Nordic forest with biofuel production facilities.

Can Nordic Countries Lead the Biofuel Revolution? Modeling Optimal Production

Reese Marlowe in Climate & Environment August 2025 • 4 min read.

"A deep dive into how technology and economics could shape the future of forest-based biofuel production in the Nordic region."

The Nordic countries, once leaders in the global forest industry, face challenges from declining demand for traditional paper products and high labor costs. However, a promising new avenue has emerged: biofuel production. With growing global interest in alternatives to fossil fuels for transportation, biofuels made from lignocellulosic feedstocks, like forest biomass, are gaining traction.

The European Union's Renewable Energy Directive mandates that at least 10% of transportation energy must come from renewable sources by 2020. This, coupled with restrictions on first-generation biofuels made from food crops, has spurred interest in advanced biofuels derived from forest resources. The Nordic countries, with their abundant forests and expertise in biomass processing, seem well-positioned to capitalize on this trend.

However, the economic viability of biofuel production in the Nordic region is complex. Techno-economic uncertainties, variations in labor and energy costs, and competition for forest biomass create a challenging landscape. It's unclear which Nordic countries are most attractive for investment in biofuel production capacity. This article explores these factors, using modeling to determine the optimal allocation of biofuel production across the region.

Optimizing Biofuel Production: Key Factors at Play

Nordic forest with biofuel production facilities.

A comprehensive study employs the Nordic Forest Sector Model (NFSM) to simulate various scenarios. This model considers factors like biomass availability, production costs, energy prices, and competition with existing forest industries. By adjusting techno-economic parameters, the study identifies the most promising locations for biofuel production facilities.

The research highlights several critical factors influencing optimal biofuel capacity allocation:

Feedstock Type: The type of forest feedstock used significantly impacts capacity allocation.
Existing Industries: Biofuel production affects industries dependent on forest feedstocks, creating both competition and synergy.
Energy Markets: The ability to sell or purchase electricity has a limited effect, comprising a small proportion of revenue or cost. Bioheat may influence allocation depending on local demand.
Labor Costs: The impact of labor costs depends on the labor intensity of the technology, which varies with scale.

The model reveals that optimal capacity allocation is highly sensitive to the type of feedstock used in the biofuel production process. Furthermore, the emergence of biofuel production has implications for existing forest-dependent industries, as it introduces competition for resources. The study also finds that the capacity to sell or purchase electricity has a limited impact on capacity allocation, as it constitutes only a small portion of the overall cost structure. However, bioheat can play a more significant role, depending on the level of local demand.

Policy Implications and Future Directions

These findings are crucial for policymakers seeking to promote biofuel production in the Nordic countries. By understanding the techno-economic drivers, they can create targeted incentives that encourage investment in the most efficient and sustainable biofuel technologies. Future research should focus on incorporating novel technologies directly into modeling efforts to capture the nuances of different biofuel production pathways and enhance our understanding of competitiveness in this evolving field.

About this Article -

This article was crafted using a human-AI hybrid and collaborative approach. AI assisted our team with initial drafting, research insights, identifying key questions, and image generation. Our human editors guided topic selection, defined the angle, structured the content, ensured factual accuracy and relevance, refined the tone, and conducted thorough editing to deliver helpful, high-quality information.See our About page for more information.

This article is based on research published under:

DOI-LINK: 10.1016/j.forpol.2017.07.004, Alternate LINK

Title: Forest-Based Biofuel Production In The Nordic Countries: Modelling Of Optimal Allocation

Subject: Management, Monitoring, Policy and Law

Journal: Forest Policy and Economics

Publisher: Elsevier BV

Authors: Walid Fayez Mustapha, Erik Trømborg, Torjus Folsland Bolkesjø

Published: 2019-06-01

Everything You Need To Know

What are the primary factors influencing biofuel production capacity allocation in the Nordic region?

The optimal allocation of biofuel production capacity in the Nordic countries is primarily influenced by several key factors. These include the type of forest feedstock used, the presence of existing forest-dependent industries, energy market dynamics, and labor costs. The specific type of forest feedstock significantly impacts the allocation. Biofuel production also affects existing industries that rely on forest feedstocks, creating both competition and potential synergies. The ability to sell or purchase electricity has a limited impact, while bioheat can influence allocation depending on local demand. Labor costs also play a role, depending on the technology's labor intensity and scale.

How does the Nordic Forest Sector Model (NFSM) assist in determining optimal biofuel production locations?

The Nordic Forest Sector Model (NFSM) is used to simulate various scenarios, considering factors like biomass availability, production costs, energy prices, and competition with existing forest industries. By adjusting techno-economic parameters within the model, researchers can identify the most promising locations for biofuel production facilities across the Nordic countries. This modeling approach allows for a comprehensive analysis of the complex interplay of factors influencing biofuel production viability and helps to determine the optimal allocation of production capacity.

Why are Nordic countries considered well-positioned for biofuel production?

Nordic countries are well-positioned for biofuel production due to their abundant forests and established expertise in biomass processing. This advantage is particularly relevant given the growing global interest in alternatives to fossil fuels for transportation and the European Union's Renewable Energy Directive, which mandates a certain percentage of transportation energy from renewable sources. The availability of lignocellulosic feedstocks from forests provides a significant resource base for advanced biofuel production.

What are the implications of biofuel production on existing forest-dependent industries?

The emergence of biofuel production in the Nordic region has implications for existing forest-dependent industries. It introduces competition for forest resources, such as the forest biomass. This competition can affect the supply and pricing of feedstocks, potentially impacting the profitability and operational strategies of these industries. The study highlights the need for a balanced approach that considers both the opportunities and challenges presented by the biofuel revolution, ensuring a sustainable and economically viable transition.

How can policymakers use the research findings to promote biofuel production in the Nordic countries?

The findings from research on techno-economic drivers are crucial for policymakers seeking to promote biofuel production in the Nordic countries. By understanding these drivers, policymakers can create targeted incentives that encourage investment in the most efficient and sustainable biofuel technologies. This includes supporting research and development, providing financial assistance, and implementing policies that address the specific challenges and opportunities associated with biofuel production, ensuring long-term competitiveness and sustainability within the region.