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A cost model for forest-based biofuel production and its application to optimal facility size determination

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  • Jenkins, Timothy L.
  • Sutherland, John W.

Abstract

With continued concerns regarding the use of fossil fuels and energy security, there is increasing interest in biofuels. However, owing to worries over the use of agricultural feedstocks for biofuel, forest biomass as a feedstock has been investigated for some time and appears to be a promising alternative. Current corn-based ethanol facilities range in size from a few million to over 380million liters (100million gallons) per year with associated construction costs near $117million for the latter sized capacity. On the other hand, the economics for forest biomass to biofuel facilities are different and there appears to be a lack of understanding about the cost optimal size for the processing facility and the associated investment. With this in mind, a mathematical model is developed to describe the total annual costs of a forest biomass to biofuel facility using the Upper Peninsula of Michigan as the case study area. The model includes terms associated with forest resource harvesting and collection, transportation, storage, and facility construction and operation costs. The model is used to establish a relationship for the optimal size of a production facility, that is, the facility size that provides the minimum unit cost. The effect of various factors on the optimal facility size and the associated biofuel unit cost are examined, especially transportation cost rate and equivalent yield. The results indicate these two factors do impact optimal size and unit cost.

Suggested Citation

  • Jenkins, Timothy L. & Sutherland, John W., 2014. "A cost model for forest-based biofuel production and its application to optimal facility size determination," Forest Policy and Economics, Elsevier, vol. 38(C), pages 32-39.
    • Handle: RePEc:eee:forpol:v:38:y:2014:i:c:p:32-39
    DOI: 10.1016/j.forpol.2013.08.004
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    References listed on IDEAS

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    Cited by:

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    2. Zhang, Fengli & Johnson, Dana & Johnson, Mark & Watkins, David & Froese, Robert & Wang, Jinjiang, 2016. "Decision support system integrating GIS with simulation and optimisation for a biofuel supply chain," Renewable Energy, Elsevier, vol. 85(C), pages 740-748.
    3. Golecha, Rajdeep & Gan, Jianbang, 2016. "Effects of corn stover year-to-year supply variability and market structure on biomass utilization and cost," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 34-44.
    4. Schröder, Tim & Lauven, Lars-Peter & Geldermann, Jutta, 2018. "Improving biorefinery planning: Integration of spatial data using exact optimization nested in an evolutionary strategy," European Journal of Operational Research, Elsevier, vol. 264(3), pages 1005-1019.
    5. Scott M. Swinton & Felix Dulys & Sarah S.H. Klammer, 2021. "Why Biomass Residue Is Not as Plentiful as It Looks: Case Study on Economic Supply of Logging Residues," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(3), pages 1003-1025, September.
    6. Crandall, Mindy S. & Adams, Darius M. & Montgomery, Claire A. & Smith, David, 2017. "The potential rural development impacts of utilizing non-merchantable forest biomass," Forest Policy and Economics, Elsevier, vol. 74(C), pages 20-29.
    7. Young, Jesse D. & Anderson, Nathaniel M. & Naughton, Helen T. & Mullan, Katrina, 2018. "Economic and policy factors driving adoption of institutional woody biomass heating systems in the U.S," Energy Economics, Elsevier, vol. 69(C), pages 456-470.
    8. Feuerbacher, Arndt & Siebold, Matthias & Chhetri, Ashit & Lippert, Christian & Sander, Klas, 2016. "Increasing forest utilization within Bhutan's forest conservation framework: The economic benefits of charcoal production," Forest Policy and Economics, Elsevier, vol. 73(C), pages 99-111.
    9. Jenkins, Timothy L. & Jin, Enze & Sutherland, John W., 2020. "Effect of harvest region shape, biomass yield, and plant location on optimal biofuel facility size," Forest Policy and Economics, Elsevier, vol. 111(C).
    10. Vanzetti, Nicolás & Corsano, Gabriela & Montagna, Jorge M., 2017. "A comparison between individual factories and industrial clusters location in the forest supply chain," Forest Policy and Economics, Elsevier, vol. 83(C), pages 88-98.

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