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.