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Effects of corn stover year-to-year supply variability and market structure on biomass utilization and cost

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  • Golecha, Rajdeep
  • Gan, Jianbang

Abstract

The availability of corn stover can vary considerably from year to year in a region due to annual changes in yield and area planted with corn. Such variations interacting with biomass market structures can affect biomass cost and utilization rate. This study first characterizes year-to-year variations in corn stover supply for the US in general and for selected major US corn producing counties in particular. There have been 20–30% year-to-year variations in stover supply in the US since 1975. Game theoretic analysis is then applied to examining corn stover utilization rate and production cost in three market structures. The analysis reveals that a free market structure will take the form of oligopoly–oligopsony, where large stover supply variations will expose both biorefineries and farmers to significant price volatility. Price equilibrium will shift significantly from year to year. Of the three market structures analysed, the “Derisked” supply market structure will be most favorable to biorefineries and farmers. Under this structure, biorefineries will maintain a stover supply region that is based on “Derisked” (lower than average) yield density to buffer for the supply uncertainty associated with annual variations. This market structure results in significantly less volatility in biomass cost while on average only 63% of collectable stover will be used for biofuel production. Our findings suggest that year-to-year variation in corn stover availability will increase feedstock cost and reduce its potential for biofuel production.

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  • 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.
    • Handle: RePEc:eee:rensus:v:57:y:2016:i:c:p:34-44
    DOI: 10.1016/j.rser.2015.12.075
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    6. Rosburg, Alicia & Miranowski, John & McFadden, Jonathan, 2016. "Mitigating Feedstock Supply Risk in Corn Stover Biofuel Production," 2016 Annual Meeting, July 31-August 2, Boston, Massachusetts 235875, Agricultural and Applied Economics Association.

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