Abstract

Energy market integration is beneficial in several ways: it can increase competition, reduce the risk of local shortages or oversupply and can also reduce price volatility. As demand for renewable energy is growing, bioenergy from solid biomass fuels is changing from its traditional role as a locally utilized form of energy into an internationally traded energy commodity. However, there is still not very much knowledge about how bioenergy markets function in terms of price mechanisms and the interconnections between international trade and price development. The aim of this thesis is to investigate the progress of European bioenergy market integration. The thesis is based on two papers in which the progress of European bioenergy market integration is assessed by studying two sub-markets. The degree of market integration is investigated by using time series analysis of bioenergy prices. This makes it possible to investigate if and how developments in national markets influence each other. Paper I investigates whether the residential markets for wood pellets in Austria, Germany and Sweden can be considered integrated. The conclusion is that whereas the German and the Austrian markets are integrated, Sweden is a separate market. In paper II, the market for unrefined wood fuels in the Baltic Sea area is studied. The subject here is to investigate the level of wood fuel market integration between Estonia, Finland and Sweden by analyzing whether there is short-run or long-run convergence between prices in the three countries. The conclusion is that although the price difference between the countries has decreased a great deal during the time period in focus, the markets can not be considered integrated. These two studies show that although trade has indeed contributed to increased bioenergy market integration in Europe, there is still a way to go until there is a common European bioenergy market. As data availability is continuously increasing, it will be possible to expand future research to the situation in more countries on a both small and large scale. Thereby it will be possible to get a more comprehensive view of the status of European bioenergy market integration.

Keywords

lic.-avh; biofuels; pellets; markets; integration; price formation; international trade; time series analysis; austria; germany; estonia; finland; sweden

Published in

Rapport (Institutionen för energi och teknik, SLU)
2009, number: 012
Publisher: Department of Energy and Technology, Swedish University of Agricultural Sciences

SLU Authors

• Olsson, Olle

  • Department of Energy and Technology, Swedish University of Agricultural Sciences
    

UKÄ Subject classification

Renewable Bioenergy Research


Permanent link to this page (URI)

https://res.slu.se/id/publ/27155