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.  .  Aguilar,  F.  X.,  Song,  N.,  &  Shifley,  S.  (2011).  Review  of  consumption  trends  and  public  policies  promoting  woody  biomass  as  an  energy  feedstock  in  the  US.  biomass  and  bioenergy,  35(8),  3708-­‐3718.  Alagappan,  L.,  Orans,  R.,  &  Woo,  C.  K.  (2011). 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