University of Stuttgart
Institute of Energy Economics and the Rational Use of Energy
Role of biomass in the energy system -
linkages between the energy and the
agricultural in the EU until 2050
Markus Blesl*, Andre Deppermann**, Harald Grethe**
*Institute for Energy Economics and the Rational Use of Energy (IER), University of Stuttgart Germany
, **Agricultural and Food Policy Group, University of Hohenheim, Germany
19th November, 2014
TIMES CGE Workshop, Copenhagen
Markus Blesl Linkage of the agriculture and energy sector
University of Stuttgart
Institute of Energy Economics and the Rational Use of Energy
November 19, 2014 2
Introduction
• Biofuels and bioenergy in general might be one important
GHG emission reduction option in the energy system.
• Potential supply and price of biomass has an impact on
future energy demand.
• Demand for biomass for energy production has an impact
on agricultural markets.
• Relationship between agricultural and energy prices is
expected to strengthen further.
Markus Blesl Linkage of the agriculture and energy sector
University of Stuttgart
Institute of Energy Economics and the Rational Use of Energy
November 19, 2014 3
Scenario assumptions ● Energy prices from WEO 2012
● Abolition of all EU biofuel mandates from 2015 on
● Limitation of area available for woody biomass to 30% of agricultural area
3 Scenarios with different greenhousegas reduction targets:
● ETS75 restricted on the ETS sector
● Overall sectors GHG emission reduction targets C75 (75% till 2050) and C80
0
10
20
30
40
50
60
70
80
90
2012 2015 2020 2030 2040 2050
Re
du
ctio
n t
aarg
et in
[%
]
ETS75 (rel. 2005)
C75 (rel. 1990)
C80 (rel. 1990)
Markus Blesl Linkage of the agriculture and energy sector
University of Stuttgart
Institute of Energy Economics and the Rational Use of Energy
November 19, 2014 4
Bioenergy potential in selected European
countries
Source: de Witt et al.
2008, RES 2020;
Bentsen 2012
0
500
1000
1500
2000
AT BG CZ DE DK EE ES FI FR GR HU IE IT LT LV PL PT RO SE SK UK
Bio
en
ergy
po
ten
tial
in [
PJ]
Additional potential energy crops till 2030 Energy crops waste (renewable) Forrest other Forrest wood
Markus Blesl Linkage of the agriculture and energy sector
University of Stuttgart
Institute of Energy Economics and the Rational Use of Energy
November 19, 2014 5
Dependency of the energy system and the
agriculture market
Agriculture Energy system
Price
Quantity
Demand Supply
Additional price for
energy crops
Demand of energy crops
from the energy system
P*
Q* Equilibrium quantity
Equilibrium
price
Markus Blesl Linkage of the agriculture and energy sector
University of Stuttgart
Institute of Energy Economics and the Rational Use of Energy
November 19, 2014 6
Product Mapping – Data harmonization
TIMES PanEU ESIM
Oilseeds Rapeseed, Sunflower,
Soybeans
Starchy Crops Corn, Wheat, Triticale, Rye,
Barley, Grass, Silage maize,
Sugar Crops White sugar
Woody Crops Area (woody crops not explicitly
modeled in ESIM)
Source: own compilation
Markus Blesl Linkage of the agriculture and energy sector
University of Stuttgart
Institute of Energy Economics and the Rational Use of Energy
November 19, 2014 7
TIMES PanEU
• Technology oriented bottom-up partial equilibrium model
• 30 region model (EU 28, No, CH)
• Energy system model
• SUPPLY: reserves, resources, exploration and conversion Country specific renewable potential and availability (onshore wind, offshore wind, ocean, geothermal, biomass, biogas, hydro)
• Electricity: public electricity plants, CHP plants and heating plants
• Residential and Commercial: End use technologies (space heating, water heating, space cooling and others)
• Industry: Energy intensive industry (Iron and steel, aluminium copper ammonia and chlorine, cement, glass, lime, pulp and paper), food, other industries, autoproducer and boilers
• Transport: Different transport modes (cars, buses, motorcycles, trucks, passenger trains, freight trains), aviation and navigation
• Country specific differences for characterisation of new conversion and end-use technologies
• Time horizon 2010 - 2050
• GHG: CO2, CH4, N2O, SF6 /Others pollutants: SO2, NOx, CO, NMVOC, PM2.5, PM10
Markus Blesl Linkage of the agriculture and energy sector
University of Stuttgart
Institute of Energy Economics and the Rational Use of Energy
November 19, 2014 8
European Simulation Model (ESIM)
• Comparative static partial equilibrium multi-country model for the agricultural sector
• Isoelastic supply functions (separate for yield and area) and demand functions
• 32 regions (EU Member States; USA, Croatia, Turkey, Western Balkans, RoW)
• Product coverage:
• 15 crops
• 21 processed products
• 6 animal products
• Pasture, set-aside
Markus Blesl Linkage of the agriculture and energy sector
University of Stuttgart
Institute of Energy Economics and the Rational Use of Energy
November 19, 2014
Primary energy consumption in the EU28
9
0%
5%
10%
15%
20%
25%
0
10000
20000
30000
40000
50000
60000
70000
80000201
0
ET
S75
C75
Öko
ET
S75
C75
C80
ET
S75
C75
C80
ET
S7
5
C75
C80
2020 2030 2040 2050
Pri
mary
en
erg
y c
on
su
mp
tio
n [
PJ]
Waste (nonrenewable)
Otherrenewables
Hydro, wind,solar, Ocean
Nuclear
Natural gas
Oil
Lignite
Coal
Share ofbioenergy
Markus Blesl Linkage of the agriculture and energy sector
University of Stuttgart
Institute of Energy Economics and the Rational Use of Energy
November 19, 2014 10
Bioenergy consumption in the EU28 by
application
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
201
0
ET
S75
C7
5
C8
0
ET
S75
C7
5
C8
0
ET
S75
C7
5
C8
0
ET
S75
C7
5
C8
0
2020 2030 2040 2050
Co
nsu
mp
tio
n in
[P
J]
Residential sectorCommercial sectorAgricultureIndustryElectricity/Heat productionOthersHydrogenation of oil seedsBiodiesel productionEthanol production (1.Gen.)Ethanol production (2.Gen.)FT-Diesel productionMethanol productionDME productionHydrogen ProductionBiogas production
Markus Blesl Linkage of the agriculture and energy sector
University of Stuttgart
Institute of Energy Economics and the Rational Use of Energy
November 19, 2014 11
Energy crops demand in the EU28
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
2010 ETS75 C75 C80 ETS75 C75 C80 ETS75 C75 C80 ETS75 C75 C80
2020 2030 2040 2050
Ene
rgy
cro
p p
rod
uct
ion
in
[PJ
]
Starchy crops
Sugar crops
Rape seed
Woody crops
Markus Blesl Linkage of the agriculture and energy sector
University of Stuttgart
Institute of Energy Economics and the Rational Use of Energy
November 19, 2014 12
Comparison of real price index for starchy and woody crops in the EU28 (2006 = 100)
100
110
120
130
140
150
160
06/07 2015 2020 2025 2030 2035 2040 2045 2050
(20
06
= 1
00
)
Starchy Crops (C80)
Starchy Crops (ETS75)
Woody Crops (ETS75)
Starchy Crops (C75)
Woody Crops (C75)
Woody Crops (C80)
Markus Blesl Linkage of the agriculture and energy sector
University of Stuttgart
Institute of Energy Economics and the Rational Use of Energy
November 19, 2014 13
Comparison of the price index for energy crops and energy carrier in the EU28 (2010 = 100)
0
20
40
60
80
100
120
140
160
2010 2015 2020 2025 2030 2035 2040 2045 2050
(20
10
= 1
00
)
Year
natural gas
oil
coal
woody and starchy crops
Markus Blesl Linkage of the agriculture and energy sector
University of Stuttgart
Institute of Energy Economics and the Rational Use of Energy
November 19, 2014 14
Net exports of selected products in the EU28 in 2050 in kt
-60000 -40000 -20000 0 20000 40000 60000
SUNOIL
RAPOIL
PALMOIL
BIODIESEL
ETHANOL
SUNSEED
RAPSEED
CWHEAT
CORN
BARLEY
ETS75
C80
C75
Markus Blesl Linkage of the agriculture and energy sector
University of Stuttgart
Institute of Energy Economics and the Rational Use of Energy
November 19, 2014 15
Conclusions
• The chosen GHG mitigation scenarios, which do not take into account direct and indirect land use effects as well as emissions from higher production intensity in agriculture, result in:
• Strong price effects
• Enormous net trade effects
• Price changes for biomass effect demand from the energy sector
• A convergence after 3 to 4 iterations can be observed within the model coupling.
• Further work focus on detail modelling of bioenergy in both models (biogas, Lignocelluloses,…)….