Integration of forest and energy sector models – New insights in the bioenergy markets

The forest and energy sectors are heavily affected by the urgent need for global climate gas emission reductions. To fully understand the implications of a transition to a low carbon society, it is important to analyse the interactions between these sectors. We herein present a coupled/integrated modelling approach that integrates a Nordic Forest Sector Model (NFSM) and a North European energy sector model (Balmorel). Both models include endogenous investment in new production capacity and market prices obtained by market equilibrium in competitive markets. The new integrated model is used to investigate forest and energy sector impacts of a low carbon scenario in the Nordic countries. The results from the integrated model approach show a steady increase in use of forest resources for heat and power generation from 47 TWh in 2020 to 117 TWh in 2050, and a corresponding increase in biomass prices. Comparing these results with results from the two individual models suggests that the integration procedure provides more realistic biomass price and volume projections compared with standalone models.