The Enhanced Use of Wood-biomass. Macroeconomic, Sectoral and Environmental Impacts

The main objective of this paper is to identify fuel substitution potential by estimating potential price induced energy substitution and by considering available technological options. We consider the impacts of CO2 taxation on reduction of emissions until 2020, assuming CO2 neutrality of burning fuel wood. We finally address the macroeconomic, environmental and sectoral impacts of enhanced usages of fuel wood for energy. The main assumptions are a 1.5 times increase of fuel wood use by 2020 and achieving a share of renewables of 29.83 %. The main outcome for this scenario is that the Austrian economy could benefit from the double dividend of sustained economic growth and fulfilment of EU targets on renewables and CO2 reduction. The prospects for the energy intensive industries deteriorate – most of them would have to reconsider their technological options and face adverse conditions for their production sites.