Analysis of the wood biomass use under EFSOS II Energy scenario with the EFI-GTM model Alexander Moiseyev, Birger Solberg & Maarit Kallio UMB & EFI & METLA.

Analysis of the wood biomass use under EFSOS II Energy scenario with the EFI-GTM model

Alexander Moiseyev,Birger Solberg & Maarit Kallio

UMB & EFI & METLA

LEF biennial workshop, Nancy, May 31 – June 1, 2012

2

EFI-GTM model

• Global Forest Sector Model• Partial equilibrium model • Several regional agents maximize their profit/welfare

under perfect competition• Recursive model • Dimensions

– 36 products (6 wood, 4 rec.paper, 26 forest industry products) + Energy Wood (+ Electricity & Heat)

– 60 regions (31 in Europe)– 1–3 existing production technologies + new

technologies from investments

A1 and B2 assumptions

• GDP growth (A1- 3% EU average annual growth and for B2 – 2%)

• Industrial Wood Supply assumption (High scenario assumptions on supply of industrial roundwood from plantations in Latin America and Developing Asia regions according to FAO’s plantation study (Brown, 2000) under A1 scenario)

• Russian Logs Export Tariff at 15€/m3 under B2, no tariff assumed under A1

GDP development in the main regions for A1 (left side) and B2 (right side), Trillion US1990$

0

5

10

15

2005 2010 2015 2020 2025 2030

Trill

ions

0

5

10

15

2005 2010 2015 2020 2025 2030

Trill

ions

AfricaAsia DevelopedChina & IndiaAsia developing (other)Latin AmericaNorth America developedWestern EuropaEastern EU contriesRussia, Ukrain & Belarus

Changes in production (additional to 2030 reference scenario), Million m3

Wood based panels Sawnwood

AFRICA

ASIA

OCEANIA

LAMER

ICA

NAMERICA

Euro

pe

RUSSIA

WORLD

-11,000-10,000

-9,000-8,000-7,000-6,000-5,000-4,000-3,000-2,000-1,000

01,0002,0003,0004,0005,0006,0007,0008,0009,000

10,00011,000

B2energyA1energy

AFRICA

ASIA

OCEANIA

LAMER

ICA

NAMERICA

Euro

pe

RUSSIA

WORLD

-5,000

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000

3,000

4,000

B2energyA1energy

Changes in production (additional to 2030 reference scenario), thousands metric ton

Chemical pulp Paper and paperboard

AFRICA

ASIA

OCEANIA

LAMER

ICA

NAMERICA

Euro

pe

RUSSIA

WORLD

-2,500

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

B2energyA1energy

AFRICA

ASIA

OCEANIA

LAMER

ICA

NAMERICA

Euro

pe

RUSSIA

WORLD

-4,000

-3,000

-2,000

-1,000

0

1,000

2,000

B2energyA1energy

Changes in harvests and trade (additional to 2030 reference scenario), Million m3

Industrial wood harvests Net import into Europe

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

B2energy

A1energy

AFRICA LAMERICA NAMERICA RUSSIA Europe0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

B2energy

A1energy

Projected development of wood prices under B2 reference and B2 Energy scenarios

Sawlogs prices, US$(2005) Pulpwood prices, US$(2005)

2010 2015 2020 2025 20300

20

40

60

80

100

120

EU27(B2ref)

Norway(B2ref)

EU27(Energy)

Norway(Energy)

2010 2015 2020 2025 20300

20

40

60

80

100

120

EU27(B2ref)

Norway(B2ref)

EU27(Energy)

Norway(Energy)

European RES target in 2030 is projected to:

• Reduce wood based panels production in Europe, while Asia is gaining additional production

• Reduce sawnwood production in Europe under A1 Energy scenario, while Russia is gaining production under A1

• Reduce chemical pulp production in Europe and Russia, while North America is gaining

• Reduce paper & board production in Europe, while North America is gaining under A1 Energy scenario

• Increase industrial roundwood harvest in Russia most of all, then in Europe, North America and Latin America to a lesser extent

• Increase additional industrial roundwood imports to Europe mainly from Russia

Additional (to the reference scenario) industrial wood use for energy in Europe 2030, Million m3

B2energy A1energy0

10

20

30

40

50

60

70

80

90

100

44.7 39.3

22.519

2634

Competion for wood

Complementary harvest

Imports

In order to achieve RES target for wood in 2030 Europe is projected to:

• Increase imports of industrial roundwood by 44.7 Million m3 under B2 and 39.3 Million m3 under A1 Energy scenario

• Increase industrial roundwood harvests by additional 22.5 Million m3 under B2 and 19 Million m3 under A1 Energy scenario

• Reduce by 26 Million m3 use of wood for wood products and redirect it for energy use under B2 Energy scenario and by 34 Million m3 under A1 Energy scenario

Problems / questions:

• Are these assumptions on High Wood Mobilisation scenarios are realistic?

• Under “real” economic environment (including CO2 trading) how much wood Power mills are going to buy?

Initial assumption for detailed energy calculations with EFI-GTM-energy model

• Oil price - $100 / burrel• Hard coal price - $100 / t• Brown coal price - $25 /t• Gas price - $10 / MMBtu (USA price - $2.5 /

MMBtu)• CO2 price range: $10 – 200 /t • Coal & Gas & Wood CHP & Power mills

(including coal with wood co-firing)

International energy prices in reference and in the context of global climate action (“A roadmap for moving to a low carbon

economy in 2050” EC, 2011)

0

20

40

60

80

100

120

140

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

$08/

bo

e

Oil reference

Oil global action

Gas reference

Gas globalaction

Coal reference

Coal globalaction

Carbon price evolution, (“A roadmap for moving to a low carbon economy in 2050” EC, 2011)

Carbon price*

0.0

50.0

100.0

150.0

200.0

250.0

300.0

2020 2025 2030 2035 2040 2045 2050

€ p

er t

on

CO

2-eq

.

Reference (frag. action, ref. fossil f. prices) Effect. Techn. (glob. action, low fossil f. prices)

Effect. Techn. (frag. action, ref. fossil f. prices) Effect. Techn. (frag. action, oil shock)

Effect. Techn. (frag. action, high fossil f. prices) Delay. Electr. (glob. action, low fossil f. prices)

Delay. CCS (glob. action, low fossil f. prices) Delay. Clim. Act. (frag. action, ref. fossil f. prices)

German electricity annual production (average for 2025-2030), GWh, Gas price $10/MMBtu

C02 priceWood CHP Gas CHP Coal CHP

Coal Power Plant

Lignite CHP

Lignite Power Plant

Wind Power

Coal-Wood co-firing

10 11 359 70 326 13 000 100 000 5 000 140 000 40 00040 18 720 124 730 13 000 38 054 5 000 140 000 40 00050 18 720 124 730 13 000 38 054 5 000 140 000 40 00060 14 615 166 851 13 000 5 000 140 000 40 000 20 50070 18 720 302 708 13 000 5 000 40 000

100 18 720 302 594 13 000 5 000 40 000120 18 720 307 518 13 000 40 000150 18 720 320 404 40 000

German electricity annual production (average for 2025-2030), GWh, Gas price $15/MMBtu

C02 price

Wood CHP

Industrial wood for energy Gas CHP

Gas Power Plant Coal CHP

Coal Power Plant

Lignite CHP

Lignite Power Plant

Wind Power

Coal-Wood co-firing

10 18 718 52 000 10 634 13 000 100 000 5 000 140 000 40 00030 18 718 52 000 10 558 13 000 100 000 5 000 140 000 40 00040 18 717 52 000 10 521 13 000 100 000 5 000 140 000 40 00050 18 717 52 000 10 483 13 000 100 000 5 000 140 000 40 000

100 14 707 52 000 14 303 13 000 100 000 5 000 140 000 40 000 21 000150 24 783 5 000 166 018 30 000 13 000 100 000 5 000 40 000155 20 755 6 000 170 027 30 000 13 000 100 000 5 000 40 000 27000160 28 001 8 250 262 762 30 000 13 000 5 000 40 000170 33 386 13 600 257 339 30 000 13 000 5 000 40 000200 58 490 38 000 237 121 30 000 13 000 0 0 40 000

German electricity annual production (average for 2025-2030), GWh, Gas price $5/MMBtu

C02 priceWood CHP Gas CHP Coal CHP

Lignite CHP

Wind Power

10 10 000 311 985 13 000 5 000 40 00040 10 000 324 867 5 000 40 00050 10 000 324 828 5 000 40 00060 10 000 289 789 80 000

Remarks / questions:

• What scenario is most likely?• Is it going to be nice an easy road (low cost

Gas and Wind & Solar Power)• Or is it going to be hard way (expensive Gas

and slow Wind & Solar Power expansion.• There is a HUGE difference between scenarios