Assessment of the Impact of Climate Change Policies on the Market for Forest Industrial Residues

• Main Authors: Emily Hope, Bruno Gagnon, Vanja Avdić
• Format: Article
• Language: English
• Published: MDPI AG 2020-02-01
• Series: Sustainability
• Subjects: climate policy; bioenergy; wood composite panels; feedstock prices
• Online Access: https://www.mdpi.com/2071-1050/12/5/1787

As part of the Pan-Canadian Framework (PCF) on Clean Growth and Climate Change, the Government of Canada (GoC) introduced carbon pricing and is in the process of developing a Clean Fuel (CF) Standard. Both policies are key elements of the PCF and aim to reduce greenhouse gas (GHG) emissions through the use of lower carbon fuels, including bioenergy. Carbon pricing and the CF Standard are expected to increase the demand for biomass feedstocks, possibly threatening feedstock availability for existing forest industrial residues users, including composite panel manufacturers. To assess the potential impact of carbon pricing and the CF Standard on Canadian composite panel producers, a Monte Carlo-based model was developed to estimate possible increases in feedstock price-points that composite panel manufacturers may face as a result of increases in bioenergy consumption. Results suggest that the composite panel industry may be negatively impacted in the long-term (2030) by the relative price increase of fossil fuels covered by carbon pricing and additional revenues for biofuel suppliers from CF Standard credits, assuming no other adjustments to the market. Although these results are preliminary in that the analysis excludes external market factors that could influence the outcome, there is evidence that such policies have the potential to generate supply risks for the Canadian composite panel industry without careful consideration of the associated externalities.