Exploring the drivers of demand for non-industrial wood pellets for heating

Matti Flinkman, Richard Sikkema, Henry Spelter, Ragnar Jonsson*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

1 Citation (Scopus)

Abstract

The targets for renewable energy in the European Union (EU) have resulted in a surge in the use of wood pellets. The EU-28 consumption has outgrown domestic production, resulting in increasing net imports. This study analyses the drivers of the use of pellets for heating (non-industrial pellets). An inquiry directed to pellet organizations indicates that country specific subsidies could be a driver for the purchase of pellet stoves and boilers, resulting in a base level of consumption of non-industrial pellets. Further, light heating oil and natural gas are considered the main heating sources substituted by wood pellets. Econometric analysis indicates that GDP is less important, while the price of wood pellets as well as the price of alternative energy carriers seem to be significant drivers. Models using different combinations of these variables account for 63% to 76% of the variation in non-industrial pellet demand. The results indicate the importance of considering competing fossil-based fuels when modelling wood pellet demand. This aspect is also relevant when new policy measures for a low carbon economy are applied, such as the levying of carbon taxes on fossil fuels.

Original languageEnglish
Pages (from-to)86-98
JournalBaltic Forestry
Volume24
Issue number1
Publication statusPublished - 2018

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pellets
heating
heat
European Union
pollution tax
alternative energy
econometrics
Gross Domestic Product
fossil fuel
import
renewable energy sources
natural gas
fossil
demand
oil
carbon
fuel oils
modeling
energy
fossil fuels

Keywords

  • Carbon tax
  • Demand elasticity
  • Econometric analysis
  • Heating
  • Heating oil
  • Natural gas
  • Renewable energy policy
  • Wood pellets

Cite this

Flinkman, Matti ; Sikkema, Richard ; Spelter, Henry ; Jonsson, Ragnar. / Exploring the drivers of demand for non-industrial wood pellets for heating. In: Baltic Forestry. 2018 ; Vol. 24, No. 1. pp. 86-98.
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title = "Exploring the drivers of demand for non-industrial wood pellets for heating",
abstract = "The targets for renewable energy in the European Union (EU) have resulted in a surge in the use of wood pellets. The EU-28 consumption has outgrown domestic production, resulting in increasing net imports. This study analyses the drivers of the use of pellets for heating (non-industrial pellets). An inquiry directed to pellet organizations indicates that country specific subsidies could be a driver for the purchase of pellet stoves and boilers, resulting in a base level of consumption of non-industrial pellets. Further, light heating oil and natural gas are considered the main heating sources substituted by wood pellets. Econometric analysis indicates that GDP is less important, while the price of wood pellets as well as the price of alternative energy carriers seem to be significant drivers. Models using different combinations of these variables account for 63{\%} to 76{\%} of the variation in non-industrial pellet demand. The results indicate the importance of considering competing fossil-based fuels when modelling wood pellet demand. This aspect is also relevant when new policy measures for a low carbon economy are applied, such as the levying of carbon taxes on fossil fuels.",
keywords = "Carbon tax, Demand elasticity, Econometric analysis, Heating, Heating oil, Natural gas, Renewable energy policy, Wood pellets",
author = "Matti Flinkman and Richard Sikkema and Henry Spelter and Ragnar Jonsson",
year = "2018",
language = "English",
volume = "24",
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Flinkman, M, Sikkema, R, Spelter, H & Jonsson, R 2018, 'Exploring the drivers of demand for non-industrial wood pellets for heating', Baltic Forestry, vol. 24, no. 1, pp. 86-98.

Exploring the drivers of demand for non-industrial wood pellets for heating. / Flinkman, Matti; Sikkema, Richard; Spelter, Henry; Jonsson, Ragnar.

In: Baltic Forestry, Vol. 24, No. 1, 2018, p. 86-98.

Research output: Contribution to journalArticleAcademicpeer-review

TY - JOUR

T1 - Exploring the drivers of demand for non-industrial wood pellets for heating

AU - Flinkman, Matti

AU - Sikkema, Richard

AU - Spelter, Henry

AU - Jonsson, Ragnar

PY - 2018

Y1 - 2018

N2 - The targets for renewable energy in the European Union (EU) have resulted in a surge in the use of wood pellets. The EU-28 consumption has outgrown domestic production, resulting in increasing net imports. This study analyses the drivers of the use of pellets for heating (non-industrial pellets). An inquiry directed to pellet organizations indicates that country specific subsidies could be a driver for the purchase of pellet stoves and boilers, resulting in a base level of consumption of non-industrial pellets. Further, light heating oil and natural gas are considered the main heating sources substituted by wood pellets. Econometric analysis indicates that GDP is less important, while the price of wood pellets as well as the price of alternative energy carriers seem to be significant drivers. Models using different combinations of these variables account for 63% to 76% of the variation in non-industrial pellet demand. The results indicate the importance of considering competing fossil-based fuels when modelling wood pellet demand. This aspect is also relevant when new policy measures for a low carbon economy are applied, such as the levying of carbon taxes on fossil fuels.

AB - The targets for renewable energy in the European Union (EU) have resulted in a surge in the use of wood pellets. The EU-28 consumption has outgrown domestic production, resulting in increasing net imports. This study analyses the drivers of the use of pellets for heating (non-industrial pellets). An inquiry directed to pellet organizations indicates that country specific subsidies could be a driver for the purchase of pellet stoves and boilers, resulting in a base level of consumption of non-industrial pellets. Further, light heating oil and natural gas are considered the main heating sources substituted by wood pellets. Econometric analysis indicates that GDP is less important, while the price of wood pellets as well as the price of alternative energy carriers seem to be significant drivers. Models using different combinations of these variables account for 63% to 76% of the variation in non-industrial pellet demand. The results indicate the importance of considering competing fossil-based fuels when modelling wood pellet demand. This aspect is also relevant when new policy measures for a low carbon economy are applied, such as the levying of carbon taxes on fossil fuels.

KW - Carbon tax

KW - Demand elasticity

KW - Econometric analysis

KW - Heating

KW - Heating oil

KW - Natural gas

KW - Renewable energy policy

KW - Wood pellets

M3 - Article

VL - 24

SP - 86

EP - 98

JO - Baltic Forestry

JF - Baltic Forestry

SN - 1392-1355

IS - 1

ER -