The role of the forest industry in the development of bioenergy in Sweden can hardly be overstated (Hillring et al., 2001). Forest industries are the largest users of bioenergy today, and it is in this sector that the largest potential for bioenergy production still exists. In fact, there is significant potential for energy surplus through better process integration within these industries, a surplus that can serve to supply external users.

For a long time and with varying enthusiasm, bioenergy has been discussed as the third pillar of the forestry sector, together with sawn wood and pulp-and-paper production. In the beginning, the discussion focused particularly on the potential competition for biomass between pulp producers and bioenergy users. After many years of research, the discussion has become broader and more sophisticated today including issues such as:

• the complementarity between forest production for timber and pulp wood on the one hand, and for energy on the other hand, in terms of silviculture, logistics and overall economy of the forest production;

• the opportunities for increased energy efficiency in the pulp and paper production;

• the possibilities to combine and integrate pulp and paper production with the production of upgraded biofuels.

In fact, there are a number of cost-efficient measures to generate more biofuels and bioenergy in connection with various activities of forest industries. Recent studies show that, by using the best commercially available technology, the pulp and paper industry can make a great amount of biofuels available to the market, if only energy efficiency is given a high priority. A tentative estimate is that, within 20 years, the Swedish pulp and paper industry can produce the equivalent to 25 TWh of bio­fuels annually. Approximately half of that energy will be used internally to increase production capacity, while the other half can be made available to the market (STFI, 2000). Gasification of black liqueur alone has the potential to double the power generation in the sector once it reaches a stage of commercial breakthrough.

Upgraded solid biofuels such as pellets are mainly produced from the by-products of saw mills. In Sweden, only a small fraction of the net annual potential of some 35TWh in the form of by-products is upgraded to biofuels. The largest portion of the by-products is used either to meet the internal energy demand of the industries, or as raw material in the pulp industry. In the long run, however, depending on how the price relation among various products evolves, it is realistic to expect that saw mills will use solid biofuels of lower quality to meet internal energy needs, and their own by-products to produce other fuels, e. g. pellets, thereby better exploiting the value and economy of the by-product.

In the long run, the conditions exemplified so far may lead to a situation in which a cost-efficient bioenergy production well integrated with forestry, pulp and paper and sawn wood industries will become an important competitive factor for the Swedish as well as other countries’ forest industries. When it comes to exploring the benefits of such an integration of production processes in the next ten years, we single out three major issues that Sweden needs to address.

• Develop national biomass for energy production systems

In the short run, the international market for biomass will provide a surplus of biomass at competitive prices. The challenge is, under the present hard market competition, to develop national systems for biomass production for energy purposes that prove competitive in the long run.

• Combine and integrate production of pulp and paper and upgraded biofuels Combined and integrated production of pulp and paper and upgraded biofuels is very promising from the energy efficiency perspective. The challenge lies in the development of production systems that create win-win synergies worth exploring, and which do not interfere too much in the main production line of e. g. pulp and paper.

• Ash recirculation

As bioenergy increasingly becomes a major supply source of energy, the biomass production cannot be carried out in a way that jeopardizes the long-term production capacity of the forestland. The challenge is to facilitate the development and utilization of ash recirculation systems in terms of organiza­tion, cost-sharing and management.

Modern bioenergy has gained increased attention in the past decade. Not only does bioenergy provide an effective option for the provision of energy services from the technical point of view, but it is also based on resources that can be utilized on a sustainable basis all around the globe. In addition, the benefits accrued go beyond energy provision, creating unique opportunities for regional development.

Obviously, the potential of deriving energy services from biomass is no novelty, and many countries, including Sweden, have come a long way in developing bioenergy systems. Still, it is not until more recently that the understanding about the far reach of bioenergy options has come to a turning point, and efforts to promote bioenergy started to be made in a more concerted form at a global level. Today, biomass is seen as one of the most promising renewable sources of modern energy services in the medium term.

In fact, studies about the global biomass potential have multiplied in the past years, contributing significantly to the recognition of the merits of bioenergy beyond expert fora. Markets for bioenergy-related products have grown fast, denoting changes on the demand side, and increasing business interest in the area. This motivates new questions, for example about the need to standardize bioenergy products. It requires renewed attention from other industries that also depend on biomass resources, and demands new types of policies to promote bioenergy which are sensitive to the interests of various industries.

Thus the challenges around bioenergy are many. The development of bioenergy systems with the reliability required of modern energy systems involves sustainable natural resource management, sophisticated organization schemes, and proper market strategies under competitive energy markets. Despite the progress attained in many countries, these challenges should not be underestimated particularly when a broad use of bioenergy is contemplated, not least in less developed countries where energy needs are still very large.

This discussion on potential and challenges has motivated the International Workshop on Biomass Potential and Utilization in Europe and Developing Countries,

held in Eskilstuna a couple of years ago, and organized by the Swedish Energy Agency in collaboration with the Swedish International Development Assistance Agency. On that occasion, the Swedish experience served as a starting point for discussing bioenergy solutions for heat and power in particular. However, the success of that meeting lay not only in the interest shown to Swedish solutions but,

most of all, also in the variety of contributions and possible solutions that were presented, which emphasized once more the large spectrum of the bioenergy options available for further exploration.

The workshop in Eskilstuna should be seen as part of a range of activities that envisage the promotion of bioenergy utilization. The objective was not to make a comprehensive review of initiatives or to rank them in any particular fashion but to discuss models, opportunities and difficulties that need to be addressed. This publication compiles some of the contributions brought to Eskilstuna, reproducing questions and solutions discussed. We hope that the book will serve as a source of information and inspiration to policy makers, financiers, developers and companies that are in the position to explore bioenergy as a new business in their sphere of activities.

The information provided here offers a starting point for understanding the complexities involved in deploying biomass energy options but, most of all, it serves as a channel to communicate that effective solutions are possible and are being implemented at various scales and under different social, economic and technical conditions. It should be seen as a discussion forum for evaluating existing options and discussing relevant policies and measures that will shape bioenergy utilization in Europe and other regions of the world, as well as to provide ideas for the direction that research should take to support the deployment of bioenergy.

Lars Tegner

Director of Development Swedish Energy Agency

The UK has ambitious greenhouse gas emissions reduction targets, that is, 20 per cent reduction by 2010 compared to 1990 levels. When it comes to the role of renewable energy, the target is 10 per cent renewable energy generation by 2010. The government has been introducing a number of policies aimed at fulfilling these targets, such as the Renewables Obligation and Green Fuels Challenge.

The government’s renewable energy target is ambitious. Approximately one-third of the renewable energy is expected to come from biomass, which may require up to 125 000 ha of energy crops for power generation. The Non-Fossil Fuel Obligation has contributed to stimulating the market for renewables somewhat, particularly for wind power, but there has generally been little incentive for developing renewable energy sources. The main policy pushing for renewable electricity is expected to be the Renewables Obligation, which forces electricity suppliers to provide a fraction of their electricity from renewables.

However, the proposed buy-out price of 3.5 pence/kWh (5.5 €cent/kWh) is not likely to promote significant investments in bioenergy schemes other than those using low-cost biomass waste as fuel, unless other policies are adopted. Recently, the government has allocated an additional £100 million (€160 million) to the development of renewable energy, a significant part of which shall be destined to heat and power from biomass.

Under the Green Fuels Challenge, biodiesel will qualify for a 20 pence per liter fuel duty rebate from 2002. Unfortunately, the tax reduction proposed is unlikely to

make biodiesel competitive with diesel, except if produced from recycled vegetable oils. Much discussion has surrounded this tax reduction issue, with biodiesel supporters asking for a significantly higher reduction and government claiming that it would not be justifiable on environmental grounds. From January 2005, bioethanol will also qualify for a 20 pence per liter fuel duty rebate. The UK government is now in the process of setting UK targets under the EU biofuels directive, and additional mechanisms may be required to assist in meeting the targets.

The UK Department of Environment, Food and Rural Affairs (DEFRA) has allocated £30 million for the introduction of energy crops (SRC and Miscanthus). The area-based incentives will cover part of the set-up costs and should lead to the establishment of approximately 6000 ha of energy crops. The SRC also have access to support from the Forestry Commission’s Woodland Grant Scheme. The produc­tion of oilseed rape for nonfood purposes benefits from subsidy payments under the current EU CAP set-aside policy which is aimed at reducing arable land area dedicated to food production. There is no other specific incentive for its cultivation for biodiesel production in the UK.

A UK Emissions Trading Scheme for greenhouse gases (GHG) has been in place since 2002 and has acted as a precursor to the EU-wide trading scheme to begin in 2005. The GHG trading schemes could support biomass for energy, but how the carbon substitution and carbon sink benefits from biomass energy will be treated by these schemes remains unclear. There are also opportunities for funding demon­stration schemes through funds derived from the Climate Change Levy.

There appears to be an increasing, albeit limited, number of initiatives dedicated to the development of bioenergy in the context of energy, agriculture and climate change policies in the UK. However, there is no clear integrated strategy for the promotion of bioenergy based on short — to long-term considerations. Such consi­derations should include analyses of environmental and socioeconomic impacts of different pathways on both the energy and the agricultural sector, as well as on regional development.

Bioenergy can be used as a means to reduce C02 emissions, thus helping to hamper the increase of C02 concentrations in the atmosphere. This can be accomplished through the substitution of fossil fuels, or substitution of materials whose production processes generate large C02 emissions, e. g. concrete, steel. Moreover, carbon can be sequestered in biomass in the form of carbon sinks. Also soils have a‘role to play in carbon sequestration. How bioenergy can help address the global climate problem is further discussed in other chapters of this volume (see also Chapters 2 and 12). In this section, we only briefly address how the climate problem is affecting the development of bioenergy in Sweden.

In Sweden, the climate problem has been acknowledged not only as a great international challenge but also as a national driver in the development of bioenergy strategies. Though Sweden has negotiated an increase of national greenhouse gas emissions of 4 per cent within the European Union, the short-term goal is to reduce emissions by 4 per cent in the first commitment period of the Kyoto Protocol. The goal shall be met without using sinks or the flexible mechanisms.

The strategic issues connected to climate change include trade-ofis between long — and short-term objectives. Short-term cost-effective measures may lead to severe impacts and, consequently, require expensive measures in the long run. Thus, should we change the energy system today or tomorrow, or more precisely, which part of the energy system can be changed on a cost-efficient basis today and tomorrow, respectively?

When it comes to measures to reduce CO2 emissions in the next ten years, we can single out two major issues that Sweden is addressing that affect bioenergy more directly.

• International trade with climate-related products

International trade with climate-related products is being established in the form of emissions trading, joint implementation and clean development mechanism. The challenge is to find ways to exploit the so-called climate boms in order to promote bioenergy know-how, generation and use.

• Complex systems, institutions and structures

Integrated bioenergy systems are complex and are affected by a number of drivers simultaneously. The institutions and structures of the international climate regime are under construction. The challenge lies in the development of an incentive structure that promotes climate-related products, while also contributing to dismantle barriers to bioenergy — both nationally and internationally.

Brew-Hammond Abeeku is the Director of the Kumasi Institute of Technology and Environment (KITE) in Ghana and the Managing Director of the Kumasi Energy (KE) Company Limited. He is a mechanical engineer and holds a PhD in Science and Technology Policy from the University of Sussex. He is also a senior lecturer at the Kwame Nkrumah University of Science and Technology in Kumasi, Ghana.

Lars Andersson is a senior project manager at the Swedish Forest Administration and head of international cooperation at the Regional Forestry Board of Varmland — Orebro. He has been forestry advisor and consultant in the Programme for an Environmental Adapted Energy System in the Baltic countries, and in various other programs in the Baltic Sea region such as Baltic 21 and the bioenergy group under BASREC.

Ausilio Bauen is a PhD research fellow at the Imperial College’s Centre for Energy Policy and Technology and head of the BioEnergy group at ICEPT. He has researched and consulted extensively on technical, economic, environmental and policy issues relating to decentralized generation and alternative fuel production and infrastructure. His recent focus is on biomass, fuel cells and integration of renew­ables into energy systems.

Knut Bernotat is a civil engineer in industrial economics and management from the Technical University, Darmstadt, Germany and the Royal Institute of Technology, Stockholm, Sweden. He also holds an international masters degree in environmental engineering and sustainable infrastructure.

Oscar Braunbeck is a full time research, teaching and extension associate professor at the State University of Campinas, Sao Paulo, Brazil. His focus is on machine design (simulation and optimization), mostly related to forage and sugarcane harvesting. He has coordinated or participated in the design of approximately fifteen field equipments aimed at increasing sustainability in the use of biomass resources.

Luis A. B. Cortez is an Associate Professor at the School of Agricultural Engineering at the State University of Campinas — UNICAMP in Brazil. He is an agricultural engineer and received his PhD in Engineering from Texas Tech University, USA in 1988. Since then he is working in the field of energy in agriculture with emphasis in biomass conversion.

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Upali Daranagama is a chemical engineer with 25 years of experience in the energy sector. Presently, he serves as the United States Agency Development — USAID — Colombo office as project management specialist in energy

Dominic N. Derzu is a senior project engineer at Kumasi Energy (KE) Company Limited, Ghana. He is a mechanical engineer, who also had an industrial training in France on industrial equipment and technologies. In the last two years, he has been involved in biomass project development at the Kumasi Institute of Technology and Environment (KITE).

Andre Faaij is an Assistant Professor of Energy Supply and Systems Studies at the Copernicus Institute, Utrecht University. He has a background in chemistry and environmental sciences with a PhD in bioenergy. He has done advisory work to FAO, IEA and UN among others and published extensively. He is task leader of IEA task 40 on Sustainable Bioenergy trade, lead author for the World Energy Assessment and the IPCC, and coeditor of Biomass & Bioenergy.

Marco Antonio Fujihara is an agricultural engineer specialized in forest economy. Presently, he is a senior consultant on climate change at PriceWater House Coopers. In the past years, he has worked with the certification of energy and forest compa­nies and developed CDM projects, actively making climate change an important issue in the managerial agenda of companies and governments. He was prev­iously director at the Brazilian Institute of Environment and Renewable Natural Resources.

Luiz Carlos Goulart is an environmental manager at Plantar S. A., Brazil. He is a business administrator and specialist in finance, environment and quality systems. In recent years he has worked full time with the Plantar C02 Project, being responsible for all basic documents of the project such as Baseline Study, Monitoring and Verification Protocol, Financial Due Diligence, Environmental Assessment and other small reports and researches.

Marties Hardtlein is a project manager at the Institute of Energy Economics and the Rational Use of Energy, University of Stuttgart. She elaborated her doctoral thesis in the field of sustainable production and utilization of energy crops. Currently, she coordinates a project on standardization of solid biofuels and conducts research on economic and ecological aspects of biofuel provision and utilization, as well as quality assurance.

Marcelo Junqueira is an agricultural engineer and holds a masters degree in business administration. He has many years of experience in the sugar industry in Brazil. In 2002, he co-founded Econergy Brasil, the representative of Econergy Interna­tional Corporation, where he is now developing CDM and renewable energy related projects in Brazil. He developed the first baseline methodology analyzed by the CDM Executive Board.

Martin Kaltschmitt is the managing director of the Institute for Energy and Environment in Leipzig, Germany. He has been deeply involved in biomass research for more than a decade. Within this time, together with others he published several books as well as some 100 articles and conference contributions in this field. He is also a member of the CEN Technical Committee 335 “Solid Biofuels”.

Alexandre Kossoy is the project manager of the Carbon Finance Unit at the World Bank where he carries out financial due diligence of projects and companies in Asia and Latin America. Previously, he worked for the Rabobank International in Sao Paulo, where he was responsible for the first structured commercial loan for a Kyoto Protocol related project (USD 5 million to the Plantar Project).

Erik Ling is the Business Development Manager for Biofuels at Sveaskog, Europe’s largest corporative forest owner. He has a PhD in forest economics. His research focused on institutional issues and different aspects of competitiveness of bioenergy. Previously, he was an executive officer at the Swedish Energy Agency, dealing with forest carbon, bioenergy systems analysis and standardization issues.

Isaias Macedo works at the State University of Campinas (UNICAMP), Sao Paulo, Brazil. He is a mechanical engineer and holds a PhD in thermal sciences. Until 1982, he worked as a professor at ITA and UNICAMP and did research mainly in energy generation systems. For twenty years, he was at the Copersucar Technology Center, Sao Paulo, leading research in sugarcane production and processing to sugar and energy.

Geraldo Alves de Moura is the Director and a shareholder of Plantar S. A. He is the leader of the Plantar C02 team and is responsible for the companies’ climate policies. He has successfully conducted the negotiation of the Plantar Project with the Prototype Carbon Fund at the World Bank which was a landmark in carbon credit financing in the forestry and metallurgical sector.

Christian Rakos has studied physics, philosophy and history in Vienna. Between 1986 and 1997 he worked at the Austrian Academy of Science in the Institute for Technology Assessment. Since 1997, he is working for E. V.A, the Austrian Energy Agency, where he is responsible for renewable energy issues. His focus is on the use of renewable energy in the heat market.

Kama! Rijal is a Sustainable Energy Policy Advisor of the Bureau of Development Policy, UNDP, Bangkok. Prior to this, he served as a renewable energy specialist at the International Centre for Integrated Mountain Development (ICIMOD). The focus of his work at UNDP is on mainstreaming energy issues for poverty alleviation and environmental sustainability towards sustainable human development.

Thomas Sandberg is a Professor of industrial economics and management at the Royal Institute of Technology, Stockholm, Sweden. He is a social scientist and holds a PhD in business studies. After working with organizational issues for many years, he is now specialized in local energy systems.

Semida Silveira is sustainability expert at the Swedish Energy Agency. She has a PhD in regional planning from the Royal Institute of Technology and has done research at institutions such as MIT and IIASA. She is a senior lecturer at the Royal Institute of Technology, and has previously worked as a manager for climate and energy programs at the Stockholm Environment Institute, and as a consultant in environmental business development.

Monica R. Souza is a mechanical engineer and holds a PhD in energy planning. The focus of her research is on electricity production from biomass. She has worked for almost two years as a researcher at the Utrecht University, The Netherlands.

Daniela Thran is a project manager at the German Institute for Energy and the Environment. She is an environmental engineer and holds a PhD in civil engineering from the University of Weimar. She coordinates projects in the biomass and renew­able energy field and is involved in the European and international bioenergy activities on standardization and quality assurance.

Arnaldo Walter is an Assistant Professor at the Department of Energy at the State University of Campinas, UNICAMP, Brazil. His professional interests include energy planning and technical-economic analysis of energy systems. In recent years, his focus has been on the analysis of electricity production from biomass.

Priyantha Wijayatunga is the Director General of the Public Utilities Commission which is responsible for regulating the restructured electricity industry in Sri Lanka. He is also a professor in electrical engineering at the University of Moratuwa and was previously Dean of the faculty of IT. He has a PhD in power system economics from the Imperial College.

Bioenergy use in Italy is relatively low at about 3.5Mtoe/year. Biomass is used for single-house heating and district heating schemes, using forestry residues, mainly in northern Italy. It is also used in CHPs, based on agricultural and food industry waste, and for biodiesel production (approximately 100000 t/year). Italy’s heavy reliance on energy imports especially fossil fuels for electricity generation and environmental considerations are driving forces favoring bioenergy. Also the availability of significant biomass resources from agricultural and agro-industrial wastes, energy crops on set-aside agricultural land and wood fuel from improved forest management and reforestation are contributing to raise the interest in bioenergy.

A number of recent government policies related to energy, environment and agri­culture are indications of this interest. The Italian government has approved a White Paper on renewable energy and national guidelines for the reduction of green­house gases. The White Paper indicates a target of 8-10 Mtoe for primary energy from biomass (24 Mtoe for all renewables). This policy paper is complemented by a Biomass Implementation Programme based on the action plan National Programme for Renewable Energy from Biomass, designed by the Ministry of Agriculture. Fiscal incentives are directed at biodiesel for transport, by which 300000 t/year are exempted from taxes over a period of three years. No quotas are placed on biodiesel for heating purposes, which is also tax exempt. The Italian government is now in the process of setting targets for Italy under the EU biofuels directive.

However, important barriers persist, such as the lack of a nonfood crop policy, organizational barriers in terms of concerted actions on the part of stakeholders in the bioenergy chain, and possibly some public opposition to biomass schemes. Progress in joined-up thinking needs to consider more closely the benefits and risks of bioenergy, innovation in the bioenergy chains, and organizational and institutional barriers.

In general, public spending on R&D aims at creating or maintaining favorable conditions for the development of a competitive industry. Investments in bioenergy know-how are no different. A major argument for being a forerunner in the devel­opment and use of bioenergy technologies is that this will foster the accumulation of know-how, and support a competitive industry. Huge markets are being envisaged internationally. In addition to Europe and North America, China, India and other parts of Asia and South America are often discussed as major markets for bioenergy technology and know-how.

Thus trade related to the bioenergy sector includes equipment, know-how and fuels. Equipment available for export from Sweden today includes pellet burners and forest fuel harvesting equipment. The know-how can be provided through con­sultancy related to biomass gasification and forest fuel logistics. The exports related to equipment and know-how are more at hand than different types of biofuels. However, some upgraded biofuels may be exported from Sweden in the long term. In general, development towards more diversified trade is observed, with countries importing some biofuels and exporting others depending on where the country has its competitive edge.

Parallel to the trade evolving between industrialized countries, an interest­ing window of opportunity has opened for export to emerging developing coun­tries. Favorable conditions in that context are observed in countries like China, India, Brazil and Chile. Environmental issues, particularly related to C02 emissions, are also contributing to foster these new markets for bioenergy technologies and services. At the same time, tropical countries with large availability of land can become important producers of biofuels for an international market.

In addition to the goal to develop a competitive bioenergy industry, there is the need to promote regional development and guarantee the security of energy supply. Bioenergy investments are suitable to promote regional development, not least because the biomass production is per definition geographically spread out. The rationale of the regional development dimension can be explained in two basic ways at the macrolevel.

• Bioenergy is to a large extent used in urban areas but produced in nonurban areas around the country. The increased use of bioenergy will allocate resources from urban areas for investment in rural areas where jobs will be created. These resources would otherwise be transferred to other regions abroad i. e. to pay for fossil fuels.

• Increased use of bioenergy will increase the value of the biomass that is produced throughout the country, mainly in the form of forest residues and by­products from the forest industry sector. These resources will generate value to various regions of the country, allowing distribution of the gains.

When it comes to measures to foster the development of a competitive bioenergy industry, we can single out three major strategies for Sweden.

• Project clusters

On an international market for bioenergy systems including biofuels, equipment and know-how, it is crucial to be able to rely on a critical mass of resources and knowledge. The challenge is to facilitate the creation of competitive bioenergy industrial clusters with significant Swedish participation.

• System integration

There is a great potential for further development of bioenergy through better integration with the forest industry, waste management etc. The challenge lies in the development of the integrated systems as in the example of Enkoping (Fact box 3.1).

• Development of businesses along with bioenergy know-how development Public-funded bioenergy projects have not delivered as many new products, and fostered as many new companies as was hoped for. The challenge lies in trying to develop a business environment capable of defining bioenergy products and services that can generate more economic returns.

Semida Silveira

1.1. WHAT IS THE NEWS?

Biomass has been a major source of energy in the world since the beginning of civilization. It has been important in development processes, including early stages of industrialization in several countries. In Sweden, for example, the first concerns about preservation date from the seventeenth and eighteenth centuries, resulting from the recognition of the central role played by forests in energy provision (see also Kaijser, 2001). Biomass was also essential in the initial development of the iron industry in Sweden and, later on, the same happened in Brazil, where charcoal is still largely utilized in iron reduction. Biomass remains a major source of energy in many countries. Ethiopia and Tanzania, for example, derive more than 90 per cent of their energy from biomass. In fact, the African continent as a whole relies heavily on biomass resources for the provision of energy services.

When observing what happened in the past two centuries, we have the impression that the more industrialized a country became, the more dependent it grew on fossil fuels. But there are exceptions. Norway, for example, was able to industrialize without developing the typical dependency on fossil fuels thanks to its hydropower endowments. At a global level, however, the industrialization period has been characterized by an increasing use of fossil fuels as energy carriers. Thus there is a tendency to think that countries with large biomass dependency are poor countries with a low level of industrialization. The generalized view has been that countries climb an energy ladder that leaves biomass behind in favor of more efficient fuels and technologies, which are often based on coal, oil and gas.

In the past decades, the old rule, that the richer and the more industrialized a country is, the more dependent it becomes on fossil fuels, has been broken. Many countries have realized the need to harness local resources to increase the security of energy supply, reverse fossil fuel dependency and improve trade balance. The global environmental agenda, for example in the form of the Agenda 21 and the Climate Convention, has also played a role in this process for more than ten years now. As a result, there is a general trend to search for energy alternatives involving locally [1]

available renewable resources, while simultaneously pursuing increased energy efficiency throughout the economy. Countries have chosen different paths to move towards sustainable energy systems, and the accomplishments vary significantly.

The good news is that the connection often made between biomass utilization and poverty starts fading. All types of energy services can and are being provided today using biomass, with the reliability, safety and efficiency required by the modern economy and society. Moreover, this is not only happening in rich countries, it is also happening in many developing countries. The other good news, and part a corollary of the former, is that industrialization, which is seen as an important step in the development process, can be achieved using sources of energy other than fossil fuels, and this can create jobs and contribute to regional development instead of displacing people, eroding local economies and destroying the natural environment.

There are reasons to believe that the turn of the century has also been a turning point for bioenergy. This results not only from the recognition of the bioenergy potential, but also from the maturity of technologies, the reliability of positive results achieved so far, and the awareness of policy makers about the multiple benefits accrued from bioenergy. To developing countries, this means that the old idea of climbing an energy ladder that gradually goes from biofuels to fossil fuels as a way to access modern energy services should be questioned and reviewed under the light of recent technological development and international opportunities for investing in renewable alternatives.

This may sound almost like a manifesto for bioenergy. Let it be so. Biomass can be used to produce different forms of energy such as heat, electricity and transport fuels, thus providing all the energy services required in modern society. We know that. Some countries have actually come a long way in testing technologies and models that can be replicated. These countries are already realizing their biomass potential. In Sweden, for example, biomass already accounts for 16 per cent of the total energy supply. In Finland, biomass responds to 19 per cent of the country’s total supply. In Brazil, 27 per cent of the energy comes from biomass, almost half the part being sugar-cane based, including an annual production of some 10 million m3 of ethanol which are used in the transport sector. In these countries, biofuels are being used to feed modern and efficient systems, providing essential energy services.

Truly, opportunities come with challenges. We have to face the crude fact that, despite all efforts being made to introduce renewables and despite their rapid percentual growth in many regions, fossil fuel annual additions to the world energy supply are still much larger in absolute terms. A quick look at OECD countries reveals that most of them still depend about eighty per cent or more on fossil fuels for the provision of energy services. Also, developing countries are largely meeting their increasing energy demands with fossil fuels, thus replicating past trends and nonsustainable experiences. Unless very significant and more proactive measures are taken both nationally and internationally, this situation will persist for many years to come, delaying the shift towards sustainable energy systems.

Bioenergy options are at hand, satisfying technical, commercial, environmental, social and even political requirements. Energy infrastructure is important for social and economic development in modern societies, and bioenergy is attractive at all stages of development due to its potential integration with development strategies in rich and poor countries alike, and in comprehensive ways hardly matched by other alternatives. It is no exaggeration to see bioenergy options amongst the most attractive energy forms that we can harness today, with technologies and system solutions that are already mastered, with strong public and political acceptance, and often also with a commercial appeal.

Certainly, we ought to be realistic about what can be accomplished, and at what speed and range. A sustainable use of biomass requires comprehensive management of natural resources such as land and water. There are a number of factors that need consideration when it comes to achieving a fair balance in the use of scarce resources. For example, it is necessary to guarantee that land competition does not jeopardize food production and security. In addition, there are questions of security of supply, vulnerability of energy systems and the challenging task of designing policies that can address the development of multisector systems. Still, these broad tasks should not keep us away from ambitious targets, particularly in the face of promising multiple rewards in the direction of sustainability.

The contribution of renewables to the Dutch energy mix is relatively low, at around 1 per cent. However, the country has taken a fairly proactive stance in energy and environment issues and aims at a 5 per cent renewable energy share in 2010. Bio­energy is expected to provide about half of the renewable target, rising from about 13 to about 70PJ/year (excluding waste incineration). The Dutch government is now in the process of setting targets for the Netherlands under the EU biofuels directive.

A number of policies are being directed mainly at the energy sector. These consist of fiscal instruments and green funds and agreements in various sectors of the bioenergy chain, such as commitments on the part of biomass suppliers, generators (e. g. cocombustion in coal plants) and end-users (e. g. industry and municipalities). Demand and willingness to pay for green electricity is also expected to act as a driving force. The main barriers to bioenergy remain the availability of biomass, the profitability of bioenergy schemes and the integration and continuity of relevant policies.

2.6. CONCLUDING REMARKS

Biomass has the potential to become a major contributor to the European primary energy mix for the supply of modern energy services. The extent to which bioenergy uptake will occur, and its rate of uptake, will depend on resource avail­ability, economic and environmental constraints, as well as policy measures result­ing from drivers such as climate change and willingness to enhance energy supply independence. .

Biomass may be used to provide a number of energy vectors through various fuel chains. Most of these will present benefits in terms of displacing and saving nonrenewable energy sources, reducing greenhouse gas emissions and providing income diversification to farmers. However, the economic and environmental chara­cteristics of the fuel chains and their ability to supply the energy vectors of the future may vary considerably. Biomass can become an important renewable energy source in industrialized countries only if it is able to supply the energy vectors demanded by modern energy services based on environmentally and economically sound fuel chains.

Thus bioenergy incentives must account for the environmental characteristics of the fuel chain i. e. from the production of the fuel to the energy service provided. A variety of market-based mechanisms can be applied at different stages of the fuel chain to stimulate development. In the case of energy crops, mechanisms need to be devised in greater synergy among energy, agriculture and environmental policies to encourage farmers to grow biomass resources in a sustainable manner.

If current energy market structures and policies are maintained, renewable energy penetration, including biomass, is likely to remain low. Piecemeal policies directed at bioenergy are being introduced in a number of EU countries as exemplified here. However, apart from countries which already have a significant biomass resource base, the uptake of biomass energy has been slow. Without the contribution of biomass, it will be difficult to meet the carbon emission reductions envisaged by the Kyoto Protocol, let alone further reductions likely to be required in the post-Kyoto period. Biomass can play a substantial role in greenhouse gas reduc­tions, and it is important to enhance understanding of carbon stock and fossil fuel substitution dynamics. Mechanisms are also needed to provide incentives for fossil — fuel substitution and for the development of sustainable long-term carbon sinks.

Clearly, much needs yet to be done in identifying and implementing viable bioenergy pathways that could contribute to a low-carbon future. Short- to long­term strategies need to be defined and enabling policies, designed and implemented. In particular, there is an urgent need for policy integration to make different bioenergy drivers converge, catalyzing economic and environment beneficial uses.

Actions delivering win-win-win situations across the agriculture, energy and the environment need to be further explored.

There is a large need to expand the energy-supply infrastructure base in the world in the coming decades. IEA (2003) estimates that the global energy system requires investments of the order of 16 trillion USD between 2001 and 2030. This is obviously a tremendous challenge involving engineering, financial and environmental dimensions. But it is also a life time opportunity for the bioenergy sector to provide alternatives that are competitive and beneficial in many respects.

The exploitation of bioenergy opportunites involves a complex and multi­functional challenge. We need to pick the bioenergy segments and applications that can serve to develop win-win solutions in cooperation with other sectors of the economy. In doing this, bioenergy will benefit from other sources of funds, not to finance the energy infrastructure per se, but to make bioenergy a more cost-efficient and sustainable solution, with multiple benefits for society. This will help create market dynamics around bioenergy as we have never experienced before.

Various factors contribute to make bioenergy applications a significant part of the coming energy-supply investments around the world. In Sweden, as well as in the whole of Europe, bioenergy shall take a final leap towards becoming a substantial and reliable supply source of energy within the coming ten years. Although this will demand huge amounts of biomass for energy, it will also further the development of technology and know-how to create a robust infrastructure system for the whole energy supply and use chain. In addition, the policy framework will be decisive in strengthening the political intentions and creating the necessary business environ­ment to allow that to happen.

With opportunities, the pressure to deliver also comes. In the coming ten years, bioenergy experts and entrepreneurs will have to exploit and realize more of the commercial potential of bioenergy products and services in order to match the competition of other renewable energy options. In other words, it is time for the bioenergy sector to deliver at a larger scale and on its own merits!