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they are left with the obligation to implement waste policy. By contrast the framework
for waste and climate change policy is set at the national, European level, and indeed
globally (Kyoto protocol).
Another reason for revising the model is that while policy-makers do consider inter-
dependencies between the various instruments to some degree in the process of policy
design, policies are u sually analysed using general equilibrium models. There are mul-
tiple financial incentives (including landfill tax escalator, ROCs, FITs, RTOCs and RHI)
that overlap although the instruments are designed to act differentially on different ac-
tors. Yet for all practical purposes the micro-economic policy instruments are simply
simulated with a macro-economic equilibrium model (MARKAL model). These con-
siderations led to a more basic revision of the concept behind the toy model. We tried
to separate more clearly endogenous and exogenous drivers and indeed, we came to
conceptualise the network as an emerging market.
4
Refining the Concept
In order to distinguish more clearly between endogenous and exogenous drivers we saw
the need to revisit the emergence of a network from the behaviour of individual firms.
Parts of the emerging market for organic waste have a specific trait: agreed sales prices
for bio waste are unknown to competitors. This situation very much resembles a fish
market, where individual bids are made secretly (no auction). Such a market has been
modelled empirically and it is considered valid economic theory [16]. This context how-
ever, is only true with regard to a fraction of processed biomass, namely the food waste
arising from food processing. The situation is different for all other forms of biomass
since these are traded nationally and globally (even if some supply is provided locally).
In our revised concept of the agent-based model there are four providers of biomass:
importers, forestry/agriculture, food processors, and municipalities (see Figure 2). The
biomass they produce can be specified further. Food processors produce biodegradable
waste and oil. The former requires a quick turnover while the latter can be stored for
some time. Forestry and agriculture provide input such as corn, straw, and wood, which
can all be stored but which have some seasonality attached to them in the case of the
first two. By contrast, wood can be supplied according to demand and left standing as
a living forest or stored to wait for a better price. Similarly, soy, rape and palm oil that
importers provide can be sold according to world market prices. Thus, there are distinct
differences between bilateral price negotiations and contracts that are informed by a
global or regional price (a price known by all in an area).
In the interviews we learnt of three types of facilitators: consultants who can be
divided into consultants who simply arrange contracts and oil brokers who also own the
biomass. Both types of facilitators observe market price development of the different
biomass primary resources for producers (mostly from the energy sector). Then we also
have Link2Energy/NISP that used to offer a free service (mostly between composters
and anaerobic digestion plants and their suppliers). Additionally, processors may decide
to set up contracts by themselves. Drawing on external facilitators or setting up supply
on their own corresponds to different transaction costs for all processors. These costs
will differ for each company depending largely on the amount of biomass they require
and the scale of the supply.
