Competition Intensity, Feedstock Mix, and the Environmental Footprint of Cellulosic Biofuels
Abstract
The present study examines the impact of spatial competition for feedstock between biofuel firms (determined by firms’ locational configurations, capacity, and transportation cost), and the economic feasibility and environmental footprint of cellulosic biofuels. It does so by extending existing spatial competition models to accommodate multiple feedstocks, including crop residues and energy dedicated crops. The model endogenizes feedstock-specific demand and pricing, and market structure. A key insight from the analysis is that spatial competition induces cost-minimizing biorefineries to include energy-dedicated crops in the mix. This is because their inclusion alleviates competition for stover, allowing the plan to fill capacity at lower cost. Moreover, this results in a reduction in greenhouse gas emissions per gallon of biofuel traded in the market, relative to a counterfactual where stover is assumed to be the only available feedstock. This suggests that spatial competition for feedstock will affect the overall economic feasibility of the industry, the economic feasibility of energy-dedicated crops, and the environmental footprint of cellulosic biofuels.
Degree
M.S.
Advisors
Sesmero, Purdue University.
Subject Area
Agricultural economics
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