Journal of Forest Economics > Vol 17 > Issue 2

Pellet promotion in the Finnish sawmilling industry: The cost-effectiveness of different policy instruments

Matti Mäkelä, , matti.makela@metla.fi Jussi Lintunen, , Hanna-Liisa Kangas, , Jussi Uusivuori, ,
 
Suggested Citation
Matti Mäkelä, Jussi Lintunen, Hanna-Liisa Kangas and Jussi Uusivuori (2011), "Pellet promotion in the Finnish sawmilling industry: The cost-effectiveness of different policy instruments", Journal of Forest Economics: Vol. 17: No. 2, pp 185-196. http://dx.doi.org/10.1016/j.jfe.2011.02.004

Published: 0/4/2011
© 0 2011 Matti Mäkelä, Jussi Lintunen, Hanna-Liisa Kangas, Jussi Uusivuori
 
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Keywords
JEL Codes:Q42Q48Q58
Wood energySawmill industryPolicy analysis
 

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In this article:
Introduction
The model
Policies
Results
Discussion

Abstract

The demand for wood fuels is increasing as several countries have targets for different types of wood-based energy, e.g. pellets. Sawmills are a source for wood fuels since they can refine their by-products into energy products. We present a model of a profit-maximizing sawmill, and analyze the production and investment decisions of thirty large-scale Finnish sawmills. The model allows the investigation of required policy incentives that enable sawmills to realize the production targets set for pellets. We analyze the policy costs of the investment, production and input subsidies. We found that the production subsidy is an efficient policy instrument.

DOI:10.1016/j.jfe.2011.02.004