	  this	  thesis.	  Recall	   in	  Denmark,	  biomass	  provides	  13%	  of	  total	  electricity	  generation	  and	  23%	  of	  heating	  requirements.	  The	  use	  of	  these	  facilities	  in	  the	   U.S.	   is	   restricted	   primarily	   to	   institutional	   settings	   such	   as	   heating	   in	   hospitals	   and	  schools.	  Interest	  exists	  in	  the	  U.S.	   in	  capturing	  the	  efficiency	  advantages	  of	  employing	  CHP	  for	   biomass	   energy	   generation,	   however	   technology	   diffusion	   is	   limited	   by	   the	   lack	   of	  centralized	  heating	  infrastructure	  in	  the	  country	  (White,	  2010).	  Of	  all	  electricity	  producing	  capacity	  in	  the	  United	  States	  in	  2012	  (1.13	  TW)	  total	  CHP	  capacity	  was	  a	  mere	  3.5%	  	  (0.39	  TW)	  (U.S.	  EIA,	  2013).	  	  3.4.1.2	  Transportation	  biofuels	  The	  United	  States	  is	  the	  largest	  producer	  of	  biofuels	  in	  the	  world	  (56.16	  billion	  liters	  in	  2011),	   making	   predominantly	   conventional	   bioethanol	   from	   corn	   (52.9	   billion	   liters),	  although	   biodiesel	   and	   cellulosic	   biofuels	   also	   contribute	   to	   the	   U.S.	   market.	   Growth	   in	  biofuels	   since	   the	   early	   2000s	   is	   responsible	   for	   the	  majority	   of	   the	   observed	   increase	   in	  renewable	   energy	   generation	   in	   the	   US.	   During	   this	   period,	   biofuels	   experienced	  exponential	  growth	  thanks	  to	  the	  establishment	  of	  the	  Renewable	  Fuels	  Standard	  (RFS)	  in	  2005	   as	   part	   of	   the	   Energy	   Policy	   Act,	   (for	   more	   information	   on	   the	   RFS	   and	   biofuel	  classifications	  see	  section	  6.3.4.b).	  The	  data	   in	   figure	  22	   illustrates	  biofuel	  consumption	  in	  the	  United	   States	   between	   1990	   and	   2011.	  Notice	   bioethanol	   consumption	   has	   plateaued	  since	  2010,	  the	  causes	  of	  which	  are	  explored	  in	  further	  detail	  below.	  	  	  73	  	  Figure	   22:	   Consumption	   of	   biofuels	   in	   the	  United	   States	   from	  1990-­‐2011	   (original	   figure,	  data	  source	  U.S.	  EIA,	  2012a)	  	  Ethanol	   is	   the	   original	   biofuel	   of	   the	   American	   industry,	   its	   production	   as	   a	  transportation	  fuel	  dating	  back	  to	  the	  early	  20th	  century	  (Hultman	  et	  al.	  2012).	  Bioethanol	  is	  consumed	   in	   a	   low	   (10%	   ethanol	   90%	   gasoline)	   blend	   known	   as	   E10	   and	   a	   high	   (85%	  ethanol	  15%	  gasoline)	  blend,	  or	  E85.	  	  Bioethanol	  was	  responsible	  for	  1.1EJ	  of	  energy,	  99%	  of	  which	   is	  consumed	  as	  E10	  and	  effectively	  all	  gasoline	   in	   the	  country	   is	  consumed	  at	  an	  E10	   blend.	   This	   creates	   a	   situation	   where	   gasoline	   consumption	   is	   limiting	   ethanol	  consumption	   in	   America	   (U.S.	   EIA,	   2012a;	   Tyner	   and	   Viteri,	   2010).	   Projected	   gasoline	  consumption	   in	   an	   E10	   market	   has	   resulted	   in	   ethanol	   demand	   that	   falls	   short	   of	   that	  mandated	   by	   the	   RFS.	   This	   results	   in	   two	   opposing	   realities,	   the	   RFS	   requires	   higher	  volumes	  of	  biofuels	  to	  be	  blended	  each	  year	  until	  2022,	  while	  the	  physical	  blend	  wall	  may	  result	  in	  declining	  ethanol	  consumption	  as	  gasoline	  consumption	  falls	  in	  the	  US,	  impart	  due	  to	   poor	   economic	   conditions	   and	   improving	   fuel	   efficiencies	   (Tyner	   and	   Viteri,	   2010).	  Assuming	  all	  ethanol	  continues	  to	  be	  consumed	  as	  E10	  only,	  current	  gasoline	  consumption	  only	  allows	  for	  ~13	  billion	  gallons	  of	  ethanol	  to	  be	  consumed,	  less	  than	  the	  RFS2	  mandates	  for	  2013-­‐2022.	  The	  	  “blend	  wall”	  is	  why	  ethanol	  consumption	  has	  plateaued	  since	  2010,	  as	  observed	  in	  figure	  22.	  The	  “blend	  wall”	  refers	  to	  the	  maximum	  volume	  of	  ethanol	  that	  can	  be	  blended	  with	  gasoline	  according	  to	  currently	  approved	  blend	  levels.	  A	  further	  discussion	  of	  the	  effects	  of	  the	  blend	  wall	  on	  biomass	  allocation	  is	  discussed	  in	  section	  6.3.3.	  Biodiesel	  consumption	  in	  the	  U.S.	  began	  in	  2001	  and	  by	  2011	  amounted	  to	  ~0.12	  EJ	  of	  energy.	   Blends	   of	   B2	   (2%	   biodiesel,	   98%	   petroleum	   diesel)	   B5	   (5%	   biodiesel,	   95%	  0.00	  200.00	  400.00	  600.00	  800.00	  1000.00	  1200.00	  1990	   1993	   1996	   1999	   2002	   2005	   2008	   2011	  Petajoules	  Bioethanol	  Biodiesel	  	  74	  petroleum	  diesel),	  B20	  (20%	  biodiesel,	  80%	  petroleum	  diesel)	  and	  B100	  (100%	  biodiesel)	  are	  all	  available	  in	  America,	  however	  B20	  is	  currently	  the	  most	  popular	  within	  the	  country	  (U.S.	  DOE,	  2014).	  The	  popularity	  of	  B20	  is	  derived	  from	  the	  balance	  of	  cost,	  emissions,	  cold	  weather	  performance	  and	  engine	  compatibility,	  while	  B100	  is	  limited	  by	  a	  lack	  of	  regulatory	  incentives,	   high	   pricing	   and	   the	   requirement	   for	   special	   handling	   and	   equipment	  modifications	   (U.S.	   DOE,	   2014).	   U.S.	   biodiesel	   is	   predominantly	   FAME,	   derived	   from	  vegetable	   oils,	   yellow	   grease,	   spent	   cooking	   oils	   and	   tallow	   although	   soybean	   oil	   as	   the	  leading	  biodiesel	  feedstock	  (U.S.	  EIA,	  2013).	  	  As	  a	  potential	  solution	  to	  the	  blend	  wall,	  research	  interest	  surrounding	  development	  of	   drop-­‐in	   biofuels	   is	   expanding	   in	   the	   United	   States.	   Unlike	   Sweden	   where	   biogas	   is	  commercially	  available	  and	  bio-­‐jet	  has	  been	  produced	  in	  demonstration	  facilities	  since	  2007,	  drop-­‐in	  biofuels	  are	  currently	  at	  the	  research	  and	  development	  stage,	  with	  some	  pilot	  and	  demonstration	  facilities	  under	  construction	  (U.S.	  DOE,	  2014).	  Although,	  the	  U.S.	  has	  recently	  reported	   that	   ~18.2	   million	   gallons	   of	   cellulosic	   biofuels	   were	   produced	   from	   January-­‐October	  of	  2014,	  80%	  of	  which	  was	  generated	  in	  September	  and	  October	  alone.	  This	  makes	  it	   appear	   as	   though	   advanced	   biofuels	   are	   experiencing	   a	   period	   of	   growth	   in	   the	  United	  States,	   however	   this	   is	  misleading	   as	   the	   overnight	   expansion	   has	   transpired	   thanks	   to	   a	  new	  definition	  of	   cellulosic	   biofuels	   that	   includes	   compressed	  natural	   gas	   and	  other	   fuels	  under	   the	   cellulosic	   biofuel	   umbrella	   (U.S.	   EPA,	   2014).	   This	   new	   definition	   may	   harm	  advanced	  biofuel	  development	  by	  undermining	  the	  existing	  mandates.	  3.4.3	  Drivers	  for	  biomass	  allocation	  in	  the	  U.S.	  Competition	   between	   bioenergy	   and	   biofuels	   for	   biomass	   feedstock	   is	   unlikely	   to	  occur	   in	  near	   future	   in	   the	  United	   States.	  Differing	  predominant	   feedstocks	   for	   bioenergy	  and	   biofuel	   generation,	   combined	  with	   an	   ongoing	   underutilization	   of	   biomass	   resources	  creates	  a	  supply	  surplus.	  Therefore,	  at	  present,	  competition	  between	  biomass-­‐based	  energy	  products	   is	   limited.	   The	   U.S.	   DOE	   has	   identified	   that	   the	   country	   holds	   the	   potential	   to	  produce	  greater	  than	  1	  billion	  tons	  of	  biomass	  for	  bioenergy	  or	  biofuel	  production	  annually	  by	  2030	  (Perlack	  et	  al.	  2011).	  Despite	  a	  lack	  of	  current	  competition	  for	  biomass	  feedstocks,	  it	  has	  been	  suggested	  that	  competition	  for	  forest-­‐based	  feedstocks	  between	  bioenergy	  and	  biofuels	   might	   occur	   as	   both	   domestic	   advanced	   biofuel	   demand,	   and	   international	  pellet/biofuel	  markets	  develop.	  Instead	  of	   domestic	   competition	   for	   the	   end	  use	  of	   biomass	   feedstocks,	   it	   is	   likely	  that	   competition	   will	   occur	   between	   domestic	   and	   international	   markets	   as	   the	   U.S.	  	  75	  continues	  to	  grow	  as	  an	  important	  exporter	  of	  biomass-­‐based	  energy	  products.	  Reallocation	  of	  bioenergy	  products	  from	  U.S.	  domestic	  to	  the	  international	  markets	  is	  also	  occurring.	  The	  United	   States	   is	   increasing	   production	   capacity	   of	   pellet	  mills,	   notably	   in	   the	   South	   East,	  primed	   for	   export	   to	   European	   markets.	   Pellets	   command	   a	   price	   premium	   in	   Europe	  compared	  to	  the	  United	  States,	  enough	  that	  it	  is	  economically	  viable	  to	  ship	  pellets	  1000s	  of	  kilometers	   via	   boat	   to	   Europe	   and	   Scandinavia.	   As	   demand	   for	   pellets	   is	   expected	   to	  increase	   in	   Europe	   to	   meet	   the	   EU	   Commission	   mandates	   of	   20%	   renewables	   by	   2020,	  imports	  are	  expected	  to	  play	  an	  essential	  role	  in	  satisfying	  demand	  (IEA,	  2013b).	  Increasing	  pellet	  demand	  in	  these	  markets	  may	  effectively	  out	  compete	  domestic	  bioenergy	  solutions	  in	  the	  absence	  of	  U.S.	  policies	  specifically	  promoting	  bioenergy	  generation	  (IEA,	  2012c).	  	  The	  “blend	  wall”	  is	  limiting	  the	  consumption	  of	  renewable	  fuels	  in	  America,	  and	  has	  sparked	  a	  growing	  trend	  in	  research	  focusing	  on	  drop-­‐in	  biofuels.	  Interest	  surrounding	  the	  use	  of	  woody	  biomass	  for	  drop-­‐in	  biofuels	  will	  certainly	  increase	  demand	  for	  suitable	  low-­‐cost	   feedstocks.	  However,	  based	  on	  the	  DOE	  estimates,	  competition	  is	  unlikely	  to	  result	   in	  the	  reallocation	  of	  biomass	  from	  one	  energy	  product	  to	  another.	  	  In	  analyzing	  the	  drivers	  for	  biomass	  allocation	  in	  the	  United	  States,	  it	  was	  apparent	  that	  both	  general	  and	  U.S.	  focused	  drivers	  influenced	  the	  allocation	  of	  biomass.	  The	  absence	  of	  strong	  climate	  change	  mitigation	  desires	  in	  the	  U.S.	  means	  that	  energy	  security	  has	  been	  the	   leading	   general	   driver.	   As	   with	   the	   other	   profiles,	   biomass	   allocation	   is	   subject	   to	  pressure	   from	   economic	   interests	   and	   the	   cost-­‐competitiveness	   of	   biomass-­‐based	   energy	  technologies.	  	  3.4.3.1	  Energy	  security	  and	  the	  emergence	  of	  biomass-­‐based	  energy	  An	  ethanol	  powered	  transportation	  fleet	  has	  been	  considered	  by	  the	  U.S.	  since	  the	  early	  20th	   century,	   although	   the	   early	   movement	   was	   largely	   thwarted	   by	   the	   Prohibition-­‐era	  regulations	  on	  alcohol.	  The	  first	   instance	  of	  energy	  security	  influencing	  biomass	  allocation	  in	   the	  U.S.	  was	  during	   the	  Second	  World	  War.	  To	  help	   reduce	   fuel	   scarcity	   issues	   ethanol	  production	  rose	  to	  600	  million	  gallons	  annually.	  After	  the	  war	  production	  dwindled	  rapidly	  as	  the	  world	  entered	  a	  period	  of	  oil	  abundance	  (Hultman	  et	  al.	  2012).	  	  It	  wasn’t	  until	  1978,	  in	  the	  shadow	  of	  the	  1973	  OPEC	  oil	  crisis,	  with	  the	  passage	  of	  the	  Energy	   Tax	   Act,	   that	   the	   ethanol	   industry	   re-­‐emerged	   in	   the	   United	   States.	   Designed	   to	  bolster	   national	   energy	   security,	   through	   the	   creation	  of	   a	   domestic	   ethanol	   industry,	   the	  Energy	   Tax	   Act	   created	   a	   tax	   incentive	   for	   ethanol	   blenders	   equal	   to	   $0.40	   per	   gallon	  effectively	   re-­‐launching	   the	   ethanol	   industry.	   By	   1980,	   100	   commercial	   bioethanol	   plants	  	  76	  were	   operating	   in	   the	   U.S.	   (Hultman	   et	   al.	   2012).	   Throughout	   the	   1980s	   growth	   in	   the	  ethanol	   industry	  was	  slow,	  despite	   the	  persistence	  of	  government	  subsidies.	  Subsidies	   for	  ethanol	  production	  were	  in	  place	  from	  1978	  until	  December	  31st,	  2011.	  Over	  the	  33	  years	  the	   tax	   credit	   price	   ranged	   from	   $0.40	   to	   $0.60	   cents	   U.S.	   per	   gallon	   (Tyner,	   2008).	  Originally,	  incentives	  were	  applied	  as	  an	  excise	  tax	  exemption,	  until	  the	  2004	  Job	  Creations	  Act	  when	  the	  government	  transitioned	  to	  the	  Volumetric	  Ethanol	  Excise	  Tax	  Credit	  (VEETC),	  a	  blender	  tax	  credit	  (Keeney	  &	  Hertel,	  2009;	  Tyner,	  2008).	   It	  was	  anticipated	  that	  altering	  the	   tax	   from	  an	  excise	   tax	  exemption	   to	  a	  blender	   tax	  credit	  would	   further	  encourage	   the	  creation	  of	  a	  transportation	  biofuel	  industry	  separate	  from	  the	  petroleum	  industry	  (Tyner,	  2007;	   Tyner,	   2008).	   The	   biodiesel	   tax	   incentive,	   introduced	   in	   2004,	   expired	   with	   the	  ethanol	   incentive	   in	   December	   of	   2011,	   but	   was	   recently	   revised	   by	   U.S.	   Congress	   on	  January	  1st	   of	  2013	   to	  expire	   the	  end	  of	   that	  year.	  The	   tax	   incentive	  mechanism	  has	  been	  criticized	  due	  to	  its	  exorbitant	  costs	  and	  ineffectiveness	  as	  a	  stand-­‐alone	  policy	  to	  promote	  biofuel	  production.	   In	  2006	  the	  program	  cost	   the	   federal	  government	  $U.S.	  2.4	  billion	  and	  $U.S.	   5	   billion	   in	   2010	   for	   ethanol,	   and	   almost	   1.4	   billion	   for	   biodiesel	   in	   2008.	   In	  comparison,	   the	   Brazilian	   ethanol	   tax	   incentive	   program	   costs	   are	   estimated	   at	   less	   than	  $U.S.	  1	  billion	  per	  year	  (Koplow,	  2006).	  The	  stark	  contrast	   in	  payouts	  between	  Brazil	  and	  the	  U.S.	   is	  due	  primarily	   to	   the	   introduction	  of	  volumetric	  blend	  mandates	   in	   the	  U.S.	   that	  persisted	  concurrently	  with	  the	  tax	  incentives	  that	  were	  originally	  conceived	  for	  an	  oil	  price	  of	  $U.S.	  20/bbl	  (Tyner,	  2008)	  Renewable	  energy	  development	  in	  the	  United	  States	  arose,	  as	  it	  did	  in	  many	  of	  the	  other	  profiles,	  from	  energy	  security	  concerns.	  In	  the	  1940s,	  the	  United	  States	  became	  a	  net	  energy	  importer,	  and	  by	  1973	  the	  country	  accounted	  for	  nearly	  one	  quarter	  of	  total	  global	  oil	  trade.	  	  Unlike	  Brazil,	  Sweden	  and	  Denmark,	  where	  the	  OPEC	  oil	  crisis	  of	  the	  1980s	  was	  a	  catalyst	   for	   widespread	   renewable	   energy	   development,	   a	   similar	   paradigm	   shift	   was	  absent	  in	  America.	  The	  oil	  crisis	  of	  the	  1980s	  did	  help	  spur	  growth	  in	  the	  use	  of	  geothermal,	  biofuels	   and	  waste	   biomass	   for	   energy,	   however	   renewables	   in	   the	  U.S.	   failed	   to	   displace	  fossil	  fuels	  at	  the	  same	  rate	  as	  they	  did	  in	  Scandinavia	  (U.S.	  EIA,	  2012;	  Klass,	  2003).	  	  Subsequent	  decades	  saw	  steady	  growth	  in	  energy	  imports,	  energy	  consumption,	  and	  a	   corresponding	   decline	   in	   energy	   self-­‐sufficiency.	   	   Figure	   23	   depicts	   U.S.	   energy	  consumption,	   imports	   and	   self-­‐sufficiency	   from	   1942-­‐2011.	   Energy	   self-­‐sufficiency	  bottomed	  out	  in	  2006	  but	  the	  trend	  line	  has	  since	  reversed	  as	  TEC	  and	  energy	  imports	  fell	  during	   the	   economic	   recession.	   Presently,	   the	   U.S.	   energy	   landscape	   is	   in	   a	   transitional	  	  77	  period.	   	  As	  of	  2008,	  domestic	   fossil	   fuel	  production	  has	  experienced	  resurgence	   thanks	   to	  growing	   accessibility	   of	   unconventional	   oil	   and	   gas.	   	   In	   addition,	   bolstered	   policies	  supporting	  electricity	  production	  from	  renewable	  sources	  and	  federal	  mandates	  for	  biofuels	  have	   increased	   domestic	   energy	   production	   consequently	   improving	   national	   energy	   self	  sufficiency.	   	   In	   their	  World	   Energy	   Outlook	   2012,	   the	   International	   Energy	   Agency	   (IEA)	  projects	  U.S.	  daily	  oil	  imports	  will	  fall	  from	  9.5	  million	  barrels	  per	  day	  (mb/d)	  in	  2011	  to	  3.4	  mb/d	   in	  2035,	  representing	  an	   improvement	   in	  energy	  self	  sufficiency	  of	  97%,	  suggesting	  the	  trend	  line	  of	  increasing	  energy	  self-­‐sufficiency	  will	  continue	  (IEA,	  2012e).	  	  	  Figure	  23:	  U.S.	   total	   energy	   consumption	   (TEC),	   energy	   imports	   and	   the	  degree	  of	   energy	  self-­‐sufficiency	  (original	  figure,	  data	  source	  U.S.	  EIA,	  2012a).	  	  In	   the	   early	   2000s,	   diversification	   and	   deployment	   of	   renewable	   energy	  technologies	  experienced	  rapid	  and	  sustained	  growth.	  Figure	  24	  outlines	  renewable	  energy	  generation	  by	  source	  in	  the	  U.S.	  from	  1990-­‐2011.	  From	  this	  figure	  it	  is	  evident	  that	  biomass,	  wind,	  geothermal	  and	  solar	  technologies	  have	  experienced	  expansion	  since	  the	  early	  2000s.	  Hydroelectric	   generation	   has	   remained	   relatively	   stable	   over	   the	   same	   period,	   as	   further	  growth	   in	   this	   industry	   is	   limited	   as	   significant	   expansion	   faces	   severe	   opposition	   from	  environmental	  groups	  and	  most	  sites	  suitable	  for	  hydropower	  capacity	  are	  already	  utilized	  (Klass,	  2003).	  	  0	  20	  40	  60	  80	  100	  120	  0	  20000	  40000	  60000	  80000	  100000	  120000	  1949	  1952	  1955	  1958	  1961	  1964	  1967	  1970	  1973	  1976	  1979	  1982	  1985	  1988	  1991	  1994	  1997	  2000	  2003	  2006	  2009	  Percent	  Self	  Suf愢cient	  Petajoules	  TEC	  Imports	  Self	  suf笫ciency	  	  78	  	  Figure	  24:	  The	  U.S.	  renewable	  energy	  mix	  from	  1990-­‐2011	  by	  source	  (original	  figure,	  data	  source	  U.S.	  EIA,	  2012a).	  	  3.4.3.2	  Energy	  related	  climate	  change	  concerns	  and	  biomass	  allocation	  Climate	  change	  concerns	  in	  the	  U.S.	  manifest	  themselves	  in	  different	  forms	  than	  those	  observed	  in	  Denmark	  and	  Sweden.	  Federal	  renewable	  energy	  and	  GHG	  emissions	  reduction	  mandates	   do	   not	   exist	   to	   the	   same	   extent	   as	   the	   Scandinavia	   profiles,	   although	   state	   and	  county	   renewable	  mandates	  and	  GHG	  emission	   targets	  are	  becoming	  more	  widespread.	  A	  detailed	   review	   of	   state-­‐by-­‐state	   targets	   is	   beyond	   the	   scope	   of	   this	   thesis.	   For	   more	  information,	   monthly	   updates	   are	   available	   on	   the	   Database	   of	   State	   Incentives	   for	  Renewables	  &	  Efficiency	  (DSIRE)	  website	  (DSIRE,	  2014).	  	  American	   climate	   change	   mitigation	   attempts	   are	   often	   marketed	   as	   environmental	  protection	  policies	  and	   initiatives	   (Rinebole,	  1996).	  Despite	   the	  different	  packaging,	   these	  programs	  hold	  influence	  in	  biomass	  allocation	  decisions	  in	  the	  America.	  The	  vast	  number	  of	  policies	  and	  programs	  of	  this	  variety	  in	  the	  U.S.	  means	  that	  only	  a	  select	  number	  of	  policies	  that	   have	   been	   previously	   recognized	   to	   influence	   biomass	   allocation	   in	   the	   U.S.	   are	  discussed	  in	  section	  6.3.4.	  	  	  3.4.3.3	  Prevailing	  economic	  interests	  	  	   Feedstocks	  for	  biomass-­‐based	  energy	  generation	  in	  the	  U.S.	  are	  predominantly	  corn	  and	   wood	   based,	   and	   the	   respective	   forest	   sector	   and	   corn	   growers	   associations	   have	   a	  vested	   interest	   in	   decisions	   regarding	   the	   allocation	   of	   this	   biomass	   to	   bioenergy	   and	  0.00	  500.00	  1000.00	  1500.00	  2000.00	  2500.00	  3000.00	  3500.00	  4000.00	  4500.00	  5000.00	  1990	   1993	   1996	   1999	   2002	   2005	   2008	   2011	  Petajoules	  Biomass	  Hydro	  Solar	  Wind	  Geothermal	  	  79	  biofuels.	   Desires	   of	   both	   interest	   groups	   are	   reflected	   in	   biomass	   allocation	   decisions	  observed	  in	  the	  United	  States.	  Unique	  to	  the	  U.S.	  case,	  oil	  companies	  have	  been	  effective	  at	  directing	  biomass	  allocation	  in	  the	  biofuels	  industry.	  	  The	  first	  response	  to	  the	  “blend	  wall”	  was	  the	  EPA’s	  move	  to	  increase	  the	  blend	  limit	  to	  15%.	   In	  2010,	  after	  substantial	  vehicle	   testing,	   the	  EPA	  approved	  the	  consumption	  of	  E15	  gasoline	   in	   light-­‐duty	  vehicles	  produced	   since	  2001.	  These	  vehicles	   accounted	   for	  62%	  of	  passenger	  vehicles	  on	  U.S.	  roads	  in	  2010	  (Schnepf	  and	  Yacobucci,	  2013).	  However,	  as	  of	  mid	  2012,	  only	  13	  stations	  concentrated	  in	  three	  states	  offered	  E15	  for	  sale	  and	  thus	  has	  been	  an	   unsuccessful	   solution	   to	   the	   “blend	   wall”.	   The	   resistance	   of	   oil	   companies	   and	  distribution	   centers	   to	   the	   proposed	   E15	   blends	   has	   been	   enormously	   influential	   at	  inhibiting	   the	   penetration	   of	   the	   higher	   blend.	  After	   the	   failure	   of	   the	  E15	   expansion,	   the	  EPA	   announced	   its’	   latest	   solution	   to	   the	   “blend	   wall”.	   A	   proposal	   was	   put	   forward	   last	  month	  to	  cut	  the	  mandated	  volumes	  of	  all	  four	  categories	  of	  biofuels	  for	  2014.	  The	  largest	  reduction	   is	  proposed	   for	  ethanol,	  3	  billion	  gallons	  below	  what	  RFS2	  currently	  mandates,	  1.4	   of	  which	  will	   come	   from	   corn-­‐ethanol.	   Although	   the	   EPA	   has	   been	   issuing	  waivers	   of	  compliance	  for	  cellulosic	  biofuel	  mandates	  since	  2010,	  this	  proposal	   is	  the	  first	  time	  corn-­‐ethanol	  mandates	  have	  been	  a	  target	  for	  reduction	  in	  U.S.	  history.	  	  	  3.4.3.4	  Cost	  competitiveness	  of	  U.S.	  bioenergy	  and	  biofuels	  	   This	   section	   considers	   how	   technologies	   and	   policies	   for	   bioenergy/biofuels	  influence	   cost	   competitiveness	   and	   ultimately	   biomass	   allocation	   decisions.	   I	   suggest	  competing	  energy	  technologies	  play	  a	  more	  important	  role	  in	  biomass	  allocation	  decisions	  in	  the	  US,	  due	  to	  the	  diverse	  nature	  of	  the	  energy	  mix.	  The	  absence	  of	  key	  district	  heating	  infrastructure	  in	  America	  has	  impeded	  the	  widespread	  adoption	  of	  bioenergy	  generation	  in	  large-­‐scale	   facilities	   outside	   of	   the	   forest	   industry.	   Furthermore,	   the	   differences	   between	  the	   US,	   largely	   quota-­‐based,	   policy	   approach	   to	   biofuels	   and	   bioenergy	   is	   essential	   to	  understanding	  the	  country’s	  current	  and	  future	  biomass	  utilization.	  	  	  3.4.3.4.1	  Technological	  advancements	  in	  biomass-­‐based	  energy	  Compared	  to	   the	  Scandinavian	  countries	  examined	   in	   this	   thesis,	   the	  United	  States	  benefits	   from	  an	  abundance	  and	  diversity	  of	   feedstocks,	   ranging	   from	  vegetable	  oil	   crops,	  starch	  rich	  crops	  and	  woody	  biomass	  (Perlack,	  et	  al.	  2011).	  During	  the	  original	  inception	  of	  biofuels	   in	   America,	   technologies	   to	   ferment	   starch	   rich	   crops	   into	   ethanol	   were	   widely	  available.	  As	  energy	  security	  concerns	  came	  and	  went	  in	  a	  cyclical	  fashion,	  bioethanol	  was	  	  80	  the	   low-­‐hanging	   fruit,	   as	   the	   technological	   feasibility	  of	   the	  process	   from	  corn	  made	   it	   an	  ideal	  candidate	  to	  replace	  imported	  fossil	  fuels.	  	  Despite	  the	  enormous	  forest	  resources	   in	  the	  United	  States,	   the	  combustion	  of	  woody	  biomass	  to	  bioenergy	  failed	  to	  take	  off	  when	  energy	  security	  concerns	  increased.	  The	  nature	  of	  domestically	  available	  energy	  alternatives	  for	  energy	  generation	  and	  the	  type	  of	  available	  heat	  and	  power	  infrastructure	  in	  America	  played	  a	  key	  role	  in	  this	  latent	  development.	  It	  is	  likely	   that	   bioenergy	   failed	   to	   take	   off	   in	   the	   United	   States	   in	   a	   similar	   manner	   as	  experienced	  Denmark	  or	  Sweden	  due	  to	  availability	  of	  large	  U.S.	  coal	  and	  hydro-­‐electricity	  supply.	  The	  availability	  of	  these	  domestic	  alternatives	  reduced	  the	  energy	  security	  concerns	  facing	   the	   heat	   and	   power	   sector,	   and	   limited	   the	   need	   for	   bioenergy	   generation.	  Furthermore,	   unlike	   Scandinavia,	   the	   U.S.	   lacked	   the	   preexisting	   district	   heating	  infrastructure	  that	  helped	  to	  make	  the	  biomass	  combustion	  such	  an	  attractive	  alternative.	  	  	   Technological	  availability	  and	  advancements	  is	  obviously	  important	  at	  establishing	  biomass	   allocation	   to	   one	   technology	   or	   another	   at	   the	   point	   of	   emergence	   for	   biomass-­‐based	   energy	   technologies.	   However,	   technological	   innovation	   alone	   is	   insufficient	   to	  explain	  how	  biomass	  allocation	   changes	  over	   time,	   and	   the	  policies	   affection	  biofuels	   and	  bioenergy	  must	  also	  be	  considered.	  	  	  3.4.3.4.2	  Policies	  affecting	  cost	  competitiveness	  of	  biofuels	  and	  bioenergy	  A	  myriad	  of	  policies	  influencing	  the	  cost	  competitiveness	  of	  bioenergy	  and	  biofuels	  in	   the	   United	   States	   are	   present	   at	   the	   county,	   state	   and	   federal	   level,	   although	   for	   the	  purpose	   of	   this	   thesis,	   only	   federal	   level	   policies	   are	   considered.	   Unlike	   Denmark	   and	  Sweden,	   the	  U.S.	   has	   not	   ratified	   the	  Kyoto	   Protocol	   and	   thus	   is	   not	   bound	  by	   any	  multi-­‐national	   climate	   policies.	   How	   federal	   policies	   improve	   the	   cost	   competitiveness	   of	  bioenergy	  and	  biofuels	  is	  essential	  to	  fully	  comprehending	  biomass	  allocation	  in	  the	  United	  States.	   Despite	   the	   long	   history	   of	   biofuel	   production	   in	   the	   US,	   dating	   back	   to	   the	   early	  years	  of	  the	  automobile,	  the	  biofuel	  industry	  has	  experienced	  a	  number	  of	  false	  starts.	  One	  such	  period	  occurred	  in	  1990	  with	  the	  introduction	  of	  the	  Clean	  Air	  Act	  Amendments	  that	  created	   new	   regulations	   for	   gasoline	   formulations.	   Methyl	   tert-­‐butyl	   ether,	   a	   common	  gasoline	  additive	  at	  the	  time,	  faced	  a	  de	  facto	  ban	  due	  to	  detrimental	  environmental	  effects	  associated	  with	  the	  toxicity	  of	  the	  substance.	  As	  a	  result,	  refiners	  switched	  to	  blending	  with	  ethanol,	   effectively	   stimulating	   the	   industry,	   as	   reflected	   in	   expanded	   production	   of	   900	  million	  gallons	  in	  1990	  to	  1.4	  billion	  gallons	  in	  1995	  (Hultman	  et	  al.	  2012).	  	  	  81	  The	   Energy	   Policy	   Act	   was	   Congress’	   response	   to	   volatile	   petroleum	   prices	   as	   a	  result	  of	  conflict	  in	  the	  Middle	  East.	  Initially	  the	  RFS	  program	  (known	  as	  RFS1)	  required	  7.5	  billion	   gallons	   of	   biofuel	   to	   be	   blended	   with	   gasoline	   by	   2012.	   The	   RFS1	   was	   the	   first	  renewable	   fuel	   volume	   mandate	   within	   America	   and	   effectively	   guaranteed	   a	   long-­‐term	  domestic	  market	   for	   ethanol.	  The	  policy	  generated	   such	  a	  positive	   response	   that	   in	  2007,	  the	   Energy	   independence	   and	   Security	   Act	   expanded	   the	   RFS	   program	   (now	   known	   as	  RFS2)	  increasing	  the	  volume	  of	  mandated	  renewable	  fuels	  to	  36	  billion	  gallons	  by	  2022,	  of	  which,	   16	   billion	   gallons	   must	   come	   from	   cellulosic	   biofuels	   and	   corn-­‐starch	   ethanol	   is	  capped	  at	  15	  billion	  gallons.	   In	   it’s	  current	   form,	   the	  Renewable	  Fuels	  Standard	  (RFS2),	   is	  the	  keystone	  policy	  dictating	  development	  of	  biofuels	  in	  transportation.	  The	  passage	  of	  RFS2	   into	   law	  established	   four	  nested	  renewable	   fuel	  categories	   in	  the	  United	  States:	  total	  renewable	  fuels,	  advanced	  biofuels,	  cellulosic	  and	  agricultural	  waste	  biofuels	  (henceforth	  cellulosic	  biofuels)	  and	  biomass-­‐based	  biodiesel	  (henceforth	  biodiesel).	  Each	  category	  has	  separate	  volume	  requirements	  and	  applied	  lifecycle	  and	  greenhouse	  gas	  performance	  standards.	  Lifecycle	  greenhouse	  gas	  reductions	  are	  compared	  to	  conventional	  fossil	  fuels	  as	  a	  baseline.	  The	  RFS2	  was	  the	  first	  transportation	  biofuel	  policy	  in	  the	  world	  to	  include	  a	  lifecycle	  sustainability	  requirement.	  (Schnepf	  and	  Yacobucci,	  2013).	  Table	  3	  below	  outlines	  the	  main	  features	  of	  each	  of	  the	  four	  fuel	  categories.	  It	  is	  important	  to	  note	  that	  due	  to	   delayed	   commercialization	   of	   cellulosic	   biofuels,	   the	   EPA	   has	   issued	  mandate	   waivers	  since	   2010,	   effectively	   removing	   required	   blending	   of	   cellulosics.	   The	   current	   2013	  cellulosic	  biofuels	  mandate	  is	  0.014	  billion	  gallons	  (bgal),	  down	  from	  the	  1	  bgal	  outlined	  by	  RFS2	  (Schnepf	  and	  Yacobucci,	  2013).	  The	   nested	   nature	   of	   fuel	   categorization	   means	   that	   any	   fuel	   that	   meets	   the	  requirement	   for	   cellulosic	   biofuels	   or	   biodiesel	   also	   meets	   the	   advanced	   biofuels	  requirement.	  	  Therefore,	  if	  production	  of	  either	  of	  these	  fuels	  were	  to	  exceed	  the	  volumetric	  mandate,	  any	  surplus	  could	  be	  counted	  towards	  advanced	  fuels.	  Furthermore,	  any	  fuel	  that	  meets	  the	  requirement	  for	  advanced	  biofuels	  is	  also	  able	  to	  meet	  the	  overall	  total	  renewable	  fuel	  requirement.	  Therefore	  any	   individual	  category	  where	  there	   is	  surplus	  volume	  would	  reduce	  the	  need	  for	  corn-­‐starch	  based	  ethanol	  for	  total	  renewable	  fuel	  mandate	  compliance	  and	  imported	  Brazilian	  ethanol	  (1.456	  bgal	  in	  2013)	  for	  advanced	  fuel	  mandate	  compliance	  (Schnepf	  and	  Yacobucci,	  2013).	  	  Table	   6:	   Renewable	   fuels	   categories	   as	   outlined	   by	   RFS2	   (adapted	   from	   Schnepf	   and	  Yacobucci,	  2013).	  	  82	  Fuel	  Category	   Emissions	  Reduction	   Fuel	  Type	   2013	  Mandate	  Total	  renewable	  fuels	   20%	  GHG	  reduction	   Corn-­‐starch	  ethanol	  and	  all	  other	  biofuels	   16.55	  bgal	  (13.8	  bgal	  cap	  on	  corn	  ethanol)	  	   Advanced	  	   biofuels	   50%	  GHG	  reduction	   Non-­‐corn	  feedstock	  such	  as:	  sorghum	  and	  wheat	  ethanol,	  imported	  Brazilian	  ethanol,	  CAWB	  and	  BBD	  2.75	  bgal	  	   Biodiesel	   50%	  GHG	  reduction	  	   Any	  diesel-­‐like	  fuel	  from	  biomass:	  algal	  biofuels,	  mono-­‐alkyl	  esters,	  cellulosic	  diesel	  1.28	  bgal	  (adjusted	  from	  1.0	  bgal)	  B	   	   Cellulosic	  	   	   biofuels	   60%	  GHG	  reduction	   Cellulosic	  bioethanol	  and	  any	  biomass-­‐to-­‐liquid	  such	  as	  cellulosic	  gasoline	  or	  diesel	  0.014	  bgal	  (adjusted	  from	  1.0	  bgal)	  	  The	   Environmental	   Protection	   Agency	   (EPA)	   is	   responsible	   for	   implementing	   and	  monitoring	  mandated	  renewable	  fuel	  volumes	  under	  the	  RFS.	  To	  do	  so,	  the	  EPA	  calculates	  annual	  percentage	  requirements	  for	  each	  biofuel	  category	  of	  RFS2.	  Percentages	  are	  used	  to	  determine	   an	   individual	   company’s	   renewable	   volume	   obligation	   (RVO).	   Renewable	  identification	  numbers	  (RINs)	  were	  created	  as	  a	  tracking	  system,	  issued	  to	  the	  producer	  or	  importer	   at	   the	   point	   of	   production	   or	   importation.	  When	   the	   producer	   or	   importer	   sells	  biofuels	  to	  a	  blender	  the	  RINs	  are	  transferred.	  By	  blending	  the	  renewable	  fuel	  with	  gasoline	  for	  retail	  sale	  or	  export	  the	  RINs	  are	  separated	  from	  the	  fuel	  and	  are	  used	  by	  the	  blender	  for	  compliance	  with	  their	  RVO	  or	  traded	  (Schnepf	  and	  Yacobucci,	  2013).	  Tradability	  of	  RINs	  has	  created	  a	  market	  for	  them,	  as	  availability	  and	  price	  of	  different	  biofuel	  products	  varies	  from	  state	   to	   state.	   Blenders	   unable	   to	   meet	   their	   RVO	   purchase	   RINs	   from	   those	   who	   have	  blended	  beyond	  their	  RVO.	  Additional	   federal	   and	   state	   subsidies	   exist	   beyond	   the	   blended	   fuel	   tax	   credits	   and	  RFS2.	   Complicated	   combinations	   of	   producer	   incentives,	   renewable	   fuel	   standards,	   state	  subsidies,	  feedstock	  incentives	  and	  more	  exist,	  varying	  from	  state	  to	  state,	  however	  experts	  consider	  these	  supplementary	  to	  RFS2	  (Tyner,	  2008).	  It	  is	  apparent	  that	  biofuels,	  especially	  ethanol,	  have	  had	  substantial,	  long-­‐term	  incentives	  in	  the	  United	  States.	  	  More	  recently,	  the	  U.S.	  biofuels	  industry	  is	  facing	  yet	  another	  period	  of	  stalled	  growth.	  Since	   2008,	   consumption	   of	   biofuels	   in	   the	   U.S.	   has	   slowed	   significantly	   as	   bioethanol	  consumption	   has	   plateaued.	   This	   situation	   is	   directly	   attributed	   to	   the	   emergence	   of	   the	  “blend	  wall”.	  Presently,	  ethanol	   is	  be	  blended	  with	  gasoline	   in	  two	  different	  volumes,	  E10,	  and	  E85.	  Gasoline	  E10	  blends	  can	  be	  consumed	  in	  all	  vehicles	  and	  E85	  is	  for	  use	  in	  special	  	  83	  flexi-­‐fuel	   vehicles	   only.	   However,	   99%	   of	   all	   ethanol	   in	   the	   U.S.	   is	   consumed	   as	   E10,	  therefore	  the	  U.S.	   is	   faced	  with	  a	  situation	  where	  gasoline	  consumption	  is	   limiting	  ethanol	  consumption.	   Projected	   gasoline	   consumption	   in	   an	   E10	   market	   has	   resulted	   in	   ethanol	  demand	  that	  falls	  short	  of	  that	  mandated	  by	  RFS2.	  This	  results	  in	  two	  opposing	  realities,	  the	  RFS2	   requires	   higher	   volumes	   of	   biofuels	   to	   be	   blended	   each	   year	   until	   2022,	   while	   the	  physical	  blend	  wall	  may	  result	   in	  declining	  ethanol	  consumption	  as	  gasoline	  consumption	  falls	   in	   the	   US,	   impart	   due	   to	   poor	   economic	   conditions	   and	   improving	   fuel	   efficiencies	  (Tyner	   and	   Viteri,	   2010).	   Assuming	   all	   ethanol	   is	   consumed	   as	   E10,	   current	   gasoline	  consumption	  only	  allows	   for	  ~13	  billion	  gallons	  of	   ethanol	   to	  be	   consumed,	   less	   than	   the	  RFS2	  mandates	  for	  2013-­‐2022.	  	  Government	   support	   for	   the	   combustion	   of	   bioenergy	   in	   modern	   application	  emerged	  amid	  high	  oil	  prices	  in	  the	  shadow	  of	  the	  1973	  OPEC	  oil	  crisis.	  	  A	  component	  of	  the	  National	   Energy	  Act	   of	   1978,	   known	   as	   the	   Public	  Utility	  Regulatory	   Policies	  Act	   (PURA),	  required	  that	  all	  utility	  providers	  purchase	  electricity	  at	  fixed	  price	  from	  qualified	  facilities	  employing	   renewable	   fuels	   (Abel,	   2006).	   Although	   the	   PURA	   mandate	   was	   open	   to	   all	  renewable	   energy	   sources,	   not	   solely	   bioenergy,	   it	   resulted	   in	   favourable	   conditions	   for	  increasing	  bioenergy	  production,	  as	  the	  combustion	  of	  biomass	  to	  generate	  electricity	  was	  cost	  competitive	  compared	  to	  other	  renewable	  energy	  sources	  at	  this	  time.	  Many	  bioenergy	  facilities	  were	   built	   as	   a	   result	   of	   PURA,	   two	   thirds	   of	   the	   35	   bioenergy	   facilities	   built	   in	  California	  at	   this	   time	  were	  participating	   in	   the	   fixed	  price	  agreement	  (Morris,	  2002).	  The	  policy	  was	  successful	  at	  created	  burgeoning	  demand	  for	  woody	  biomass	   from	  1980-­‐	  early	  2000s	  (Aguilar	  et	  al.	  2011).	  In	  2005,	  the	  Energy	  Policy	  Act	  signaled	  an	  end	  to	  the	  purchase	  requirements	   (Energy	   Policy	   Act,	   2005).	   Following	   enactment	   of	   the	   Energy	   Policy	   Act,	   a	  slight	   decline	  was	   seen	   in	   the	   use	   of	  woody	  biomass	   for	   energy,	   however	   it	   is	   difficult	   to	  discern	   if	   this	  was	  a	   result	  of	   the	  act	  alone	  or	  a	  number	  of	  other	  external	   factors,	  namely	  declining	  domestic	  paper	  production.	  	   In	   addition	   to	   renewable	   energy	   mandates	   of	   PURA,	   the	   U.S.	   government	   has	  provided	  significant	  tax	  incentives	  and	  grants	  for	  bioenergy	  since	  the	  1990s.	  	  The	   Energy	  Policy	   Act	   of	   1992	   created	   a	   tax	   credit	   for	   the	   production	   of	   bioenergy	   in	   a	   closed-­‐loop	  system.	  Under	   the	   act,	   a	   closed-­‐loop	   system	   referred	   to	   facilities	   that	   combusted	  biomass	  for	  energy	  in	  which	  the	  feedstock	  employed	  was	  energy	  crops	  (Energy	  Policy	  Act,	  1992).	  In	  2004,	  the	  American	  Jobs	  Creation	  Act	  expanded	  the	  production	  tax	  credit	  to	  include	  open-­‐loop	   bioenergy	   generation,	   which	   includes	   the	   combustion	   of	   forest	   and	   pulp-­‐related	  	  84	  biomass,	   effectively	   ensuring	   all	   bioenergy	   systems	   now	   qualified	   for	   the	   credit.	   The	   tax-­‐credit	   provided	   for	   open-­‐loop	   biomass	   ($10/MWh)	   was	   less	   than	   that	   for	   closed-­‐loop	  ($21/MWh)	  bioenergy	  production	  (American	  Jobs	  Creation	  Act,	  2004).	  Eligibility	  for	  open-­‐loop	  facilities	  was	  restricted	  to	  a	  five-­‐year	  period,	  expiring	  by	  2010.	  	  After	   the	  passage	  of	   the	  U.S.	  Highway	  Act	   of	   2005,	   owners	  of	  U.S.	  Kraft	   pulp	  mills	  began	  exploiting	  the	  Alternative	  Fuel	  Provision	  tax	  credit	  put	  in	  place	  by	  the	  act,	  originally	  designed	   to	   promote	   renewable	   fuels	   in	   the	   transport	   sector.	   By	  mixing	   0.1%	   diesel	   fuel	  with	   the	   black	   liquor,	   prior	   to	   combustion	   in	   the	   recovery	   boiler,	   the	   black	   liquor/diesel	  mixture	  was	  considered	  a	  biofuel	  and	  qualified	  for	  a	  USD$0.50/gallon	  tax	  credit.	  Pulp	  mills	  in	   the	   U.S.	   that	   took	   part	   in	   the	   program	   experienced	   significant	   financial	   payouts	   to	   the	  tune	   of	   USD$6	   billion	   in	   2009	   alone,	   effectively	   subsidizing	   the	   U.S.	   pulp	   industry.	   	   The	  policy	   was	   seen	   as	   a	   failure	   as	   it	   awarded	   the	   pulp	   and	   paper	   industry	   handsomely	   for	  increasing	  their	  consumption	  of	  fossil	  fuels	  as	  diesel	  is	  not	  traditionally	  blended	  with	  black	  liquor,	   effectively	   increasing	   the	   GHG	   emissions	   associated	   with	   the	   mills.	   Despite	   the	  generous	   subsidy	  payout,	  bioenergy	  generation	  within	   industry	   fell	   in	   the	   final	  quarter	  of	  2008	  (Aguilar	  et	  al.	  2011).	  	  	   The	   American	   Recovery	   and	   Reinvestment	   Act	   of	   2009	   is	   regarded	   as	   one	   of	   the	  most	   effective	   incentive	  programs	   for	   the	  U.S.	   bioenergy	   sector	   (Becker	   et	   al.	   2009).	   This	  energy	   tax	   credit	   has	   successfully	   stimulated	   growth	   in	   biomass-­‐based	   CHP	   and	   electric	  power	   facilities	   across	   the	   commercial	   and	   industrial	   sectors	   (Aguilar	   et	   al.	   2011).	   In	   the	  residential	  sector,	  the	  Residential	  Energy	  Efficiency	  Tax	  Credit	  of	  2006	  provided	  residents	  with	  tax	  credit	  up	  to	  $500	  for	  high-­‐efficiency	  biomass	  stoves	  installed.	  In	  2009	  the	  limit	  was	  increased	   to	   $1500	   and	   remains	   a	   major	   incentive,	   increasing	   residential	   bioenergy	  consumption,	  (DSIRE,	  2009).	  	  	   Combined	  with	  the	  slew	  of	  tax	  credits,	  the	  U.S.	  has	  provided	  a	  number	  of	  grants	  and	  government	  bonds	  to	  fund	  renewable	  energy	  generation,	  for	  which	  bioenergy	  qualified.	  The	  Renewable	  Energy	   Systems	   and	  Energy	  Efficiency	   Improvements	  Program	  of	   2003	   is	   one	  such	   grant,	   provided	   funding	   for	   feasibility	   studies	   and	   renewable	   energy	   systems	   in	   the	  commercial	  and	  electricity	  sectors.	  In	  2008	  the	  program	  evolved	  into	  the	  Rural	  Energy	  For	  America	   Program	   Grant	   and	   was	   expanded	   from	   23M	   US$	   in	   2003	   to	   70M	   US$	   in	   2012	  (Aguilar	  et	  al.	  2011).	  	  Unlike	  biofuels	  production,	  which	  is	  dictated	  by	  the	  Renewable	  Fuels	  Standard	  (see	  section	   6.3.4b),	   no	   nation	  wide	  mandate	   exists	   to	   guarantee	   required	   levels	   of	   bioenergy	  	  85	  generation.	   In	   its	  place,	  state-­‐level	  mandates	  exist	  as	  an	  aspect	  of	   the	  Renewable	  Portfolio	  Standards	   (RPS).	   The	   RPS	   encompasses	   policies	   designed	   to	   increase	   production	   of	  electricity	   from	   renewable	   sources	   including;	  wind,	   solar,	   geothermal,	   biomass	   and	   some	  forms	   of	   hydroelectricity	   (Jeffers	   et	   al.	   2012).	   	   At	   the	   time	   of	   writing,	   30	   states	   had	   RPS	  mandates	  with	  7	  additional	  states	  implementing	  voluntary	  goals	  (U.S.	  EIA,	  2012).	  	  	  A	   breadth	   of	   policies	   is	   included	   under	   the	   RPS	   umbrella.	   	   Typically,	   an	   RPS	  mandates	   a	  minimum	  requirement	   for	   a	   share	  of	   electricity	   to	  be	   supplied	   from	  qualified	  renewable	   energy	   resources	  within	   a	   particular	   time	   frame.	   	   The	   number	   of	   policies	   and	  their	  mechanisms	  vary	  by	  state	  yet	  a	  number	  of	  renewable	  electricity	  credit	  (REC)	  trading	  markets	  have	  emerged	  as	  a	  response	  to	  state	  RPS	  targets.	  	  RECs	  operate	  in	  a	  similar	  fashion	  to	   Renewable	   Identification	   Numbers	   (RINs,	   see	   section	   6.3.4.b),	   where	   renewable	  electricity	  producers	  must	  generate	  credits	   to	  meet	   their	  RPS	  obligation.	   	  A	  producer	   that	  collects	   surplus	   RECs	  may	   trade	   or	   sell	   them	   to	   other	   electricity	   suppliers	   who	  may	   not	  generate	  enough	  renewable	  electricity	  to	  meet	  their	  RPS	  requirements.	  	  Detailed,	  up	  to	  date	  information	   for	   individual	   state	   RPS	   is	   produced	   monthly	   by	   the	   Database	   for	   State	  Incentives	  for	  Renewables	  and	  Efficiency	  (DSIRE,	  2014).	  	  	  A	   lack	   of	   specific	   bioenergy	   policies	   and	   mandates	   are	   restricting	   widespread	  adoption	   outside	   industry.	   	   In	   2010,	   results	   from	   a	   U.S.	   Department	   of	   Energy	   (DOE)	  workshop	  suggested	  a	   lack	  of	   federal	  RPS	   targets	  and	  no	  comprehensive	  carbon	  price	  are	  the	  greatest	  barriers	  facing	  bioenergy’s	  successful	  adoption	  in	  the	  United	  States	  (U.S.	  DOE,	  2010).	   	   In	   addition	   general	   renewable	   energy	  policies,	   such	   as	   those	   outlines	   by	   the	  RPS,	  means	  bioenergy	   is	   competing	   against	   other	   renewable	   technologies	   for	   access	   to	   limited	  funding	  and	  resources.	  	  Further	  hurdles	  affecting	  widespread	  biomass	  utilization	  for	  energy	  include,	   transportation	  and	  harvesting	  costs,	   technological	   challenges	  and	  competition	   for	  feedstock	  end	  uses	   (Guo	  et	   al.	   2007).	   	   	  Despite	   the	   impediments	  outlined,	   a	   recent	   report	  from	   the	   United	   States	   Department	   of	   Agriculture	   (USDA)	   expects	   wood	   biomass	   use	   to	  contribute	  2637.63	  PJ	  in	  2015	  and	  3059.66PJ	  in	  2030	  (White,	  2010)	  3.4.4	  U.S.	  conclusion	  	   Despite	  being	  the	  world’s	  largest	  producer	  and	  user	  of	  both	  bioenergy	  and	  biofuels	  on	  an	  energy	  basis,	   there	  has	  not	  been,	  and	   it	   is	  unlikely	  that	   there	  ever	  soon	  will	  be,	  any	  competition	   for	   biomass	   for	   either	   bioenergy	   or	   biofuel	   production	   in	   the	   US.	   Biomass	  emerged	   as	   the	   largest	   source	   of	   renewable	   energy	   in	   the	   United	   States,	   due	   to	   its	  integration	  within	  the	  forest	  sector.	  As	  U.S.	  pulp	  and	  paper	  production	  declined	  ~2004,	  in-­‐	  86	  mill	   bioenergy	   generation	   also	   decreased.	   Coincidentally,	   domestic	   biofuels	   increased	  significantly	  over	  this	  time,	  expanding	  exponentially	  (mainly	  bioethanol).	  	  The	  expansion	  of	  biofuels	  in	  the	  U.S.	  is	  largely	  thanks	  to	  government	  policies	  based	  on	   improving	  domestic	  energy	  security,	  as	  evident	   from	  the	  government	  support	  schemes	  passed	  over	  the	  last	  40	  years	  (the	  names	  alone	  are	  very	  indicative	  of	  this).	  	  	   Today,	   significant	   resistance	   limiting	   further	   consumption	   of	   these	   alternative	  energy	  sources	  hinders	  further	  biofuels	  and	  bioenergy	  development.	  The	  persistence	  of	  the	  blend	   wall	   and	   increasing	   domestic	   oil	   and	   gas	   production	   has	   resulted	   in	   bioethanol	  consumption	   limitations,	   and	   lowered	   the	   cost	   competitiveness	   of	   bioenergy	   projects.	  Growth	   in	   the	   world	   markets	   for	   these	   products	   has	   caused	   U.S.	   exports	   of	   both	   wood	  pellets	   and	   biofuels	   to	   increase,	   especially	   as	   domestic	   consumption	   continues	   to	  experience	   limitations.	  Without	   clear,	   long-­‐term	   support	   for	   bioenergy	   or	   biofuels	   in	   the	  United	  States,	  exports	  of	  these	  products	  may	  continue	  as	  international	  markets	  develop.	  An	  interesting	  situation	  may	  arise	  in	  the	  U.S.	  in	  which	  the	  country	  becomes	  a	  global	  supplier	  for	  bioenergy	   and	   biofuel	   products,	   due	   to	   their	   abundance	   of	   low-­‐cost	   biomass,	   with	   high	  global	   market	   prices	   for	   bioenergy	   and	   biofuel	   products	   out	   competing	   the	   domestic	  American	  market	  for	  these	  products.	  	  	   	  	  87	  CHAPTER	  FOUR:	  CONCLUSIONS	  FROM	  THE	  COUNTRY	  COMPARISONS	  	  	   As	  evident	  from	  the	  case	  studies,	  variation	  exist	  in	  how	  biomass	  is	  employed	  within	  both	  bioenergy	  and	  biofuels	  in	  all	  countries	  examined.	  This	  chapter	  complies	  data	  from	  the	  case	  studies	  on	  biomass	  consumption	  and	  allocation	  to	  bioenergy	  and	  biofuels	  in	  an	  attempt	  to	  extrapolate	  broader	  patterns	  with	  respect	  to:	  the	  importance	  of	  biomass	  in	  the	  energy	  mix,	  chief	  biomass	  applications,	  the	  status	  of	  competition	  and	  the	  influence	  of	  the	  four	  identified	  drivers	  on	  biomass	  allocation.	  	  	  4.1	  The	  importance	  of	  biomass	  in	  their	  current	  energy	  mix	  Biomass	  is	  the	  largest	  source	  of	  renewable	  energy	  in	  the	  world	  and	  in	  all	  of	  the	  countries	  examined.	  Consumption	  of	  biomass	  for	  energy	  and	  fuels	  is	  outlined	  as	  a	  proportion	  of	  total	  energy	  in	  figure	  25.	  This	  figure	  reveals	  that	  it	  is	  important	  to	  examine	  both	  biomass	  consumption	  as	  a	  proportion	  of	  total	  energy	  and	  the	  total	  energy	  generated	  from	  biomass	  when	  trying	  to	  truly	  discern	  how	  important	  biomass	  is	  for	  energy	  generation	  in	  a	  country.	  	  Figure	  25:	  Consumption	  of	  biomass	  as	  a	  proportion	  of	  total	  energy	  demand	  for	  the	  country	  profiles	  (original	  figure	  data	  compiled	  from	  DEA,	  2012;	  MME,	  2012;	  SVEBIO,	  2013;	  U.S.	  EIA,	  2012).	  	   Despite	   the	   United	   States’	   dominance	   as	   the	   global	   leader	   in	   biofuel	   production	  (2053	  PJ	  in	  2011)	  and	  bioenergy	  generation	  (2600	  PJ	  in	  2011)	  the	  contribution	  of	  biomass	  to	   total	   energy	   demand	   is	   the	   second	   lowest	   of	   all	   countries	   examined	   at	   4.5%.	   This	  incongruity	   is	   the	  result	  of	  a	  comparatively	  high-­‐energy	  demand	  (~103	  EJ	   in	  2011)	  of	   the	  0	   5	   10	   15	   20	   25	   30	   35	   40	  Sweden	  Denmark	  Brazil	  US	  Biomass	  as	  a	  percentage	  of	  total	  energy	  consumption	  	  88	  U.S.	   compared	   to	   the	   other	   country	   profiles.	   In	   contrast,	   Sweden’s	   biomass	   consumption	  accounted	   for	  469	  PJ	   in	  2013,	  an	  order	  of	  magnitude	  smaller	   than	  the	  US,	  although	   it	  was	  the	  largest	  energy	  source	  in	  the	  country,	  accounting	  for	  34%.	  In	  Brazil,	  the	  high	  penetration	  of	  biomass	  within	  the	  industrial	  energy	  mix	  (over	  50%	  of	  total	  bioenergy	  is	  within	  industry)	  largely	   explains	   why	   biomass	   forms	   27%	   of	   the	   country’s	   final	   energy	   mix.	   Brazil’s	  industrial	   operations	   account	   for	   the	  majority	   of	   the	   country’s	   energy	   demand	   as	   private	  energy	  demand	  for	  heating	  and	  transportation	  is	  low	  when	  compared	  to	  Denmark,	  Sweden	  or	  the	  United	  States.	  	  The	   countries	   examined	   in	   this	   thesis	   revealed	   that	   bioenergy	   is,	   by	   far,	   the	  most	  dominant	   application	   for	   biomass	   in	   most	   countries’	   energy	   mixes	   (figure	   26).	   Biofuels	  make	  only	  a	  small	  contribution	  to	  biomass	  consumption,	  even	  in	  Brazil,	  the	  second	  largest	  biofuel	  producer	  in	  the	  world.	  Although,	  in	  the	  United	  States	  biofuel	  consumption	  is	  rapidly	  approaching	  that	  of	  bioenergy	  and	  may	  surpass	  it	  in	  the	  future	  with	  further	  development	  of	  advanced	  biofuels.	  	  4.2	  The	  state	  of	  biomass	  competition	  Relative	   consumption	  of	  bioenergy	  and	  biofuels	   are	   compared	   for	   each	   country	   in	  figure	  26.	  In	  the	  countries	  studies	  limited	  competition	  for	  biomass	  occurs	  between	  biofuel	  production	  and	  bioenergy	  generation	  as	  different	  feedstocks	  are	  used	  for	  these	  applications.	  Agriculture	  products,	  mainly	  sugar,	  starch	  and	  oil	  rich	  biomass	  crops,	  are	  the	  predominant	  biofuel	  feedstocks	  and	  are	  unsuitable	  for	  bioenergy	  generation;	  thus	  competition	  is	  mostly	  absent	  at	  present.	  	  Figure	  26:	  Comparison	  of	  bioenergy	  and	  biofuel	  consumption,	  expressed	  in	  petajoules,	   for	  	  89	  all	   case	   countries	   (original	   figure	   data	   compiled	   from	   DEA,	   2012;	   MME,	   2012;	   SVEBIO,	  2013;	  U.S.	  EIA,	  2012).	  	  	  Increased	   targets	   for	   biofuel	   blending,	   heightened	   sustainability	   concerns	   and	  realized	   commercial	   scale	   lignocellulosic	   ethanol	   facilities	   indicate	   a	   growth	   of	   advanced	  biofuels	   in	   the	   future.	  Under	   these	   circumstances	   it	   could	  be	  anticipated	   that	   competition	  for	   biomass	   between	   biofuels	   and	   bioenergy	   would	   increase.	   Yet	   when	   several	   of	   the	  current	   commercial	   biofuel	   plants	   were	   examined	   in	   detail,	   it	   became	   apparent	   that	  competition	   is	   unlikely	   to	   occur,	   even	   under	   circumstances	   where	   widespread	  commercialization	   of	   advanced	   biofuel	   is	   realized.	   All	   currently	   commercial	   cellulosic	  ethanol	  plants	  rely	  on	  the	  co-­‐generation	  of	  biofuels	  and	  bioenergy	  to	  render	  the	  processes	  economically	  viable.	  Since	  the	  October	  2013	  opening	  of	  Beta	  Renewable’s	  cellulosic	  ethanol	  operation	   in	  Crescentino,	   Italy	  (83	  ML	  biofuel	  and	  13MWe	  bioenergy)	   two	  other	   facilities;	  Abengoa	  (100	  ML	  biofuel	  and	  22	  MWe	  bioenergy)	  and	  GranBio	  (82	  ML	  biofuel	  and	  17	  MWe)	  have	  both	  began	  the	  co-­‐production	  of	  cellulosic	  biofuels	  and	  bioenergy.	  The	  major	  benefits	  from	  co-­‐production	  are	  two	  fold:	  bioenergy	  contracts	  improve	  cost	  competitiveness	  of	  fuel	  production	  and	  energy	  generation	  utilizes	  waste	  lignin.	  The	  long-­‐term	  price	  guarantee	  of	  an	  electricity	  contract	  makes	  bioenergy	  an	  attractive	  co-­‐product	  as	   it	  ensures	  a	   fixed	   income	  for	  the	  facility,	  helping	  to	  improve	  cost-­‐competitiveness	  of	  the	  biofuel	  products.	  Combustion	  of	  the	  energy	  dense	  lignin	  helps	  to	  minimize	  processing	  waste,	  however	  this	  fraction	  is	  only	  considered	   a	   waste	   stream	   when	   enzymatic	   hydrolysis	   is	   employed.	   Thermochemical	  conversion	  of	  biomass	  to	  biofuels	  will	  use	  the	  lignin	  fraction	  thus	  bioenergy	  co-­‐generation	  would	   be	   limited.	   At	   the	   time	   of	   writing	   no	   commercial	   scale	   thermochemical	   advanced	  biofuel	  plants	  were	  in	  operation.	  	  4.3	  The	  drivers	  for	  biomass	  allocation	  Identifying	  what	  factors	  have	  influenced	  biomass	  distribution	  in	  the	  past,	  assessing	  their	   present	   contribution	   to	   allocation	   decisions	   and	   how	   they	  might	   influence	   possible	  competition	  in	  the	  future	  was	  one	  of	  the	  objectives	  of	  this	  thesis.	  Although	  energy	  security	  and	   climate	   change	   were	   two	  major	   drivers,	   strong	   regional	   variation	   exists	   in	   both	   the	  cost-­‐competitiveness	   of	   biomass	   based	   energy	   and	   fuels	   and	   the	   prevailing	   economic	  interests	   of	   each	   country.	   The	   relative	   importance	   of	   these	   country-­‐specific	   drivers	   and	  their	   influence	  on	  biomass	  employment	   for	  bioenergy	  or	  biofuel	   applications	   is	  discussed	  below.	  	  90	  4.3.1	  Energy	  security	  	   Energy	   security	   concerns	   have	   been	   an	   important	   driver	   for	   the	   emergence	   of	  bioenergy	  and	  biofuels	  in	  many	  of	  the	  country	  profiles.	  The	  government	  policies	  that	  arose	  in	  response	  to	  energy	  security	  concerns	  provided	  a	  structural	  base	  for	  both	  bioenergy	  and	  biofuels	  development.	  Recently,	  increased	  access	  to	  unconventional	  oil	  and	  gas	  has	  changed	  the	   energy	   landscape,	   lessening	   the	   impact	   of	   energy	   security	   concerns	   as	   a	   driver.	  Presently,	  energy	  security	  cannot	  be	  considered	  an	  essential	  pre-­‐requisite	  for	  bioenergy	  or	  biofuel	  development.	  This	  may	  change	  in	  the	  future	  as	  fluctuations	  in	  global	  oil	  prices	  could	  make	   some	   domestic	   sources	   uncompetitive,	   there	   by	   reintroducing	   energy	   security	  concerns.	  Furthermore,	   the	   incidence	  of	  an	  energy	  security	   threat	   cannot	  be	  used	   to	  predict	  biomass	   allocation	   to	   bioenergy	   or	   biofuels.	   Although	   this	   issue	   played	   a	   key	   role	   in	   the	  development	   of	   biofuels	   in	   both	   Brazil	   and	   the	   United	   States,	   it	   was	   also	   crucial	   in	   the	  development	   of	   bioenergy	   technologies	   in	   Denmark	   and	   Sweden	   during	   the	   same	   time	  period.	   Salience	   of	   energy	   security	   does	   not	   appear	   to	   favour	   biomass	   allocation	   to	   one	  conversion	  technology	  over	  another.	  	  	  	   Energy	   security	   concerns	   change	   over	   time	   with	   shifting	   energy-­‐	   markets,	  technologies,	   supply	   and	   demand	   but	   this	   does	   not	   necessarily	   change	   biomass	  apportionment	   decisions.	   Despite	   varying	   levels	   of	   energy	   security	   and	   bioenergy	   and	  biofuel	   consumption	   in	   all	   of	   the	   country	   profiles	   over	   the	   last	   few	   decades,	   neither	  application	  appears	  to	  be	  correlated	  to	  energy	  security	  at	  present.	  However,	  transportation	  fuels	   are	   primarily	   produced	   from	   oil,	   while	   stationary	   energy	   has	   multiple	   alternatives;	  thus	   in	   the	   absence	   of	   domestic	   oil	   resources,	   energy	   security	   could	   act	   as	   a	   driver	   for	  biofuel	  development.	  	  4.3.2	  Climate	  change	  mitigation	  	   As	  seen	  in	  the	  case	  studies,	  support	  for	  increasing	  the	  contribution	  of	  bioenergy	  and	  biofuels	  is	  often	  framed	  within	  the	  context	  of	  climate	  change	  mitigation	  potential.	  Desires	  to	  avoid	   the	   negative	   externalities	   associated	   with	   fossil	   fuels	   have	   justified	   investment	   in	  bioenergy	   and/or	   biofuels.	   As	   a	   driver,	   climate	   change	   mitigation	   has	   historically	   been	  important	  in	  spurring	  the	  development	  of	  bioenergy	  and	  biofuels.	  Apportionment	  decisions	  for	   biomass	   are	   largely	   dependent	   upon	   the	   perceived	   sustainability	   of	   biomass	   and	   the	  ability	   of	   bioenergy	   or	   biofuels	   to	   achieve	   GHG	   emission	   reduction	   targets.	   Diverging	  perspectives	   are	   evident	  when	   examining	   the	   different	   approaches	   to	   biomass	   utilization	  	  91	  that	   occurred	   in	   Denmark	   and	   Sweden	   in	   the	   early	   2000s.	   Swedish	   adoption	   of	   biofuels	  starkly	   contrasts	   the	   rejection	   of	   EU	   blend	  mandates	   in	   Denmark	   and	   illustrates	   that	   the	  presence	  of	  climate	  change	  mitigation	  desires	  is	  insufficient	  for	  discerning	  how	  biomass	  is	  allocated	  in	  a	  given	  region.	  	  	  In	   some	   cases,	   the	   initial	   deployment	   of	   biofuels	   and	   bioenergy	   was	   carried	   out	  without	   much	   emphasis	   on	   actual	   sustainability	   and	   climate	   change	   mitigation	   effects.	  Between	   2006	   and	   2013	   stringent	   sustainability	   criteria	   for	   biofuels	   in	   the	   EU	   and	   U.S.	  means	  that	  implementation	  should	  have	  “real”	  climate	  benefits	  (Scarlat	  &	  Dallemand,	  2011).	  Similar	   guidelines	   are	   under	   development	   for	   bioenergy	   feedstocks	   in	   the	   EU	   and	  Scandinavia.	   As	   sustainability	   guidelines	   become	   more	   common	   they	   should	   have	  implications	   for	   biomass	   competition;	   sustainably	   harvested	   lignocellulosic	   biomass	   will	  experience	  greater	  climate	  benefits	  than	  current	  agriculture	  based	  biofuel	  feedstocks	  (such	  as	  corn).	  It	   is	   likely	  that	  increased	  climate	  change	  concerns	  could	  increase	  competition	  for	  lignocellulosic	   biomass.	   Specific	   targeting	   of	   transportation-­‐derived	   emissions	  will	   propel	  biofuels	  to	  be	  featured	  prominently	  in	  this	  debate.	  	  	   To	   further	   complicate	   matters,	   recent	   studies	   have	   highlighted	   an	   increasing	  uncertainty	  regarding	  the	  GHG	  emissions	  reduction	  potential	  of	  bioenergy	  and	  conventional	  biofuel	  technologies	   (IEA,	  2013b;	  IRENA,	  2014).	  The	  origins	  of	  this	  ambiguity	  arise	  chiefly	  from	   feedstock	   sustainability	   and	  an	   increasing	  understanding	  of	   environmental	   costs	   for	  both	   direct	   and	   indirect	   land	   use	   (IRENA,	   2014).	   Confusion	   surrounding	   actual	   climate	  benefits	  of	  bioenergy	  and	  biofuels,	  combined	  with	   loosened	  climate	  targets	   in	  the	  wake	  of	  the	  economic	  recession,	  has	  contributed	  to	  slower	  biofuel	  and	  bioenergy	  growth	  in	  the	  EU.	  It	  is	  difficult	  to	  discern	  what	  influence	  climate	  change	  may	  have	  on	  the	  future	  of	  bioenergy	  and	  biofuel	  markets,	  and	  any	  suggestions	  made	  would	  be	  pure	  speculation	  and	  beyond	  the	  scope	  of	  this	  thesis.	  	  4.3.3	  Prevailing	  economic	  interests	  The	   prevailing	   economic	   interests	   within	   a	   given	   country	   form	   powerful	   interest	  groups.	  These	  groups	  lobby	  government	  policy	  makers	  in	  an	  attempt	  to	  advance	  their	  own	  economic	  interests	  and	  have	  a	  significant	  impact	  on	  government	  policies.	  Historically	  these	  groups	   have	   been	   key	   drivers	   for	   both	   bioenergy	   and	   biofuel	   development	   in	   all	   of	   the	  country	  profiles	  examined.	  	  Furthermore,	   the	   major	   biomass	   producing	   industries	   in	   a	   given	   country	   can	   be	  used	   to	  predict	   the	  predominant	  biomass	   feedstocks	  employed,	  and	  how	  these	   feedstocks	  	  92	  are	  used	  within	   the	  energy	   sector.	  The	  nature	  of	   the	   feedstock	  be	   it	   agricultural	  or	   forest	  based,	   can	   be	   used	   to	   further	   discern	   how	   biomass	   resources	   will	   be	   allocated	   towards	  biofuel	  or	  bioenergy	  production.	  For	  example	  in	  Brazil,	  where	  sugarcane	  is	  one	  of	  the	  most	  important	   agricultural	   crops	   in	   the	   country,	   available	   sugar	   is	   best	   suited	   for	   biofuel	  production.	   In	   contrast,	   Sweden,	   with	   abundant	   forest	   biomass	   and	   strong	   economic	  interest	  groups	  in	  this	  industry	  will	  promote	  the	  utilization	  of	  forest	  biomass	  in	  bioenergy	  generation.	  	  Currently,	   the	   majority	   of	   advanced	   biofuel	   production	   is	   targeting	   agriculture	  residues	   such	  as	   straw,	   corn	   stover	  and	   sugarcane	  bagasse	  as	   feedstocks.	  As	   technologies	  develop	  that	  can	  convert	  forest	  biomass	  to	  biofuels,	  a	  shift	  in	  biomass	  allocation	  could	  occur.	  	  Prevailing	  economic	  interests	  outside	  of	  biomass	  producing	  and	  handling	  industries	  also	   have	   the	   ability	   to	   dictate	   the	   success	   of	   bioenergy	   and/or	   biofuels.	   The	   diverging	  reactions	  of	   the	  Brazilian	  and	  American	  automotive	   industries	   to	  biofuel	  development	  are	  an	   excellent	   example	   of	   this.	   The	   widespread	   acceptance	   of	   flex-­‐fuel	   vehicles	   and	   high	  ethanol	   blends	   in	   Brazil	   starkly	   contrasts	   the	   ongoing	   blend-­‐wall	   situation	   in	   the	   United	  States.	  	  4.3.4	  Cost	  competitiveness	  of	  bioenergy	  or	  biofuels	  	  In	  the	  competition	  for	  biomass,	  the	  ability	  of	  one	  technology	  to	  contest	  with	  another	  for	   the	   same	   feedstock	   is	   very	  much	   dependent	   upon	   the	   cost	   competitiveness,	   with	   the	  more	   economically	   viable	   technology	   likely	   to	   prevail.	   Traditionally,	   this	   notion	   has	   seen	  lignocellulosic	   biomass	   favoured	   for	   bioenergy	   generation	   rather	   than	   biofuels,	   as	   the	  technical	   challenges	   associated	   with	   bioenergy	   are	   more	   surmountable	   than	   those	  associated	   with	   biofuel	   production.	   However,	   as	   identified	   earlier	   this	   is	   changing	   as	  advanced	  biofuel	  technologies	  become	  commercialized.	  Furthermore,	   trepidations	   surrounding	   cost	   competitiveness	   can	   evaporate	   when	  other	  drivers	  are	  present	  and	  their	  attention	  deemed	  more	  critical.	  In	  these	  circumstances,	  technologies	   often	   benefit	   from	   extensive	   policy	   support.	   This	   was	   the	   case	   with	   early	  biofuel	  development	   in	   the	  United	  States	  and	  Brazil	  and	   the	  conversion	  of	  many	  CHP	  and	  district	  heating	  facilities	  from	  fossil	  fuels	  to	  biomass	  in	  Scandinavia.	  	  4.3.5	  Policy	  and	  biomass	  allocation	  This	   thesis	   has	   identified	   a	   number	   of	   drivers	   involved	   in	   the	   development	   of	  bioenergy	   and/or	   biofuels.	   Despite	   the	   importance	   of	   energy	   security,	   climate	   change	  	  93	  mitigation	   desires,	   prevailing	   economic	   interests,	   and	   cost-­‐competitiveness;	   government	  policy	   mechanisms	   over-­‐ride	   all	   other	   drivers	   and	   provide	   a	   foundation	   for	   bioenergy	  and/or	   biofuel	   development.	   Policies	   are	   necessary	   to	   support	   both	   the	   advancement	   of	  bioenergy	  and	  biofuel	  technologies.	  	  In	   each	   country	   profiles	   it	   was	   observed	   that	   the	   relative	   importance	   of	   energy	  security,	  climate	  change	  mitigation,	  prevailing	  economic	  interests,	  and	  cost	  competitiveness	  are	  capable	  of	  changing	  overtime.	  Policies,	  as	  a	  process	  are	  unable	  to	  change	  as	  rapidly	  as	  these	   other	   drivers	   (in	   democratic	   societies,	   thus	   excluding	   the	   Brazilian	   military	  dictatorship	  1964-­‐1985).	  The	  slow	  reactionary	  capacity	  of	  policy	  means	  their	  authority	  on	  biomass	   allocation	   is	  more	   long-­‐standing	   than	   the	   other	   drivers.	   In	  Brazil	   and	   the	  United	  States,	  energy	  security	  threats	  existed	  during	  the	  onset	  of	  biofuel	  development	  and	  biofuel	  policies	  were	   largely	  born	  out	  of	   this	   threat,	  however	  when	  energy	  security	   issues	  waned	  over	  time,	  the	  policies	  did	  not	  immediately	  follow.	  As	  a	  result,	  the	  presence	  of	  strong	  biofuel	  policies	  (RFS	  and	  Pró-­‐Álcool)	  allowed	  for	  further	  expansion	  of	  the	  industry	  in	  each	  country	  well	   after	   a	   decline	   in	   energy	   security.	   In	   Sweden	   and	   Denmark,	   the	   initial	   drivers	   for	  bioenergy	  development,	  have	  long	  lost	  public	  salience,	  but	  the	  policies	  implemented	  during	  the	  early	  inclusion	  of	  these	  technologies	  within	  the	  energy	  mix,	  were	  instrumental	  in	  setting	  the	  foundation	  for	  current	  biomass	  apportionment	  decisions.	  Interestingly,	  climate	  change	  mitigation	   and	   the	   related	   policies	   have	   experienced	   muted	   volatility	   in	   Sweden	   and	  Denmark,	   when	   compared	   to	   the	   United	   States.	   Understanding	   the	   causes	   of	   this	  phenomenon	  is	  outside	  the	  scope	  of	  this	  thesis.	  Policy	  support	  mechanisms	  such	  as	  subsidies,	  research	  funding	  and	  blend	  mandates	  are	   necessary	   to	   support	   pioneer	   facilities	   and	   allow	   for	   process	   optimization	   at	   the	  commercial	  scale,	  eventually	  driving	  down	  production	  costs.	  Unfortunately,	  policies	  are	  not	  always	  sufficient	   to	  promote	  and	  maintain	  production,	  particularly	   for	  biofuels,	  as	  seen	   in	  all	  country	  profiles.	  	  In	  both	   the	  United	  States	   and	  Brazil,	   binding	  blend	  mandates	  were	   introduced	   (in	  2005	  and	  1993	  respectively)	  to	  create	  a	  guaranteed	  demand	  for	  the	  fuel.	  The	  introduction	  of	  a	  22%	  blend	  mandate	  in	  Brazil	  was	  an	  effective	  way	  to	  combat	  cheap	  oil	  prices	  and	  the	  presence	   of	   mandates	   concurrently	   with	   bioethanol	   subsidies	   in	   the	   U.S.	   saw	   bioethanol	  consumption	  increase	  from	  ~354	  PJ	  in	  2005	  to	  ~1120	  PJ	  in	  2010	  (U.S.	  EIA,	  2011).	  In	  the	  US,	  unlike	  Brazil,	  mandates	  are	  not	  pegged	  as	  a	  percentage	  of	  gasoline	  consumption;	  rather	  the	  RFS	  outlines	  clear	  volumetric	  targets	  to	  be	  met	  by	  all	  fossil	  fuel	  providers.	  	  	  94	  In	  the	  EU,	  the	  2003	  Biofuel	  Directive	  introduced	  blending	  targets	  of	  2.0%	  and	  5.75%	  for	  2005	  and	  2010	  respectively,	  although	  the	  quota	  was	  non-­‐binding	  (Hveplund,	  2011).	  By	  2010	  biofuels	   accounted	   for	  only	  4.4%	  of	   transportation	   fuel	  demand,	   falling	   short	   of	   the	  mandate.	  Despite	  the	  shortfall,	  the	  previous	  year	  the	  EU	  Commission	  endorsed	  a	  minimum	  binding	   target	   of	   10%	   for	   biofuels	   in	   transport	   by	   2020.	   In	   2012	   biofuels	   reached	   5%	  of	  transportation	   fuel	   demand,	   however	   uncertainties	   regarding	   the	   future	   of	   EU	   biofuel	  policies	  and	  slow	  economic	  recovery	  in	  many	  of	  the	  member	  states	  is	  limiting	  expansion	  of	  biofuels	  in	  Europe	  (IEA,	  2014;	  UN,	  2014).	  	  Unfortunately,	  blend	  mandates	  are	  also	  subject	  to	  unforeseen	  complications	  limiting	  their	   efficiency.	   In	   the	   US,	   the	   blend	   wall	   is	   limiting	   bioethanol	   consumption	   while	  undermining	   the	   RFS	   mandates,	   while	   a	   flexible	   bioethanol	   mandate	   was	   introduced	   in	  Brazil	  in	  an	  attempt	  to	  cope	  with	  the	  fluctuating	  bioethanol	  supply	  due	  to	  variability	  in	  the	  annual	   sugar	   harvest.	   Sustainability	   concerns	   have	   changed	   the	   EU	   biofuels	   climate;	  especially	  considering	  the	  region	  relies	  on	  imports	  to	  meet	  their	  current	  biofuel	  mandates	  (UN,	   2014).	   Furthermore,	   the	   majority	   of	   member	   countries	   have	   failed	   to	   meet	   their	  targets	  since	  the	  mandates	  were	  first	  introduced	  in	  2003.	  Globally,	  blend	  mandates	  exist	  in	  over	  60	  countries,	  however	  biofuel	  production	  and	  consumption	  is	  still	  concentrated	  within	  the	   U.S.	   and	   Brazil	   as	   investors	   may	   be	   deterred	   from	   other	   nations	   with	   high	   biomass	  availability	   due	   to	   the	   unpredictable	   political	   climate	   of	   areas	   such	   as	   Russia,	   China	   and	  Africa	   (IEA,	   2014).	   This	   further	   illustrates	   the	   fact	   that,	   although	   essential	   for	  commercialization,	  government	  policies	  alone	  are	  not	  adequate	  to	  increase	  biofuel	  use.	  	  In	   the	   future,	   policies	  will	   be	   fundamental	   for	   the	   commercialization	   of	   advanced	  biofuel	   technologies	  due	   to	   their	   process	   complexity	   and	   currently	  high	  production	   costs.	  Clear	  long-­‐term	  policy	  signals	  will	  be	  crucial	  to	  stimulate	  investment	  in	  facility	  construction.	  In	   the	  wake	   of	   oil	   price	   projections	   of	   $US70/bbl	   by	   2015,	   this	  will	   be	   a	   demanding	   task	  (IEA,	   2014).	   Careful	   development	   will	   be	   required	   to	   avoid	   the	   hurdles	   previously	  experienced	   with	   conventional	   biofuel	   policies	   all	   while	   targeting	   environmental	  sustainability	   and	   limiting	   the	   economic	   cost.	   Rewarding	   carbon	   emissions	   benefits	   from	  these	   fuels	   via	   a	   carbon	   tax	   on	   fuels	   could	   be	   an	   effective	   way	   to	   differentiate	   between	  conventional	  and	  advanced	  biofuels.	  The	  success	  of	  similar	  policies	  for	  biofuels	  has	  greatly	  benefited	   the	   Swedish	   biofuel	   market	   as	   the	   country	   pays	   one	   of	   the	   highest	   prices	   on	  carbon	  in	  the	  world	  and	  currently	  leads	  the	  EU	  with	  9%	  biofuels	  in	  transportation.	  	  	  95	  Drop-­‐in	  biofuels	  present	   an	  opportunity	   to	  move	  beyond	   road	   transportation	   into	  aviation	  and	  marine	  applications.	  Furthermore	  they	  provide	  the	  ability	  for	  the	  U.S.	  to	  solve	  the	  effective	  cap	  on	  bioethanol	  consumption	  currently	  caused	  by	  the	  blend	  wall.	   It	  will	  be	  critical	   for	   these	   fossil-­‐fuel	   equivalent	   products	   to	   be	   categorized	   in	   a	   manner	   that	  recognizes	  their	  potential	  advantages	  over	  both	  conventional	  and	  advanced	  biofuels.	  	  	   	  	  96	  CHAPTER	  FIVE:	  CONCLUSIONS	  AND	  FUTURE	  RESEARCH	  	  5.1	  Conclusions	  A	  comprehensive	  review	  of	  current	  and	  projected	  global	  energy	  trends,	  with	  a	  focus	  on	   biomass-­‐based	   energy,	   indicated	   that	   there	   was	   no	   competition	   for	   biomass	   between	  bioenergy	  or	  biofuels	  applications	  and	  this	  was	  likely	  to	  remain	  the	  case	  for	  the	  foreseeable	  future.	   It	  became	  apparent	   that	  bioenergy	  generation	   is,	   and	  will	   likely	   remain,	   the	  major	  use	  for	  biomass	  even	  in	  jurisdictions	  such	  as	  Brazil	  and	  the	  US	  where	  biofuels	  are	  produced	  and	  used	  extensively.	  This	  very	  limited	  competition	  is	  primarily	  due	  to	  the	  differing	  feedstock’s	  employed	  to	  make	  bioenergy	  and	  biofuels.	  The	  vast	  majority	  of	  biofuel	  production	  uses	  conventional,	  sugar,	  starch	  and	  oil	  rich	  feedstocks,	  while	  bioenergy	  production	  is	  derived	  predominantly	  from	   woody	   biomass.	   	   Brazil	   is	   likely	   to	   be	   the	   only	   region	   where	   biomass	   competition	  might	  occur	  in	  the	  near	  future	  as	  sugarcane	  bagasse	  is	  increasingly	  used	  to	  generated	  heat	  and	   power	   at	   the	   mill	   site	   (sometimes	   exporting	   excess	   electricity	   into	   the	   grid),	   while	  companies	   such	   as	   Granbio	   and	   Raizen	   are	   assessing	   the	   potential	   of	   using	   bagasse	   as	   a	  feedstock	   for	  cellulosic	  ethanol	  production.	  However,	  rather	  than	  creating	  competition	   for	  cellulosic	   feedstocks,	   these	   facilities	   are	  more	   likely	   to	   co-­‐produce	  biofuels	   and	  bioenergy	  from	  these	  residues	  to	  achieve	  improved	  economic	  viability.	  	  It	   is	   evident	   from	   the	   exploratory	   research	   that,	   although	   there	   are	   a	   number	   of	  drivers	   involved	   in	   the	   development	   of	   bioenergy	   and/or	   biofuels,	   government	   policies	  predominate	   by	   providing	   a	   more	   stable	   structure	   for	   bioenergy	   and/or	   biofuel	  development.	   For	   both	  Brazil	   and	   the	  United	   States,	   although	   the	   energy	   security	   threats	  that	  originally	  catalyzed	  biofuel	  development	  have	  somewhat	  dissipated,	   the	  development	  of	   strong	  biofuel	  policies	   (RFS	  and	  Pró-­‐Álcool)	   enhanced	   the	  expansion	  of	   the	   industry	   in	  each	  country.	  For	  Sweden	  and	  Denmark,	  policies	  such	  as	   those	   initially	  used	  to	  better	  use	  their	   forest	   and	   agriculture	   derived	   residues	   to	   produce	   bioenergy	   and,	  more	   latterly,	   to	  reduce	   their	   fossil	   fuel	   derived	   carbon	   emission,	   will	   continue	   to	   motivate	   ongoing	  bioenergy,	  and	  to	  a	  lesser	  extent,	  biofuels,	  development.	  	  	  	  	  97	  5.2	  Future	  research	  The	  importance	  of	  policy	  in	  the	  development	  of	  biofuels	  and	  bioenergy	  suggests	  that	  future	   research	  would	   benefit	   from	   a	   cross-­‐country	   comparison.	   Unlike	   this	   study	  where	  numerous	   drivers	   were	   considered,	   focusing	   specifically	   on	   government	   support	   policies	  employed	   for	   biofuels	   and	  bioenergy	  would	   have	   significant	  merit.	   Comparisons	   between	  policy	   mechanisms	   allow	   governments	   to	   evaluate	   the	   effectiveness	   of	   their	   stimulus	  methods	  to	  those	  employed	  by	  other	  countries	  or	  regions.	  	  The	  country	  comparison	  highlighted	  the	  importance	  of	  cost-­‐competitiveness	  of	  biofuels	  for	  their	  penetration	  within	  the	  energy	  mix	  of	  a	  given	  country	  or	  region.	  Over	  the	  latter	  half	  of	  2014,	  global	  oil	  prices	  declined	  significantly	  from	  ~110$/bbl	  in	  June	  to	  ~60$/bbl	  in	  December	  (Nasdaq.	  2014).	  This	  has	  created	  an	  increasingly	  difficult	  environment	  for	  renewable	  fuels,	  which	  hope	  to	  compete	  with	  fossil	  fuels	  in	  the	  transportation	  sector.	  Many	  of	  the	  current	  government	  policies	  and	  programs	  were	  designed	  when	  long-­‐term	  oil-­‐price	  projections	  were	  in	  the	  $120/bbl	  range	  (IEA,	  2014).	  The	  structure	  of	  these	  support	  policies	  will	  have	  to	  be	  reassessed	  if	  oil	  and	  fossil	  fuel	  prices	  remain	  at	  their	  current	  levels.	  Particular	  topics	  of	  interest	  include	  evaluating	  the	  effectiveness	  of	  specific	  policy	  mechanisms	  such	  as	  feed-­‐in	  tariffs,	  carbon	  pricing,	  fuel	  taxes	  or	  emissions	  based	  vehicle	  registration	  tax.	  	  It	  is	  recognized	  that	  the	  world’s	  biomass	  supply,	  demand	  and	  trade	  will	  expand,	  if	  predictions	  by	  groups	  such	  as	  the	  IEA	  are	  to	  be	  anywhere	  close	  to	  realistic.	  However,	  a	  review	  of	  the	  international	  and	  domestically	  generated	  data	  regarding	  biomass	  utilization	  for	  energy	  generation	  revealed	  that	  there	  is	  significant	  variation	  in	  the	  projections	  that	  have	  been	  published	  by	  different	  organizations.	  For	  example,	  the	  vast	  majority	  of	  biomass	  supply	  projections	  show	  heavy	  reliance	  on	  biomass	  derived	  from	  dedicated	  energy	  crops.	  However,	  currently,	  these	  crops	  provide	  very	  limited	  volumes	  of	  biomass.	  Biomass-­‐based	  energy	  projections,	  especially	  those	  for	  biofuels,	  have	  a	  long	  history	  of	  being	  very	  optimistic.	  The	  IEA’s	  World	  Energy	  Outlook	  2013	  projections	  and	  the	  cellulosic	  biofuel	  mandates	  of	  the	  U.S.	  RFS2	  serve	  as	  just	  two	  examples.	  Future	  work	  must	  consider	  how	  to	  develop	  more	  realistic	  projections	  for	  bioenergy	  and	  biofuels	  as	  continued	  over-­‐estimation	  will	  have	  a	  negative	  influence	  on	  investors	  and	  policy	  makers,	  affecting	  the	  potential	  success	  of	  a	  given	  technology	  in	  the	  long-­‐run.	  	  	  	  98	  REFERENCES	  	  Abel	  A.	  (2006).	  CRS	  report	  for	  Congress,	  energy	  policy	  Act	  of	  2005.	  Accessed	  13	  December	  2014.	  <http://www.circleofblue.org/waternews/wp-­‐content/uploads/2010/08/CRS-­‐Summary-­‐of-­‐Energy-­‐Policy-­‐Act-­‐of-­‐2005.pdf>.	  Aguilar,	  F.	  X.,	  Song,	  N.,	  &	  Shifley,	  S.	  (2011).	  Review	  of	  consumption	  trends	  and	 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