Regional economic impacts of biomass based energy service use: A comparison across crops and technologies for East Styria, Austria

Biomass action plans in many European countries seek to expand biomass heat and fuel supply, mainly to be supplied by peripheral, agricultural regions. We develop a two-plus-ten-region energy-focused computable general equilibrium (CGE) model that acknowledges land competition in analysing the sub-state local-regional economic implications of such a strategy, embedded within a global context. Our model is based on a full cost analysis of selected biomass technologies covering a range of agricultural and forestry crops, as well as thermal insulation. The local-regional macroeconomic effects differ significantly across technologies and are governed by factors such as net labour intensity in crop production. The high land intensity of agricultural biomass products crowds out conventional agriculture, and thus lowers employment and drives up land prices and the consumer price index. The regional economic results show that net employment effects are positive for all forestry based biomass energy, and also show for which agriculture based biomass systems this is true, even when accounting for land competition. When regional consumer price development governs regional wages or when the agricultural sector is in strong enough competition to the international market, positive employment and welfare impacts vanish fully for agriculture based bio-energy.