Modern bioenergy options have not been typical choices when the supply of heat, power and liquid fuels are contemplated. However, as bioenergy evolves from being a peripheral alternative to becoming a mainstream player in the energy sector, conditions for designing strategies for the segment change significantly. The framework within which bioenergy shall compete becomes more and more apparent.

Not least, there is the difficult question of where in the supply chain the avail­able biomass resources are optimally utilized. Key actors in this competition are positioned and organized, and this includes biomass producers, the various links of the energy industry, and the combustion sector, as well as the agencies and institutions involved in energy research.

fact box 3.!. Integrated system for bioenergy, water treatment arid regional development — the experience of Enkoping

Enkoping is a small town located in the middle of Sweden, about 7(1 km from Stockholm. In 1972, the municipality founded Enkopings Varmeverk to produce and distribute heat to the local community. Today, 20000 people live in the urban area of Enkoping. Thirty-six employees work with the operation and maintenance of the 76-km-long district heating network that provides the majority of residential, commercial and industrial buildings of the town with heating services. Some 220 GWh of heat are distributed to more than 1400 customers every year, of which some 1100 are single-family houses.

Originally, the three boilers at Enkopings Varmeverk operated on oil and propane gas but, nowdays, the heat production relies mostly on biofuels. One of the boilers has been converted for burning wood powder and has an output of 20 MW, It produces around 15-18 per cent of the requirement for district heating and runs from the middle of May to the middle of September. It also runs during the w inter at low temperatures. In the colder part of the year, from the middle of September to the middle of May, the ЬіоГиеІ — fired CHP plant, Ena Kraft, meets the demand for healing. The CHP plant produces around 80-85 per cent of the yearly consumption of district heating in Enkoping. The plant uses bark, sawdust, residues from logging operations and satis.

Local farmers are planting the saiix that is heating homes and industries in Enkoping. As part of an innovative project, the municipal council has financed the saiix planta­tions. and a leasehold agreement has been established with each individual landowner. Residual ash from the power plant, approximately 1500 tons per year, is mixed with sludge-water and distributed to local saiix plantations. The water used for irrigation passes the conventional purifying process prior to being pumped into ponds. After filtration, the water is distributed throughout the 80-hcctare saiix plantation. In this way. approximately 60 tons of nitrogen/hcetare are dispersed every year.

This bio-cyclical solution that utilizes nutrients from sewage treatment and ashes from energy generation to grow energy crops has been the result of a cooperation coordi­nated by the County Council and involving local authorities, the power plant and the farmers in Enkoping. Nitrogen and phosphorous effluence, that would otherwise pollute the Lake Miilarcn and the Baltic Sea. is being used to fertilize energy planta­tions, reducing the harvest time by 25 per cent. It is understood that the conditions for emissions of heavy metals comply with the prevailing limits and regulations. Saiix is being used to help purify wastewater emanating from private septic tanks and the municipal sewage plant.

A key factor in understanding BMDH development in Austria is the difficult economic situation of farmers, particularly in areas with low tourism and a declining industrial base. The majority of Austrian farmers are also forest owners. Farmers own about half of the Austrian forests and their properties are usually smaller than 40 ha. Thus farmers in areas with low rates of development are eagerly seeking alternative income sources within agriculture and forestry.

During the last 20 years, there has been an oversupply of wood in the market. Meanwhile, wood prices have decreased significantly due to competition with cheap wood imports, periodic crises in the pulp and paper industry and increased use of recycling paper. The substantial decline in wood prices was a major driving force behind BMDH development. This technology offered a chance to add value to wood that was neither suitable for sawmills nor paper production.

Thus, not surprisingly, most BMDH plants in Austria were established in peripheral regions and were motivated by the opportunity to improve local socio­economic conditions. Normally, in places where there are economic opportunities in other sectors such as tourism or industry, the interest in establishing BMDH is low. This is true for most of the western states of Austria.

Still, it is possible to motivate the technology in other socioeconomic contexts for other reasons. There are cases of prosperous tourist villages where BMDH plants were established for reasons such as comfort, local air pollution and prestige. In these cases, more advanced technologies such as flue gas condensation were necessary to prevent any visible emissions which might bother the tourists.

4.2. ECONOMIC ASPECTS OF PLANTS

In practice, the specific investment costs of biomass district heating plants show widely differing values, which depend on local preconditions, planning competence and philosophy, operators etc. The range of costs is from 360€/kW of installed power to 1800€/kW with average values around 850€/kW. The costs of the boiler amount to one-third of the total investment, and the grid another third. Figure 4.3 shows the average contribution of different plant components to the total investment costs of 80 plants investigated.

Figure 4.4 shows the composition of the operational costs of BMDH plants. While data on investment costs were available from most of the 80 plants inves­tigated, many operators did not provide data on operational costs. Thus Figure 4.5 is based on the data of 3 plants only. Nevertheless, it does illustrate well what charac­terizes all plants, that is, the main cost factors in the operational costs of biomass district heating plants are capital costs and fuel costs.

To analyze the role of different factors in the economic performance of a plant, a sensitivity analysis was conducted for the specific case of a 1000 kW plant built in 1995 in the province of Styria. This plant had moderate investment costs of 640 000 €, a short district heating grid of 600 m and a heat production of 1300 MWh per year. The biomass used is a mixture of 25 per cent dry woodchips supplied by farmers (heating value 3400kWh/ton, price 82 €/t) and 75 per cent industrial

wood chips (2800 kWh/ton, 32€/t). The average heat price for customers was 0.063 €/kWh (all prices excluding value added tax). The capital for investment is composed of 15 per cent private capital from the members of the cooperative, 15 per cent connection fees, 35 per cent subsidies and 35 per cent agro-investment loan with 4.5 per cent interest and 15 years payback time. The calculated interest rate for privately invested capital was 4 per cent.

The dynamic model Biowirt commonly used for calculating the economics of BMDH plants was used to analyze how the variation of different parameters affected the amortization time of the project. It turned out that the two most critical factors for the economy of the BMDH are the heat price and the heat sales that can be achieved. A crucial precondition to make the project viable is the readiness of consumers to connect to the district-heating grid and pay a somewhat higher price than for individual heating. This readiness is in fact achievable, as biomass district heating offers significantly enhanced comfort compared to individual heating systems that are frequently in poor conditions in rural areas. Surprisingly, some consulting firms advised operators to sell heat as cheap as possible to increase sales fast — a disastrous proposal when considered in light of the findings of the sensitivity analysis.

Besides enhanced comfort, environmental protection and local self-sufficiency also play a significant role in the motivation of district-heating customers. Economic considerations play neither a central role nor are they consistent. This conclusion is

Insurance,

administration

Personnel

Fuel costs

39°,

Capital costs

43%

Electricity

emphasized by a survey on the opinions and experiences of customers in different villages. The survey showed no consistent relationship between the economic evaluation of BMDH by consumers and the actual heat prices paid (which differed by more than 20 per cent).

4.3. THE SOCIOCULTURAL CONTEXT

A major barrier found particularly early in the innovation process was distrust of the new technology. Will it work? What will be its impact on village life? Who is going to profit from the project? These were some of the questions usually discussed for months at the village inns. Conflicts have been observed in the majority of villages where plants were installed and these were often rather serious. Figure 4.5 illustrates the level of resistance observed.

Such mistrust of new technology is by no means unusual and is often observed regardless of the type of innovation and specific context. It has to do with the cultural integrity of a society. Thus it is not simply an individual phenomenon, but also a social one. Rational economic and technical considerations will only serve to create trust if they both symbolically and factually converge with the social meaning accepted by the majority of the society affected.

Since the 1950s, rural communities in Austria have experienced the profound impacts of technical innovations in agriculture that not only completely changed the way agriculture was conducted but also changed the rural culture. New forms of life and increasing economic pressure on farmers led to social disintegration and a feeling of meaninglessness in many places. The result is suspicion regarding any form of innovation that can possibly change further or destroy local cultural habits. Parallel to that, there is a genuine desire to support initiatives that may bring new hope for rural development. The tension between these two dispositions explains the wide spectrum of reactions towards BMDH projects. The full collective support as well as vivid conflicts may be associated with such a project (see Figure 4.5). In most cases, the conflicts could be settled. However, BMDH consultants report of villages where local conflicts caused the cancellation of projects.

Two basic categories of conflicts could be distinguished in the Austrian case. The first one is related with the so-called syndrome of acquired depression that seems to be related to the general cultural and social disintegration of rural areas as mentioned earlier[6]. The retraction of the village economy, often combined with a long-lasting autocratic local political elite, may lead to a total apathy of the population. People have lost all hope for a better future. An innovative project not only challenges this depressed attitude but perhaps also the ruling elite. The typical attitude in such a village is distrust and rivalry. Under these conditions, the main arguments against a BMDH project are irrational or pseudoeconomic.

The second type of conflict is related to the NIMBY Syndrome (i. e. Not-in-my — backyard Syndrome). BMDH is nice for everybody except those who live close to the chimney and fear to be bothered by smoke or noise. This type of conflict appears quite often in places with many new settlers, usually upper class residents from urban areas seeking unspoiled nature in the countryside. These settlers are usually well organized and try to use rational or even scientific arguments to stop the project.

It is of central importance for a BMDH project that conflicts are properly and timely addressed to avoid unnecessary costs. We found that the average investment costs for plants meeting strong or very strong resistance were 30 per cent higher than for plants with no resistance. Cost increases were caused, for instance, by the necessity to change the location of the project or due to extra requirements for licensing. Lower heat sales due to the unwillingness of opponents to connect to the grid may also have a serious economic impact on the project.

The institutions that were managing technology deployment were so geared to deal with economic and technical questions that they did not address the social aspect of technology introduction adequately. Any systemic management approach needs to take this point as a key issue to avoid economic inefficiencies and limited diffusion of the technology. It is quite possible that many villages, potentially suited to receive the technology, were lost due to mismanagement of local conflicts.

This serves to explain the early decline in the rate of establishment of new BMDH systems.

Ausilio Bauen

2.1. IS BIOMASS IMPORTANT TO EUROPE?

Energy, environment, agricultural and forestry-based drivers are contributing to a rediscovery of bioenergy in industrialized nations with access to biomass resources. In fact, bioenergy offers the possibility to harness a domestic, rural-based, low — carbon and sustainable energy source in both industrialized and developing coun­tries. Currently, commercial and noncommercial uses of biomass represent about 13.5 per cent of the world’s primary energy consumption (see also Figure 1.1).

In the European Union (EU), bioenergy comprises some 3.5 per cent of the total primary energy mix. Figure 2.1 shows the primary energy consumption in the European Union, including details of renewable energy sources. Notably, biomass is the largest renewable energy source in the European Union. The biomass resources commonly used in the EU are fuelwood, wood residues from the wood-processing industry, used wood products (e. g. demolition wood), and also straw in some countries. Various modern technologies are being applied.

Bioenergy is intrinsically linked to energy, environment, agriculture and forestry issues. As such, it receives consideration within international and national renewable energy, as well as environment, agriculture and forestry policy agendas. Unfortu­nately, there is a lack of integration across these policy agendas, which hinders the understanding of constraints affecting bioenergy, and the convergence of incentives to promote it, ultimately delaying its development.

Two fundamental questions related to the development of bioenergy options are: (i) what biomass conversion technologies and end-uses will present the most favorable economic and environmental options in the future energy mix; and (ii) what amount of biomass resources will these options require? Options range from heat and power production to liquid-fuel substitutes, but opinions vary widely on their potential contribution to future energy mixes and with regard to the appropriate resources, technologies and scales that are to be applied.

Questions as to which short-term bioenergy options are practical, and where the opportunities lie for establishing markets for biofuels and bioenergy technologies

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© 2005 Dr Semida Silveira Published by Elsevier Ltd. All rights reserved.

in the near future are key to further development in this area. Also, it is important to verify how short-term developments fit with the potential long-term role envisaged for biomass in the energy mix. Interesting short-term markets for bioenergy appear to exist for cofiring with coal, district and small-scale heating, combined heat and power and blending of biofuels with petroleum transport fuels. Long-term options could be biomass use for heat and power generation in integrated gasification combined cycle plants and for the production of new fuels such as hydrogen.

This chapter briefly discusses the bioenergy potential in Europe and some of the energy, environment and agriculture cross-cutting issues that are relevant in the definition of coordinated action for bioenergy in the European context. Climate change issues and long-term policies for renewables are likely to have a significant impact on the development of bioenergy and these issues are, therefore, particularly addressed.

Biofuels and combustion equipment of various types and sizes are becoming more and more standardized. The transactions between buyers and sellers are also to a great extent, regulated through standardized contracts. This indicates a more mature phase of the bioenergy business segment. This new phase is strongly anchored on the experience of countries like Sweden and a few others, which now pave the way to a larger dissemination of bioenergy options.

Bioenergy is becoming a mainstream alternative, and more of a standardized business chain characterized by its bulkiness and management complexity. In Sweden, and probably in most of Europe where energy markets are mature, econo­mies of scale are likely to become more important for the commercial attractiveness of the business. In contrast, the small-scale use of biomass, particularly in Swedish rural homes, will remain very competitive due to the low cost of fuel and difficult taxation of these privately generated services.

The Austrian political system is such that it allows a study of the effects of different policies on BMDH deployment individually. Austria is a federal republic with nine different states. The energy policy of these states is quite different and had a profound impact on the rate of diffusion of BMDH technology. Remarkably, the majority of the BMDH plants is situated in only four states (Lower Austria, Upper Austria, Salzburg and Styria).

The comparison of state policies and their impacts shows the role of various economic incentives in the diffusion process. During the early development phase of BMDH, implementation management was of central importance. Successful introduction occurred only in provinces that established a dedicated institution or focal point that managed daily problems effectively. These institutions facilitated cooperation among all relevant actors, conducted public information activities and provided advice to local developers.

After 5-10 years of dedicated introduction management, the establishment of a plant became more of a routine process. Economic incentives established in neighboring provinces were able to learn from previous lessons and foster diffusion faster. Nevertheless, efforts to keep the development on track remain important even after twenty years since the first plant was established. The actual tasks that need to be addressed include the establishment of a program to upgrade old plants, benchmarking of plant performance, and educational activities for operators.

4.4. CONCLUSIONS

Given the complex approach necessary to get technology deployment started, two common myths regarding renewable energy can be discarded. The first says that renewable energy is primarily a question of research. The second myth says it is nothing but a question of economic incentives. Neither myth is true. Admittedly, both research and economic incentives are important ingredients. However, they must be integrated systematically taking into account the complexity of issues involved in setting up a new energy system. In other words, a systematic approach is required if the efforts are to succeed. These conclusions are also confirmed in a recent investigation where about 30 different cases of successful market deployment of energy technologies were compared (Kliman, 2001). In the majority of the cases, success was closely linked to dedicated institutions managing the innovation.

The case of biomass district heating in Austria shows the complexity of estab­lishing a renewable energy system. It is of fundamental importance for successful renewable energy policies to avoid a simplistic economic and technical focus, and address this complexity. Resources need to be made available for a systemic man­agement during the introduction of renewable energy technologies. Money invested in proper advice, monitoring of technical development, benchmarking, quality control, educational measures, and promotion based on a profound understanding of the social processes in communities is an indispensable prerequisite for success.

Biomass is available in a variety of forms and is generally classified according to its source (animal or plant) or according to its phase (solid, liquid or gaseous). Generally, bioenergy can be derived from sources such as forests and energy crop plantations, residues from primary biomass production, and by-products and wastes from various industrial processes.

Forests, woodlands, short rotation forestry and other arboricultural activities (for example, park maintenance) are a source of wood fuel. Fuel can also be obtained from energy crop plantations using species such as willow, eucalyptus, sugarcane, miscanthus, energy grain, hemp, oilseed rape, sunflower and sugar beet. Residues represent another possible source of fuel. This includes residues from food and industrial crop production (for example, cereals, sugarcane, tea, coffee, rubber trees,
oil and coconut palms) and residues from forestry activities (for example, from stem wood production). By-products and wastes may also originate from sawmill waste, manure, sewage sludge, abattoir waste and municipal solid waste. Generally, these are sources of low-cost fuel.

Biomass and waste needing disposal can be burned directly or converted to intermediate solid, liquid or gaseous fuels to produce heat, electricity and transport fuels. A number of biomass conversion technologies are currently commercially available. In addition, there is a potential for technological advances and commer­cialization of more efficient technologies for production of electricity and transport fuels in a rather near future. Table 2.1 shows a range of biomass technology options and corresponding end-uses, indicating also the status of these technologies.

There are significant differences among European countries when it comes to the exploitation of biomass resources. The bulk of biomass being used consists of fuelwood for domestic heating. The use of biomass for district heating is substantial in a few countries such as Austria, Finland and Sweden, mainly fed by fuelwood and wood residues from the forestry and wood-processing industry. In Denmark, straw is used to some extent. In comparison, the use of biomass in industry and for power generation is modest. In some countries, such as Sweden, electricity is generated in combined heat and power plants connected to district heating. In addition, biofuels in transport applications represent a small fraction of the bioenergy use in countries such as Austria, France, Germany, Italy and Sweden.

A large biomass potential remains unexploited in Europe, for example in the form of residues from woodland management measures, agricultural residues, organic waste from industry and households and energy crops (see also Table 11.1). The total biomass potential is estimated at 6759.2 PJ (161.4 Mtoe), with the largest contribu­tions coming from woody residues (i. e. wood residues from stem wood production, thinning from managed forests, and wood waste from the wood products industry and arboricultural activities) and from a variety of annual and perennial energy crops (Bauen and Kaltschmitt, 2001).

The fact that bioenergy has many links to other sectors and activities creates both problems and opportunities for its dissemination. There are definitely opportunities for developing bioenergy applications within win-win frameworks, combining solu­tions for different interests and functions in society. However, the multitude of issues involved often creates complex and time-consuming political processes.

Finding and developing political, technical and economic win-win niches for bioenergy is, therefore, the key to effective implementation strategies. We need to detect major functions of bioenergy in society, and the drivers and obstacles connected to these functions, as well as interlinks between them, to be able to explore the synergies. In this section, we discuss some major tasks related to these functions, and ways through which bioenergy can be further promoted in Sweden. We continue to follow the structure presented in Table 3.1. Again, the list is not meant to be exhaustive, but rather points to some key aspects that need particular attention.

Obviously, the issues discussed here may weigh differently in different countries, and other issues may be more important than these. For example, in Sweden, integration with the forest industry is a wise focus in face of the size and importance of forestry activities. In countries where agriculture is a major economic sector, the development of a competitive nonfood activity to diversify the economy may provide good synergy effects and qualify as an essential issue. In many developing countries, rural development may receive particular attention and be a major argument in favor of bioenergy.

Kamal Rijal

5.1. THE IMPORTANCE OF THE FOREST SECTOR IN MOUNTAIN AREAS

In recent years, planning in the forestry sector has evolved to focus on how forest products (primarily, fuelwood and timber) can be utilized on a sustainable basis to contribute to sustainable development (FAO, 1993; Shen and Contreras-Hermosilla 1995). This is even more important in mountain areas, which are environmentally more vulnerable than the plains due to their fragile ecosystems. In addition, con­tradictions may exist between long-term development goals and the short-term necessities of the mountain population. Resolving this contradiction is a prerequisite for establishing the long-term vision needed to achieve changes in mountain energy systems along a sustainable path.

Sustainable development in the mountain areas depends on the capacity to develop woodfuel-based energy aiming at fulfilling the energy needs of mountain communities and increasing productivity, without jeopardizing livelihoods or depleting the forest resource base. An appropriate approach to accomplish this is to value the environment and treat it as a central feature in wood-based energy planning in the mountain areas. The choice between various forms of energy needs to be assessed, and the value of environmental stocks and flows must be accounted for, along with the role of forests as carbon sinks (Durning, 1993). The quality of life and environmental balance should be considered as important as economic growth.

In terms of fuelwood, the main concern is with resources that can be exploited for short-term benefits, which ultimately may destroy the resource base. To prioritize long-term benefits is difficult as most mountain communities lack other fuel choices. Commercial fuels and renewable energy technologies are usually not available in these areas and are not within easy reach. Even if availability of other options increases, there is still the issue of low affordability among the communities. It is therefore important to devise a mechanism of control over resources and decisions on development paths which is kept in the hands of the mountain communities themselves. The communities need to be given the power to influence the decisions

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© 2005 Dr Semida Silveira Published by Elsevier Ltd. All rights reserved.

that affect their lives, which can be better achieved if they have greater control over the physical, financial and environmental capital on which they depend.

This chapter proposes to identify technological, policy and institutional options that may be feasible for the sustainable supply of fuelwood in the mountain communities of Hindu Kush, the Himalayan region of Asia[7], here called HKH region. We start by examining the management and planning efforts within the forestry sector in the region, how energy services are being met through the use of fuelwood and what the long-term implications of present practices are. We also look at lessons learnt from the implementation of forestry programs in mountain areas and propose a framework for the sustainable management of fuelwood to the benefit of mountain communities.

The need for reductions of greenhouse gas emissions may provide a significant incentive to further develop bioenergy. Biomass can act as a carbon sink and as a substitute for fossil fuels. Its role as a means of reducing C02 in the atmosphere is recognized in the Kyoto Protocol in articles 3.3 and 3.4. The IPCC (1995) estimates that between 60 and 87 GtC could be stored in forests between 1990 and 2050, corresponding to about 12-15 per cent of projected fossil fuel emissions, and without regard to carbon storage in biofuel plantations in currently unforested land.

While the establishment of forest-based carbon sinks may have an important role, they are by no means the solution to climate change. They also remain contentious, a principal concern being related to the permanency of the sink. Hence, there is a view that biomass sinks should be associated with a multifunctional role for biomass, be it for the production of bioenergy or raw materials for other purposes (Schlamadinger et al„ 2001; Read, 1997).

The advantage of using sustainably grown biomass for energy is that it ensures emissions reductions through the substitution of fossil fuels and is not constrained by the saturation limits of managed biomass carbon sinks. Bioenergy for fossil fuel substitution may be complemented with significant carbon sequestration in litter and soils, depending on land-use changes. The levels of carbon substitution and sequestration will depend on the plant species grown and associated management practices, as well as on soil types. Land use and management directed at using biomass for fossil fuel and other raw material substitution could reduce concerns over the temporary nature of land use changes for carbon mitigation as it would be linked to a traded commodity in the form of biomass materials. Associated carbon sinks could also be more secure.

Changes in land use and land management practices associated with energy crops as well as biofuel chain logistics affect the carbon cycle. Consequently, energy crops are not necessarily carbon neutral. The magnitude of carbon released or stored both above and below the ground through the introduction of energy crops may significantly affect the carbon balance of biofuel cycles. This needs to be considered in determining the carbon credits that can be attributed to them. Generally, the introduction of herbaceous and woody perennials on agricultural land or degraded land will lead to an increase in soil carbon. However, many factors, including those external to the land use and management practices, such as local climate, will affect the soil carbon balance and may lead to uncertainties in its assessment. Concerns still remain over the permanence of the carbon sinks.

Following from the Kyoto Protocol, the EU target is a reduction of 8 per cent of greenhouse gas emissions by 2012. Biomass already contributes to avoided C02 emissions by supplying part of the energy demand in the European Union, which would otherwise be mainly met with fossil fuels. Avoided C02 emissions associated with current biomass use are estimated at 2-9 per cent of the 1998 energy-related C02 emissions in the EU (Bauen and Kaltschmitt, 1999).

Increased utilization of biomass could make a substantial additional contribution to reduce C02 emissions and meet the Kyoto Protocol targets. Based on potential estimates and assumptions on its use for heat and power purposes only, it is believed that biomass could reduce 1998 C02 emissions by between 6 and 26 per cent (Bauen and Kaltschmitt, 2001). The consideration of carbon sinks could add further reduc­tions of C02 emissions as a result of biomass utilization (Schlamadinger et al., 2001).

The EU climate policy emphasizes nitrogenous emissions from agricultural activities. Perennial grasses and woody crops have a lower nitrogen fertilization demand and higher nitrogen use efficiency compared to annual crops (including annual biofuel crops), leading to lower nitrogen losses (nitrogen leaching and gaseous nitrogen emissions, mainly N20). Hence, the choice of energy crops will affect greenhouse gas emissions from the agricultural sector and may influence climate change mitigation actions. Nitrogen losses are subject to uncertainties, as they will be affected by soil type.

How such aspects may translate into policy actions that can be integrated with other agricultural, energy and environmental policies deserves further consideration. Although carbon sinks remain contentious and the extent to which they should contribute to the Kyoto commitments unsure, land management for fossil fuel substitution is to some degree likely to be a key issue in meeting stringent greenhouse gas emissions targets. An important issue yet to be addressed is if and how carbon sequestration associated with land management for fossil fuel substitution should be considered.

As pointed out before, bioenergy is becoming a mainstream energy alternative. But, while the business structure for bioenergy utilization is well tested and has proven efficient to this point, a number of issues need to be addressed as the expansion of bioenergy systems is contemplated. Such issues refer to the availability of biomass resources, the type of services demanded and the best form to provide them utilizing bioenergy, as well as the policies and institutional base needed to ensure that biomass will remain an attractive source of energy.

Further development of the biofuel base can be effectively achieved in the short — and medium-term based on the existing biomass potential. According to Lonner et al., (1998), the potential supply of biomass in terms of forest fuels, waste and imports within a feasible cost range are greater than the foreseeable demand within Sweden. Although this study provides an indication of the resource availability, the validity of a study focused on Swedish needs only may be questioned. Truly, Sweden has been a forerunner in the use of modern biomass technologies, but the whole European Union is contemplating bioenergy options. Thus the resource availability should be analyzed within a broader context. The trade with biofuels is increasing with major streams from the Baltic countries and Russia to Scandinavia and the Northern parts of Europe. However, with increasing demands from different countries, competition for biofuels is likely to increase.

The next leap in the use of bioenergy in Sweden will most certainly be in combined heat and power production (CHP). In this area, Sweden is actually behind Finland and Denmark. The large availability of electricity from nuclear power plants in the past decades has allowed low electricity prices on the market, providing a disincentive for new CHPs. Also the structure of the tax system and the environmental legisla­tion in Sweden have played a role in the development observed. However, the enlargement of the power production capacity in Sweden shall count heavily on CHPs. Given the present policies and tax structure, for example to curtail greenhouse gas emissions, these CHPs are most likely to be fueled with biomass. Meanwhile, the penetration of biofuels in the transport sector shall proceed at a lower speed until perhaps a breakthrough is reached in about ten years.

When it comes to development of the biomass resource base in the next ten years, we can single out four major issues that Sweden needs to address.

• Trade with bioenergy technology, know-how and biofuels

The internationalization of the bioenergy sector leads to increased trade with biofuels, while also improving markets for bioenergy equipment and know-how. The challenge is to understand the underlying conditions and incentives behind existing and potential trade patterns to be able to exploit the trade in bioenergy — related products in an effective way.

• Transnational energy companies

The challenge is to understand the structure of decision-making, and the strategic considerations of emerging transnational energy companies so that they can be made proactive in promoting bioenergy options.

• Integration of bioenergy with other socioeconomic sectors

Successful bioenergy projects integrated with other sectors and functions are needed in order to achieve a general support for bioenergy from society at large. The challenge lies in facilitating the creation of a wide cluster of actors that can develop and manage complex bioenergy projects.

• Decreased tax advantage

As bioenergy increasingly becomes a major supply source of energy, the reasons for strong tax advantages decreases. The challenge lies in the development of bioenergy systems that are resilient to more competitive conditions.