Modeling an integrated market for sawlogs, pulpwood and forest bioenergy

Traditionally, most applications in the initial stage of forest supply chain deal with sawlogs to sawmills, pulpwood to pulp or paper mills and forest residues to heating plants. However, in the past decades, soaring prices of fossil fuel, global awareness about CO2 emission and increasing attention to domestic resource security have boosted the development of alternative renewable energy, among which forest bioenergy is the most promising and feasible choice for medium- and large-scale heating and electricity generation. Different subsidies and incentive policies for green energy further promote the utilization of forest bioenergy. As a result, there is a trend that pulpwood may be forwarded to heating plants as complementary forest bioenergy. Though pulpwood is more expensive than forest residues, it is more efficient to transport and has higher energy content. The competition between traditional forest industries and wood-energy facilities, expected to grow in the future, is very sensitive for the forest companies as they are involved in all activities. In this paper, we develop a model that all raw materials in the forest, i.e. sawlogs, pulpwood and forest residues, and byproducts from sawmills, i.e. wood chips and bark, exist in an integrated market where pulpwood can be sent to heating plants as bioenergy. It represents a multi-period multi-commodity network planning problem with multiple sources of supply, i.e. pre-selected harvest areas, and multiple kinds of destination, i.e. sawmills, pulp mills and heating plants. The decisions incorporate purchasing the raw materials in harvest areas, reassigning byproducts from sawmills, transporting those assortments to different points for chipping, storing, wood-processing or wood-fired, and replenishing fossil fuel when necessary. Moreover, different from the classic wood procurement problem, we take the unit purchasing costs of raw materials as variables, on which the corresponding supplies of different assortments linearly depend. With this price mechanism, the popularity of harvest areas can be distinguished. The objective of the problem is to minimize the total cost for the integrated market including the purchasing cost of raw materials. Therefore, the model is a quadratic programming (QP) problem with a quadratic objective function and linear constraints. A large case study in southern Sweden under different scenario assumptions is implemented to simulate the integrated market and to study how price restriction, market regulation, demand fluctuation, policy implementation and exogenous change in price for fossil fuel will influence the entire wood flows. Pair-wise comparisons show that in the integrated market, competition for raw materials between forest bioenergy facilities and traditional forest industries pushes up the purchasing costs of pulpwood. The results also demonstrate that resources can be effectively utilized with the price mechanism in supply market. The overall energy value of forest bioenergy delivered to heating plants is 23% more than the amount in the situation when volume and unit purchasing cost of raw materials are fixed.Forest supply chain; integrated market; bioenergy; wood procurement; wood distribution; quadratic programming

WoodCircus, Underpinning the vital role of the forest-based sector in the Circular Bioeconomy. D2.2 Resource Efficiency, Side Streams and Value Chain Analysis – WP2 Final Report

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One and Two Way Packaging in the Dairy Sector

Choosing packaging material for dairy products and soft drinks is an interesting issue at the moment. Discussions arise on the costs impacts and environmental impacts of both one way packaging and reusable packaging. The aim of this article is to develop an evaluation tool providing costs and environmental impacts of the PC-bottle and the GT-packs in the dairy sector, considering forward and return flows. The evaluation tool enables the user to analyse the costs and environmental impacts of a supply chain with and without return flows using scenario analyses with respect to the use of various carrier types and the number of return loops. It appears that costs differences between PC-bottles and GT-pack are quite small. The PC bottle has a better environmental profile than the GT-pack. Scenario analysis on the carriers results in the advice to use preferably roll-in-containers with direct delivery, secondly roll-in-containers with delivery via distribution centers, thirdly in case of direct delivery either cartons or crates and cartons in case of delivery via distribution centers.pricing;supply chain management;reverse logistics;environment;life cycle assessment

Trends and possible future developments in global forest-product markets - implications for the Swedish forest sector

This paper analyzes trends and possible future developments in global wood-product markets and discusses implications for the Swedish forest sector. Four possible futures, or scenarios, are considered, based on qualitative scenario analysis. The scenarios are distinguished principally by divergent futures with respect to two highly influential factors driving change in global wood-product markets, whose future development is unpredictable. These so-called critical uncertainties were found to be degrees to which: (i) current patterns of globalization will continue, or be replaced by regionalism, and (ii) concern about the environment, particularly climate change, related policy initiatives and customer preferences, will materialize. The overall future of the Swedish solid wood-product industry looks bright, irrespective of which of the four possible futures occurs, provided it accommodates the expected growth in demand for factory-made, energy-efficient construction components. The prospects for the pulp and paper industry in Sweden appear more ambiguous. Globalization is increasingly shifting production and consumption to the Southern hemisphere, adversely affecting employment and forest owners in Sweden. Further, technical progress in information and communication technology (ICT) is expected to lead to drastic reductions in demand for newsprint and printing paper. Chemical pulp producers may profit from a growing bio-energy industry, since they could manufacture new, high-value products in integrated bio-refineries. Mechanical pulp producers cannot do this, however, and might suffer from higher prices for raw materials and electricity

Bio-energy production in the sugar industry: an integrated modeling approach

Recent reforms in the Common Agricultural Policy and the sugar regime caused serious concerns for the future of the European sugar industry. At the same time, the European Commission considers transportation bio-fuels as a key factor for reducing reliance on imported fuels, emission levels of greenhouse gases and to meet rural development goals. Matching the sugar sector with bio-ethanol production may create opportunities for sustainable management of the existing sugar industry infrastructure and also serve bio-fuel policy targets. A partial equilibrium economic model is used in order to evaluate the shift from sugar to bio-ethanol production in Thessaly, Greece. In the agricultural feedstock supply and industrial processing sub-models are articulated indicating optimal crop mix for farmers and the best technology configurations for industry. The joint ethanol-biogas option appears to be preferable using sugar beet and wheat, whereas capacity selected amounts at 120 kt of ethanol.Sugar beet, grain, ethanol, mathematical programming, Greece, Agricultural and Food Policy, Food Consumption/Nutrition/Food Safety,

01-02 "Mixed Signals: Market Incentives, Recycling, and the Price Spike of 1995"

Environmental economics assumes that reliance on price signals, adjusted for externalities, normally leads to efficient solutions to environmental problems. We explore a limiting case, when market volatility created "mixed signals": waste paper and other recycled materials were briefly worth an immense amount in 1994-95, then plummeted back to traditional low levels in 1996. These rapid reversals resulted in substantial economic and political costs. A review of academic and business literature suggests six possible explanations for abrupt price spikes. An econometric analysis of the prices of wood pulp and waste paper shows that factors that explained price changes in 1983-93 contribute very little to understanding the subsequent price spike. From the econometric analysis and from other sources, we conclude that speculation, rather than "rational" economic factors, must have played a major role in the price spike. If speculatively driven price spikes can disrupt an environmentally important industry such as recycling, then the surprising implication for public policy is that measures to control or stabilize prices, far from interfering with the market, may actually help to make it more efficient.

"Mixed Signals: Market Incentives, Recycling, and the Price Spike of 1995"

Environmental economics assumes that reliance on price signals, adjusted for externalities, normally leads to efficient solutions to environmental problems. We explore a limiting case, when market volatility created “mixed signals”: waste paper and other recycled materials were briefly worth an immense amount in 1994-95, then plummeted back to traditional low levels in 1996. These rapid reversals resulted in substantial economic and political costs. A review of academic and business literature suggests six possible explanations for abrupt price spikes. An econometric analysis of the prices of wood pulp and waste paper shows that factors that explained price changes in 1983- 93 contribute very little to understanding the subsequent price spike. From the econometric analysis and from other sources, we conclude that speculation, rather than “rational” economic factors, must have played a major role in the price spike. If speculatively driven price spikes can disrupt an environmentally important industry such as recycling, then the surprising implication for public policy is that measures to control or stabilize prices, far from interfering with the market, may actually help to make it more efficient.price spike, recycling, economic policy, market volatility

Integrated network design for forest bioenergy value chain - decisions support system for the transformation of the Canadian forest industry

Les usines de bioénergie devraient jouer un rôle important dans la production d'énergie verte à partir de la biomasse forestière. Pour intégrer l'usine de bioénergie dans la chaîne d'approvisionnement forestière, l'industrie a besoin de nouveaux investissements ainsi que de la conception et de la gestion de la chaîne de valeur. D'un autre côté, les incertitudes associées aux nouveaux produits sur le marché peuvent ajouter des risques supplémentaires à un investissement aussi important dans la chaîne d'approvisionnement forestière instable. Par conséquent, l'objectif principal de cette thèse est d'étudier la conception du réseau de bioénergie forestière dans un contexte déterministe et stochastique. La première partie de la thèse propose une plate-forme expérimentale pour intégrer la conception et le pilotage de la chaîne de valeur puisque le nouveau design ne sera réalisable que s'il considère au préalable la planification. La plateforme a inclus plusieurs actions collaboratives entre tous les partenaires impliqués dans la chaîne d'approvisionnement. Cette plateforme est la base d’un nouvel outil éducatif appelé jeu de transport. Ensuite, la plate-forme a été utilisée pour concevoir un réseau optimisé de bioénergie forestière. La chaîne d'approvisionnement forestière de Terre-Neuve, composée de quatre acteurs majeurs de l’industrie forestière, a été considérée comme notre étude de cas. La rentabilité de l'ajout de nouvelles installations de bioénergie ainsi que de nouveaux terminaux dans plusieurs emplacements potentiels ont été évalués. Enfin, à la troisième partie de la thèse, nous repensons le réseau bioénergétique en tenant compte de l'incertitude de la demande et des prix de tous les produits finaux de la nouvelle chaîne de valeur. Plusieurs bioprocédés potentiels avec différentes technologies ont été évalués dans notre étude de cas. Pour fournir une solution tenant compte du risque, nous avons développé deux nouveaux modèles de gestion des risques. Les résultats dans les trois parties ont clairement démontré l'impact de la planification intégrée, des usines de bioénergie et de la collaboration sur l'amélioration de la performance de la chaîne d'approvisionnement forestière. En général, le travail accompli dans ce projet permettra une transformation en douceur de la chaîne d'approvisionnement forestière en tenant compte des risques d'investissement. En ce qui concerne les résultats obtenus grâce aux études de cas, nous croyons que la plateforme et les approches proposées dans cette thèse peuvent être considérées comme des outils novateurs et pratiques pour le problème de la conception des réseaux de bioénergie forestière.Bioenergy plants are expected to play an important role in green energy production from forestry biomass. To incorporate bioenergy plant in the forest supply chain, the industry requires new investments as well as new value chain design and management. On the other side, the uncertainties associated with demand and price of new products in the market may add risks to such large investment in current forest supply chain. Hence, the main objective of this thesis is to analyze and to propose new design of the forest bioenergy network in both a deterministic and a stochastic context. The first part of the thesis has proposed four optimization models for strategic, tactical and operational planning levels of the supply chain. The models have included several collaborative actions between all involved stakeholders of the supply chain. They have been integrated in a new educational tool called hierarchical transportation game. In the second part of the thesis, we have integrated the developed optimization models to propose an integrated value chain design and value chain management optimization model. This model has been used to analyze a forest bioenergy network in Newfoundland. Newfoundland forest supply chain comprising four major stakeholders was considered as our case study. The profitability of adding a new bioenergy plant as well as new terminals in several potential locations have been evaluated. Finally, in a third part of the thesis we have proposed the bioenergy network taking into account uncertainty on demand and price of all final products of a new value chain. Several potential bioprocesses with different technologies have been evaluated for our case study. To provide a risk-averse solution, we have proposed two risk management models. The results from the three parts of the thesis have demonstrated the impact of integrated planning, bioenergy plants and collaboration on improvement of forest value chain. In general, the work in this thesis can support an efficient transformation of the forest supply chain considering investment risks. The optimization models and approaches proposed in this thesis are novel and practical for the forest bioenergy network design problem

A Framework for Reverse Logistics

Reverse Logistics has been stretching out worldwide, involving all the layers of supply chains in various industry sectors. While some actors in the chain have been forced to take products back, others have pro-actively done so, attracted by the value in used products One way or the other, Reverse Logistics has become a key competence in modern supply chains. In this paper, we present a content analysis of reverse logistics issues. To do so, we propose a content framework focusing on the following questions with respect to reverse logistics: why? what? how?; and, who?, i.e. driving forces and return reasons, what type of products are streaming back, how are they being recovered, and who is executing and managing the various operations. These four basic characteristics are interrelated and their combination determines to a large extent the type of issues arising from the resulting reverse logistics system.supply chain management;reverse logistics;content analysis;theory;framework

Design of Closed Loop Supply Chains

Increased concern for the environment has lead to new techniques to design products and supply chains that are both economically and ecologically feasible. This paper deals with the product - and corresponding supply chain design for a refrigerator. Literature study shows that there are many models to support product design and logistics separately, but not in an integrated way. In our research we develop quantitative modelling to support an optimal design structure of a product, i.e. modularity, repairability, recyclability, as well as the optimal locations and goods flows allocation in the logistics system. Environmental impacts are measured by energy and waste. Economic costs are modelled as linear functions of volumes with a fixed set-up component for facilities. We apply this model using real life R&D data of a Japanese consumer electronics company. The model is run for different scenarios using different parameter settings such as centralised versus decentralised logistics, alternative product designs, varying return quality and quantity, and potential environmental legislation based on producer responsibility.supply chain management;reverse logistics;facility location;network design;product design