Deepening the territorial Life Cycle Assessment approach with partial equilibrium modelling: First insights from an application to a wood energy incentive in a French region

An innovative modelling framework and metrics are developed to assess the economic and environmental performances of regional incentives in the wood energy sector. Our approach is based on the coupling between a partial equilibrium economic model of the forest sector with Life Cycle Assessment (LCA). Its originality relies on the computation of regional eco-efficiency ratios while taking account of diverse direct and indirect spatial and market interactions. Several adaptations were implemented to ensure consistency between the two modelling approaches in terms of process yields and flow balances. These adaptations make it possible to produce both economic and environmental indicators with a consistent perimeter. Finally, we used two kinds of eco-efficiency indicators to compare bioenergy policies. On the one hand, Partial Eco-Efficiency (PEE) combines the economic surplus induced by an incentive on the energy wood sector with its potential environmental impacts. On the other hand, Full Eco-Efficiency (FEE) adds the environmental impacts avoided by substitution between wood-energy and fossil fuels, compared to a business-as-usual (BAU) scenario. The proposed adaptations were applied to a case study in the French Grand Est region that compared the eco-efficiency of scenarios with or without a subsidy to wood energy consumption. Results show that subsidy increases the eco-efficiency of the forest-based sector using both PEE and FEE while keeping competition with the other regions to a minimum. However, most benefits come from the consideration of avoided impacts, with FEE far exceeding PEE. Using FEE, the scenario with the subsidy is 5% to 50% more eco-efficient than the BAU despite an increased consumption of wood products, due to economic gains and avoided impacts. These outcomes show the importance of considering potential trade-offs when assessing the economic and environmental performance of regional policies in favour of the bioeconomy.