Spatial Economic Modeling of the Waste-driven Agricultural Biogas in Lubelskie Region, Poland

Abstract

In this study, we aim to support the evidence-based policy in agricultural biogas production at regional level in Poland. To do so, we set up a decentralized decision framework, simultaneously taking into account the agricultural sector heterogeneity, the biogas technology state-of-the-art and the Polish institutional setting related to renewable energy production. A partial equilibrium model simulates the agricultural and the biogas sector interactions, estimating market clearing prices and quantities at the intersection of supply and demand. The optimal number, size and location of biogas plants are derived at the equilibrium. Considering the case study of Lubelskie region, we tested alternative incentive schemes for agricultural biogas development. Results indicate that limiting the use of energy crops in favour of other substrates, such as livestock, manure and agro-industrial waste, is decisive to preserve biogas profitability under all policy scenarios tested. However, it seems that only with the implementation of the current policy scheme there is a concrete perspective for the biogas industry take-off.