The impacts of climate and energy policy instruments on forest bioeconomy

Jenni Miettinen and Markku Ollikainen examine how climate and energy policies affect the forest bioeconomy. The latter focuses on the sustainable use of forest resources such as producing renewable materials and bio-based products like wood, paper, and biochemicals. Forest bioeconomy also aims to promote climate mitigation by phasing out fossil resources and improving resource efficiency. One key concept is the cascading use of wood, which involves using wood in the production process for as long as possible before using it for energy production. This approach helps to maximize the value extracted from biomass and supports a more circular economy.

Climate and energy policies have a significant impact on the forest bioeconomy, influencing companies’ choices between using wood-based by-products for energy or for producing biochemical products. For example, in the European Union, the climate policy treats the burning of wood-based by-products for energy as carbon neutral to avoid double counting of emissions. This affects companies’ decision-making regarding energy production and biochemical products. When emissions trading raises electricity prices, it encourages companies to prioritize energy production from wood-based side streams reducing the cascading use. The implementation of a carbon tax on wood use, more specifically if applied to the wood-burning process, could incentivize chemical production, favoring the cascading principles.

Climate policies encouraging the cascading use of wood hence help reduce carbon emissions by diverting wood-based side streams from energy production into chemical production. Policymakers should also prioritize carbon taxes as they create better incentives and support the forest bioeconomy’s goals.

The impacts of climate and energy policy instruments on forest bioeconomy – ScienceDirect