Demand for waste as fuel in the swedish district heating sector: a production function approach.
This paper evaluates inter-fuel substitution in the Swedish district heating industry by analyzing almost all the district heating plants in Sweden in the period 1989-2003, specifically those plants incinerating waste. A multi-output plant-specific production function is estimated using panel data methods. A procedure for weighting the elasticities of factor demand to produce a single matrix for the whole industry is introduced. The price of waste is assumed to increase in response to the energy and CO2 tax on waste-to-energy incineration that was introduced in Sweden on 1 July 2006. Analysis of the plants involved in waste incineration indicates that an increase in the net price of waste by 10% is likely to reduce the demand for waste by 4.2%, and increase the demand for bio-fuels, fossil fuels, other fuels and electricity by 5.5%, 6.0%, 6.0% and 6.0%, respectively.
Furtenback
Orjan
O
Department of Forest Economics, SLU, SE-901 83 Umea , Sweden. orjan.furtenback@sekon.slu.se
D001674:Bioelectric Energy Sources; D017745:Incineration / Q000379:methods*; D008962:Models, Theoretical; D013548:Sweden; D013997:Time Factors