Development of local and regional forest based bioenergy in Norway – supply networks, financial support and political commitment

Abstract

This paper explore reasons and explanations of growth of new bioenergy firms in Norway: Norwegian authorities have a stated goal of doubling the use of bioenergy by 2020, as both a way of developing the renewable energy sector and providing opportunities for rural employment. However studies shows that there are difficulties concerning the profitability in the sector. We approach the question from a supply chain perspective using a comparative case method. Five cases representing small to medium sized supply chains (1–5 MW) for local heating selected from three geographical regions are studied. The focal firms in the supply chains normally specialize in one or two stages in the chain, for example fuel manufacturing and heat production. In all cases national funding was a critical factor and were directed to various stages in the chains and infrastructure. Also, local political involvement was vital for the establishment of the chains.. Moreover, economies of scope and links to supply chains outside bioenergy were essential. In fact, bioenergy providers drew their main income from other sources and may therefore tolerate sparse income from bioenergy for a period. Hence, the answer to the question of why bioenergy supply increases despite poor profitability seems to be actors’ pluriactivity backed by local political engagement and adequate economic support schemes at national level.