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FAO/UNEP/UN-Energy Bioenergy Decision Support Tool -
MODULE 7: Deployment and Good Practices
A basic challenge with bioenergy, especially at small or medium-
scale, is that the relevant market demand may exist, but is diffuse
and poorly defned; a variety of institutional mechanisms will be
needed in order to properly articulate demand so that suppli-
ers of technologies and services will have the confdence to
come forward. The structural challenge in building the market is
sometimes depicted as having three main components (Practical
Action, 2009):
1. the enabling environment, which provides legal and regula-
tory foundations;
2. market actors and linkages, which provide various elements
in the bioenergy chain; and
3. supporting services, including technical support, fnancing
and infrastructure.
One example at the household level, which illustrates these three
types of components, is the programme led by Gaia Foundation
to create a market for ethanol stoves; a variety of linkages were
involved in bringing together supply and demand (Box 3). In such
cases where there are many small consumers, the articulation of
demand is accomplished by organising and better defning the
needs of those potential buyers with some interest in the services
Box 2: Ethanol bus programme in Sweden
Starting in the 1980s, a program was initiated under which bus engines were re-designed to run on ethanol by SCANIA and ethanol
buses were introduced during the 1990s. The program has grown continuously and as of 2010, there were buses in many cities and
towns in Sweden, with over 400 city buses in Stockholm running on ethanol, covering nearly half of the feet. The bus programme
was part of a broader programme to develop a market for fuel ethanol in Sweden by stimulating demand from feet vehicles as well
as passenger cars. The goal was also to build up the infrastructure gradually by adding flling stations
with ethanol pumps along with the needed logistics for blending and maintenance. Ethanol was initially imported and imports remain
signifcant share of total use. There was later an establishment of ethanol production in Sweden from wheat and from black liquor, as
well as efforts no on cellulosic ethanol. The Swedish initiatives with ethanol represent a case of the market being developed from the
demand side rather than investing frst in ethanol production, thus based on the idea of “market-pull.”