IDEAS home Printed from https://ideas.repec.org/a/eee/appene/v126y2014icp281-296.html
   My bibliography  Save this article

Impact of feedstock diversification on the cost-effectiveness of biodiesel

Author

Listed:
  • Gülşen, Ece
  • Olivetti, Elsa
  • Freire, Fausto
  • Dias, Luis
  • Kirchain, Randolph

Abstract

While biodiesel production and consumption for use in transportation has risen considerably over the last decade, its competitiveness in the marketplace is largely due to regulatory and fiscal support from governmental bodies, exceeding $25 billion in 2010 in the EU and US alone. The price of feedstocks represent 80–85% of the total biodiesel cost, and with over 350 different oil feedstocks available for blending, there is potential to optimize feedstock blends to reduce costs. This paper presents a chance-constrained optimization model that considers the technical constraints of conventional, first generation feedstocks, pricing trends, as well as the uncertainty and variation latent within these numbers. Further, the frequency with which a feedstock blend portfolio should be re-evaluated is considered through a case study. The model is then applied to a second case study for actual fuel constraint scenarios used in the EU and US. The results demonstrate the potential for substantial cost savings through targeted feedstock diversification, minimizing risks to producers from price fluctuations while still meeting technical fuel standards.

Suggested Citation

  • Gülşen, Ece & Olivetti, Elsa & Freire, Fausto & Dias, Luis & Kirchain, Randolph, 2014. "Impact of feedstock diversification on the cost-effectiveness of biodiesel," Applied Energy, Elsevier, vol. 126(C), pages 281-296.
    • Handle: RePEc:eee:appene:v:126:y:2014:i:c:p:281-296
    DOI: 10.1016/j.apenergy.2014.03.063
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306261914003031
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.apenergy.2014.03.063?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Harry Markowitz, 1952. "Portfolio Selection," Journal of Finance, American Finance Association, vol. 7(1), pages 77-91, March.
    2. Tan, Raymond R. & Aviso, Kathleen B. & Barilea, Ivan U. & Culaba, Alvin B. & Cruz, Jose B., 2012. "A fuzzy multi-regional input–output optimization model for biomass production and trade under resource and footprint constraints," Applied Energy, Elsevier, vol. 90(1), pages 154-160.
    3. Lin, Jiefeng & Gaustad, Gabrielle & Trabold, Thomas A., 2013. "Profit and policy implications of producing biodiesel–ethanol–diesel fuel blends to specification," Applied Energy, Elsevier, vol. 104(C), pages 936-944.
    4. Wang, Rui & Song, Baoan & Zhou, Wanwei & Zhang, Yuping & Hu, Deyu & Bhadury, Pinaki S. & Yang, Song, 2011. "A facile and feasible method to evaluate and control the quality of Jatropha curcus L. seed oil for biodiesel feedstock: Gas chromatographic fingerprint," Applied Energy, Elsevier, vol. 88(6), pages 2064-2070, June.
    5. Basha, Syed Ameer & Gopal, K. Raja & Jebaraj, S., 2009. "A review on biodiesel production, combustion, emissions and performance," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(6-7), pages 1628-1634, August.
    6. Dimitris Bertsimas & Melvyn Sim, 2004. "The Price of Robustness," Operations Research, INFORMS, vol. 52(1), pages 35-53, February.
    7. A. Charnes & W. W. Cooper, 1959. "Chance-Constrained Programming," Management Science, INFORMS, vol. 6(1), pages 73-79, October.
    8. Stephen A. Rhoades, 1993. "The Herfindahl-Hirschman index," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Mar, pages 188-189.
    9. Shih, Jhih-Shyang & Frey, H. Christopher, 1995. "Coal blending optimization under uncertainty," European Journal of Operational Research, Elsevier, vol. 83(3), pages 452-465, June.
    10. Azadi, Pooya & Brownbridge, George & Mosbach, Sebastian & Smallbone, Andrew & Bhave, Amit & Inderwildi, Oliver & Kraft, Markus, 2014. "The carbon footprint and non-renewable energy demand of algae-derived biodiesel," Applied Energy, Elsevier, vol. 113(C), pages 1632-1644.
    11. Demirbas, Ayhan, 2009. "Political, economic and environmental impacts of biofuels: A review," Applied Energy, Elsevier, vol. 86(Supplemen), pages 108-117, November.
    12. Rong, Aiying & Lahdelma, Risto, 2008. "Fuzzy chance constrained linear programming model for optimizing the scrap charge in steel production," European Journal of Operational Research, Elsevier, vol. 186(3), pages 953-964, May.
    13. Jain, Siddharth & Sharma, M.P., 2010. "Stability of biodiesel and its blends: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(2), pages 667-678, February.
    14. Chen, Sheng-Tung & Kuo, Hsiao-I & Chen, Chi-Chung, 2010. "Modeling the relationship between the oil price and global food prices," Applied Energy, Elsevier, vol. 87(8), pages 2517-2525, August.
    15. Malça, João & Freire, Fausto, 2011. "Life-cycle studies of biodiesel in Europe: A review addressing the variability of results and modeling issues," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(1), pages 338-351, January.
    16. Talebian-Kiakalaieh, Amin & Amin, Nor Aishah Saidina & Mazaheri, Hossein, 2013. "A review on novel processes of biodiesel production from waste cooking oil," Applied Energy, Elsevier, vol. 104(C), pages 683-710.
    17. Balat, Mustafa & Balat, Havva, 2010. "Progress in biodiesel processing," Applied Energy, Elsevier, vol. 87(6), pages 1815-1835, June.
    18. C. van de Panne & W. Popp, 1963. "Minimum-Cost Cattle Feed Under Probabilistic Protein Constraints," Management Science, INFORMS, vol. 9(3), pages 405-430, April.
    19. Yan, Yunjun & Li, Xiang & Wang, Guilong & Gui, Xiaohua & Li, Guanlin & Su, Feng & Wang, Xiaofeng & Liu, Tao, 2014. "Biotechnological preparation of biodiesel and its high-valued derivatives: A review," Applied Energy, Elsevier, vol. 113(C), pages 1614-1631.
    20. Leung, Dennis Y.C. & Wu, Xuan & Leung, M.K.H., 2010. "A review on biodiesel production using catalyzed transesterification," Applied Energy, Elsevier, vol. 87(4), pages 1083-1095, April.
    21. R. F. Hutton & J. R. Allison, 1957. "A Linear Programming Model for Development of Feed Formulas under Mill-Operating Conditions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 39(1), pages 94-111.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Caldeira, Carla & Swei, Omar & Freire, Fausto & Dias, Luis C. & Olivetti, Elsa A. & Kirchain, Randolph, 2019. "Planning strategies to address operational and price uncertainty in biodiesel production," Applied Energy, Elsevier, vol. 238(C), pages 1573-1581.
    2. Pires de Oliveira, Ivan & Caires, Anderson Rodrigues Lima, 2019. "Molecular arrangement in diesel/biodiesel blends: A Molecular Dynamics simulation analysis," Renewable Energy, Elsevier, vol. 140(C), pages 203-211.
    3. Inam Ullah Khan & Zhenhua Yan & Jun Chen, 2019. "Optimization, Transesterification and Analytical Study of Rhus typhina Non-Edible Seed Oil as Biodiesel Production," Energies, MDPI, vol. 12(22), pages 1-21, November.
    4. Cao, Leichang & Zhang, Shicheng, 2015. "Production and characterization of biodiesel derived from Hodgsonia macrocarpa seed oil," Applied Energy, Elsevier, vol. 146(C), pages 135-140.
    5. Bukkarapu, Kiran Raj & Krishnasamy, Anand, 2022. "A critical review on available models to predict engine fuel properties of biodiesel," Renewable and Sustainable Energy Reviews, Elsevier, vol. 155(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bateni, Hamed & Karimi, Keikhosro & Zamani, Akram & Benakashani, Fatemeh, 2014. "Castor plant for biodiesel, biogas, and ethanol production with a biorefinery processing perspective," Applied Energy, Elsevier, vol. 136(C), pages 14-22.
    2. Azad, A.K. & Rasul, M.G. & Khan, M.M.K. & Sharma, Subhash C. & Mofijur, M. & Bhuiya, M.M.K., 2016. "Prospects, feedstocks and challenges of biodiesel production from beauty leaf oil and castor oil: A nonedible oil sources in Australia," Renewable and Sustainable Energy Reviews, Elsevier, vol. 61(C), pages 302-318.
    3. Singh, Paramvir & Varun, & Chauhan, S.R. & Kumar, Niraj, 2016. "A review on methodology for complete elimination of diesel from CI engines using mixed feedstock," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 1110-1125.
    4. Tran, Dang-Thuan & Chen, Ching-Lung & Chang, Jo-Shu, 2016. "Continuous biodiesel conversion via enzymatic transesterification catalyzed by immobilized Burkholderia lipase in a packed-bed bioreactor," Applied Energy, Elsevier, vol. 168(C), pages 340-350.
    5. Caldeira, Carla & Swei, Omar & Freire, Fausto & Dias, Luis C. & Olivetti, Elsa A. & Kirchain, Randolph, 2019. "Planning strategies to address operational and price uncertainty in biodiesel production," Applied Energy, Elsevier, vol. 238(C), pages 1573-1581.
    6. Santori, Giulio & Di Nicola, Giovanni & Moglie, Matteo & Polonara, Fabio, 2012. "A review analyzing the industrial biodiesel production practice starting from vegetable oil refining," Applied Energy, Elsevier, vol. 92(C), pages 109-132.
    7. Xiao, Hanjie & Li, Yizhe & Wang, Hua, 2017. "A stochastic kinetic study of preparing fatty acid from rapeseed oil via subcritical hydrolysis," Applied Energy, Elsevier, vol. 204(C), pages 1084-1093.
    8. S. M. Ashrafur Rahman & I. M. Rizwanul Fattah & Hwai Chyuan Ong & M. F. M. A. Zamri, 2021. "State-of-the-Art of Strategies to Reduce Exhaust Emissions from Diesel Engine Vehicles," Energies, MDPI, vol. 14(6), pages 1-24, March.
    9. Scott, James & Ho, William & Dey, Prasanta K. & Talluri, Srinivas, 2015. "A decision support system for supplier selection and order allocation in stochastic, multi-stakeholder and multi-criteria environments," International Journal of Production Economics, Elsevier, vol. 166(C), pages 226-237.
    10. Ümit Sakallı & Ömer Baykoç & Burak Birgören, 2011. "Stochastic optimization for blending problem in brass casting industry," Annals of Operations Research, Springer, vol. 186(1), pages 141-157, June.
    11. Lian, Shuang & Li, Huijuan & Tang, Jinqiang & Tong, Dongmei & Hu, Changwei, 2012. "Integration of extraction and transesterification of lipid from jatropha seeds for the production of biodiesel," Applied Energy, Elsevier, vol. 98(C), pages 540-547.
    12. Demirbas, Ayhan, 2011. "Biodiesel from oilgae, biofixation of carbon dioxide by microalgae: A solution to pollution problems," Applied Energy, Elsevier, vol. 88(10), pages 3541-3547.
    13. Banković-Ilić, Ivana B. & Stamenković, Olivera S. & Veljković, Vlada B., 2012. "Biodiesel production from non-edible plant oils," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(6), pages 3621-3647.
    14. Li, Qin & Yan, Yunjun, 2010. "Production of biodiesel catalyzed by immobilized Pseudomonas cepacia lipase from Sapium sebiferum oil in micro-aqueous phase," Applied Energy, Elsevier, vol. 87(10), pages 3148-3154, October.
    15. Patel, Alok & Arora, Neha & Mehtani, Juhi & Pruthi, Vikas & Pruthi, Parul A., 2017. "Assessment of fuel properties on the basis of fatty acid profiles of oleaginous yeast for potential biodiesel production," Renewable and Sustainable Energy Reviews, Elsevier, vol. 77(C), pages 604-616.
    16. Borugadda, Venu Babu & Goud, Vaibhav V., 2012. "Biodiesel production from renewable feedstocks: Status and opportunities," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(7), pages 4763-4784.
    17. Demirbas, Ayhan, 2011. "Competitive liquid biofuels from biomass," Applied Energy, Elsevier, vol. 88(1), pages 17-28, January.
    18. Habibullah, M. & Masjuki, H.H. & Kalam, M.A. & Rahman, S.M. Ashrafur & Mofijur, M. & Mobarak, H.M. & Ashraful, A.M., 2015. "Potential of biodiesel as a renewable energy source in Bangladesh," Renewable and Sustainable Energy Reviews, Elsevier, vol. 50(C), pages 819-834.
    19. Gude, Veera Gnaneswar & Grant, Georgene Elizabeth, 2013. "Biodiesel from waste cooking oils via direct sonication," Applied Energy, Elsevier, vol. 109(C), pages 135-144.
    20. Ng, Jo-Han & Ng, Hoon Kiat & Gan, Suyin, 2012. "Characterisation of engine-out responses from a light-duty diesel engine fuelled with palm methyl ester (PME)," Applied Energy, Elsevier, vol. 90(1), pages 58-67.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:appene:v:126:y:2014:i:c:p:281-296. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.