Energy is still the largest and dominant use made of wood and it will remain the largest single use for the foreseeable future. However, the vast majority of this wood energy will be supplied and consumed in traditional ways in cooking, and heating in the homes of the world’s developing nations, and also in the cottage industries. A significant portion of this energy consumption will occur outside the money economy and without a substantive investment in measuring actual use will not be known with any great precision. The unsubsidized output of ‘modern’ energy forms from woody feedstock is likely to be small. Certainly it is likely to be small relative to the total world demand for such energy forms. This unsubsidized but competitive energy is also likely to be a by-product of industrial wood manufacturing processes rather than the single output of stand-alone dedicated energy production facilities.
Wood and other renewable energy clearly have the potential to supply a significant fraction of the energy needs of many, if not all, modern economies. Because of this, there will always be some interest in, and research of, ways in which this potential could be realized. Research effort is likely to wax and wane depending on the price of fossil fuels and in particular crude oil prices. There is evidence that research should be able to reduce the current cost of manufacturing a variety of fuels from woody feedstocks. However, without a radical breakthrough that either dramatically reduces the delivered cost of biomass to processing, or alternatively significantly lowered processing costs, biofuels are likely to remain relatively expensive compared to the present fossil fuels. There is therefore unlikely to be much international trade in wood as a feedstock for energy plants.
Concern about the environment, national security issues and inadequate capture in market prices of the full cost associated with the use of non-renewable fuels, has proved to be a powerful force in advancing the cause of all, not just wood, renewable energy systems. It is difficult to see that there will be any lessening in these concerns in the next twenty years. Moreover variation in the price of fossil fuels, which can be expected, typically acts to reinforce a number of these concerns. As a result of the concerns about security and externalities investment in subsidized modern wood energy systems can be expected. Thus investment will occur despite the fact that there may be little expectation of fossil fuel price increasing and despite the fact that analysis, when it does occur, will most probably conclude that “most biomass energy technologies have clearly not yet reached a stage where market forces alone can make the adoption of these technologies possible.”
Taxes and subsidies have shaped the modern biofuels industry and taxes and subsidies are likely to continue to shape the industry.