Cellulosic biofuels analysis: Case study of biofuel comparison economics and road infrastructure impacts

Craig William Rismiller, Purdue University

Abstract

The passage of U.S. laws mandating and subsidizing advanced cellulosic biofuels may spur the development of a commercial cellulosic biofuels industry. However, a cellulosic industry will only develop if the overall economics including government incentives render investment in the sector attractive to private investors. Assuming the industry is developed, it will have impacts on the road infrastructure in biomass rich states like Indiana. This thesis has two main objectives: determine the current economics of the cellulosic production types compared to the grain based industry and examine the road infrastructure impacts of transporting biomass to the cellulosic facilities. The study compares the profitability of three biofuel production types: grain based ethanol, cellulosic biochemical ethanol, and cellulosic thermochemical biofuels. In order to compare the current profitability of each of the production types, the Biofuels Comparison Model (BCM) was developed. The BCM is a spreadsheet model that predicts the net present value (NPV) for each production type given price, technical, and financial assumptions. The BCM can be updated to reflect the current profitability through embedded web price links. The study finds that grain, biochemical, and thermochemical production types are all currently unprofitable when subsidies and mandates are ignored. However, the grain based ethanol process is predicted to be the most profitable (lowest loss) compared to the cellulosic biofuels. When the 2008 Farm Bill subsidies are added to the BCM, all three production types are projected to be profitable. With the addition of the subsidies, the cellulosic biofuels are estimated to have higher NPV's compared to grain based ethanol. Road infrastructure impacts were estimated for the projected top three most ideal cellulosic biofuel plant locations in Indiana. Road impacts were measured by estimating the truckloads required to transport the biomass, the loaded one-way vehicle trip miles (VTM) and average length of haul (LOH). The results indicate that the transportation of biomass to the cellulosic facilities will increase the VTM in Indiana by 4.9 million to 10.4 million miles. Road infrastructure impacts in Indiana are projected to be 318 to 683 percent higher compared to grain ethanol production on a per gallon produced basis. This study also estimated the road impacts by functional road class. The study suggests that 30 percent of the truck miles traveled delivering biomass will occur on rural FC 2 roadways, which are usually state routes and other major roads. These roadways are located in rural areas where the biomass will be physically collected from the fields. The study finds that larger roadways will see more truck impact compared to smaller roadways even though there are more miles of the smaller roadways in Indiana.

Degree

M.S.

Advisors

Tyner, Purdue University.

Subject Area

Agriculture|Agricultural economics|Transportation planning|Environmental science

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