Abstract
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.
Highlights
In order to meet its commitments to the Paris Agreement, the Government of Canada (GoC) is in the process of developing and implementing a set of policies and programs to meet its greenhouse gas (GHG) emissions reduction target of 30% below 2005 levels by 2030 [1]
Carbon pricing is intended to increase the cost of fossil fuels, positively influencing the relative competitiveness of bioenergy generated from renewable sources, including wood pellets
The purpose of this study is to evaluate the indirect effects of the carbon pricing and Clean Fuel (CF) Standard policies in Canada with respect to the Canadian composite panel industry
Summary
In order to meet its commitments to the Paris Agreement, the Government of Canada (GoC) is in the process of developing and implementing a set of policies and programs to meet its greenhouse gas (GHG) emissions reduction target of 30% below 2005 levels by 2030 [1]. The PCF addresses emissions reduction in many ways, including a carbon pricing system and the development of a Clean Fuel Standard (CF Standard), which is designed to promote the use of lower carbon fuels including bioenergy Both carbon pricing and the CF Standard may have significant implications for the Canadian economy and the Canadian forestry sector. The options available for compliance includes the purchase of credits generated by low-carbon fuel producers, providing an additional source of revenue for bioenergy producers Both carbon pricing and the CF Standard are designed to incent continued reductions in emissions over time via increases in emissions costs (carbon pricing) and increases in credit values [2], potentially increasing the demand for biofuels and biomass over time. The suite of actions proposed by the PCF influence how energy is produced and consumed across the economy, and has direct and indirect impacts on all industrial sectors
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