Biogas Value Chain – Microeconomic Incentives
and Policy regulation
Ph.d. Description for Lise Skovsgaard, Ph.d. in the BioChain project – WP1
Background and motivation
Results from this PhD study will contribute to the specific goal for the WP1
in the Biochain project which is to: “Develop decision support tools to
optimise the value chains of biogas production”.
Figure 1: WP1 illustration
This PhD project focuses on the economic challenges facing the biogas producer
– taking the overall purpose into consideration.
Objective and research questions
The objective of the PhD study is to determine the more considerable economic challenges for the
biogas producer along with identifying useful tools and methods to deal with these challenges.
Potential regulation methods are investigated in relations to costs and possibilities.
Attention will be given to the entire value chain, while focus will be on microeconomic incentive and
policy regulation in particular related to input- and output markets, ownership structures and the
significance of risk.
Output markets
Risk
Investment
Input
markets
Regulation
Figure 2: The overall Biochain project, with circles around focus areas in this project – and input-output markets
combined with risk and regulation as special concern
The PhD project will address the following questions
1. Risk: Which risk issues are more determining for the investment decision, and can tools be found
to reduce this risk?
2. Biogas production relates to many different input and output markets with different ownership
structures, some with perfect competition, some with monopoly relations. How does this mix
influence the biogas production and could a change in structure change the chances for profit?
3. Regulation: How does the existing regulation in the energy- and agricultural sectors affect the
biogas production? And can changed regulation improve chances for profit?
Approach and Methods
WP1
2013
q1
Aug-13
q2
q3
Value Chain
Description
q4
2014
q1
D
q2
Aug-14
q3
Value Chain Model,
Plant level
WP2
WP3
WP4
WP5
Lise
2013
q1
q2
Attending
q4
2015
Aug-15
2016
Aug-16
q1
q2
q3
q4
q1
q2
q3
Value Chain Model,
D
Linking to
National level
Balmorel
D
Price methods M
q4
D
Data collection D Decision support model D
Gas production and organinc pool model D
Carbon storage simulations M
D
Cost of Logistics
D
Aug-13
2014
q3
q4
q1
Data collection
M
q2
Aug-14
q3
Economic analysis
+ Input for VCModel
2015
Aug-15
2016
Aug-16
q4
q1
q2
q3
q4
q1
q2
q3
VCModel development,
Linking to
National level
Balmorel
D
Price methods M Finishing PhD
q4
Figure 3: Time schedule
The PhD project is initiated with a literature study on relevant theoretic and empirical literature. This
is combined with interviews from central actors in the Danish biogas sector. Based on this, I expect
to find an overall picture on the determining challenges and potentials for the investment decision
hereunder potential clashes between the regulations of the two sectors. I expect to have finished
most of this part after the first year (see time schedule).
Risk will be investigated analytically using microeconomic and risk theory. The approach will be to
find the more determining challenges for the biogas producer and implement them in the value
chain model as a stochastic element for further investigation. Risk will be relevant in most of the
analysis, for instance in relations to potential regulation suggestions.
Market structures will be investigated analytically using microeconomic and industrial organisation
theory, for example the relationship between input – and output markets related to ownership
structures will be taken up and results are expected in combination with empirical data to be fed
into the value chain model for further investigation.
The research questions related to regulation will be treated in a combination of empirical and
theoretic analysis using incentive regulation theory and behavioural economics. Results and
suggestions will be tested analytically or/and as input in the relevant models, e.g. in the Value Chain
Model or in an Energy Systems model (probably Balmorel).
Deliverables
Results from the theoretical models and analysis will serve as input to the value chain model as well
as the Energy Systems model at national level. Deliverables from this PhD project will therefore both
be input to the final decision support tool for the value chain project as well as independent analysis
on biogas production and regulation surrounding it. Finally, it is expected to find relevant
suggestions for policy makers on biogas regulation.
The thesis will be written in English and be structured as an article based thesis. It will include no less
than three articles in international peer-reviewed journals.