IDEAS home Printed from https://ideas.repec.org/a/eee/appene/v230y2018icp330-343.html
   My bibliography  Save this article

Financial viability of biofuel and biochar production from forest biomass in the face of market price volatility and uncertainty

Author

Listed:
  • Campbell, Robert M.
  • Anderson, Nathaniel M.
  • Daugaard, Daren E.
  • Naughton, Helen T.

Abstract

A comparative techno-economic analysis of two different thermochemical biomass conversion pathways was conducted to examine the effects of fuel price and other variables on project financial performance. Monte Carlo simulation was used to quantify the effects of uncertainty and volatility of ten critical variables: biofuel, biochar and feedstock prices, discount rate, capital investment, labor cost, loan terms, feedstock drying, and biofuel and biochar conversion rates. Market prices for biofuel and biochar have the largest impact on net present value (NPV) of any variable considered, due in part to the high levels of uncertainty associated with future prices of both. Across the ranges of input values for these variables in simulation analysis, hearth-based pyrolysis biochar production had the highest likelihood of profitability with a mean NPV of $41.5 million and only 20% of outcomes resulting in a net loss, while 68% of outcomes for auger-based biochar-biofuel coproduction represented a financial loss, including a mean NPV of -$24.2 million. However, when additional revenue from Renewable Identification Numbers (RINs) credits generated by biofuel production is considered, financial outcomes of biochar-biofuel coproduction improve to 50% likelihood of experiencing a net loss. Findings of the very strong impact of market prices on financial outcomes, relative to other important technical and economic variables, can inform effective targeting of future renewable energy policy, as well as the design of future techno-economic analyses, which do not currently focus on the effect of market prices on profitability.

Suggested Citation

  • Campbell, Robert M. & Anderson, Nathaniel M. & Daugaard, Daren E. & Naughton, Helen T., 2018. "Financial viability of biofuel and biochar production from forest biomass in the face of market price volatility and uncertainty," Applied Energy, Elsevier, vol. 230(C), pages 330-343.
    • Handle: RePEc:eee:appene:v:230:y:2018:i:c:p:330-343
    DOI: 10.1016/j.apenergy.2018.08.085
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306261918312558
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.apenergy.2018.08.085?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. Nathaniel Anderson & J. Greg Jones & Deborah Page-Dumroese & Daniel McCollum & Stephen Baker & Daniel Loeffler & Woodam Chung, 2013. "A Comparison of Producer Gas, Biochar, and Activated Carbon from Two Distributed Scale Thermochemical Conversion Systems Used to Process Forest Biomass," Energies, MDPI, vol. 6(1), pages 1-20, January.
    2. Tripathi, Manoj & Sahu, J.N. & Ganesan, P., 2016. "Effect of process parameters on production of biochar from biomass waste through pyrolysis: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 55(C), pages 467-481.
    3. Zhao, Xin & Yao, Guolin & Tyner, Wallace E., 2016. "Quantifying breakeven price distributions in stochastic techno-economic analysis," Applied Energy, Elsevier, vol. 183(C), pages 318-326.
    4. Sansaniwal, S.K. & Rosen, M.A. & Tyagi, S.K., 2017. "Global challenges in the sustainable development of biomass gasification: An overview," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 23-43.
    5. Myungkyu Shim & Hee-Seung Yang & Seohyun Lee, 2018. "Technological Progress and Youth Employment (in Korean)," Working Papers 2018-31, Economic Research Institute, Bank of Korea.
    6. Chen, Liming & Felipe, Jesus & Kam, Andrew J.Y. & Mehta, Aashish, 2021. "Is employment globalizing?," Structural Change and Economic Dynamics, Elsevier, vol. 56(C), pages 74-92.
    7. Sarkar, Susanjib & Kumar, Amit & Sultana, Arifa, 2011. "Biofuels and biochemicals production from forest biomass in Western Canada," Energy, Elsevier, vol. 36(10), pages 6251-6262.
    8. Tekin, Kubilay & Karagöz, Selhan & Bektaş, Sema, 2014. "A review of hydrothermal biomass processing," Renewable and Sustainable Energy Reviews, Elsevier, vol. 40(C), pages 673-687.
    9. Galinato, Suzette P. & Yoder, Jonathan K. & Granatstein, David, 2011. "The economic value of biochar in crop production and carbon sequestration," Energy Policy, Elsevier, vol. 39(10), pages 6344-6350, October.
    10. Robert M. Campbell & Nathaniel M. Anderson & Daren E. Daugaard & Helen T. Naughton, 2018. "Technoeconomic and Policy Drivers of Project Performance for Bioenergy Alternatives Using Biomass from Beetle-Killed Trees," Energies, MDPI, vol. 11(2), pages 1-20, January.
    11. Oecd, 2018. "Market Opening, Growth and Employment," OECD Trade Policy Papers 214, OECD Publishing.
    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. Agnieszka Medyńska-Juraszek & Magdalena Bednik & Piotr Chohura, 2020. "Assessing the Influence of Compost and Biochar Amendments on the Mobility and Uptake of Heavy Metals by Green Leafy Vegetables," IJERPH, MDPI, vol. 17(21), pages 1-16, October.
    2. Mohamed, Badr A. & O'Boyle, Marnie & Li, Loretta Y., 2023. "Co-pyrolysis of sewage sludge with lignocellulosic and algal biomass for sustainable liquid and gaseous fuel production: A life cycle assessment and techno-economic analysis," Applied Energy, Elsevier, vol. 346(C).
    3. Peng, Valerie & Slocum, Alexander, 2020. "Endemic Water and Storm Trash to energy via in-situ processing," Renewable and Sustainable Energy Reviews, Elsevier, vol. 134(C).
    4. Richard Bergman & Kamalakanta Sahoo & Karl Englund & Seyed Hashem Mousavi-Avval, 2022. "Lifecycle Assessment and Techno-Economic Analysis of Biochar Pellet Production from Forest Residues and Field Application," Energies, MDPI, vol. 15(4), pages 1-18, February.
    5. Lee Cartier & Svan Lembke, 2021. "Climate Change Adaptation in the British Columbia Wine Industry Can carbon sequestration technology lower the B.C. Wine Industry's greenhouse gas emissions?," Papers 2104.13330, arXiv.org.
    6. Giulio Allesina & Simone Pedrazzi, 2021. "Barriers to Success: A Technical Review on the Limits and Possible Future Roles of Small Scale Gasifiers," Energies, MDPI, vol. 14(20), pages 1-23, October.
    7. Deng, Chen & Lin, Richen & Kang, Xihui & Wu, Benteng & O’Shea, Richard & Murphy, Jerry D., 2020. "Improving gaseous biofuel yield from seaweed through a cascading circular bioenergy system integrating anaerobic digestion and pyrolysis," Renewable and Sustainable Energy Reviews, Elsevier, vol. 128(C).
    8. Khodaei, Hassan & Olson, Chris & Nikrityuk, Petr, 2019. "Numerical investigations of the impact of inflow conditions on characteristics of a large-scale pyrolysis unit," Energy, Elsevier, vol. 169(C), pages 1101-1111.
    9. Arora, Amit & Singh, Vijay, 2020. "Biodiesel production from engineered sugarcane lipids under uncertain feedstock compositions: Process design and techno-economic analysis," Applied Energy, Elsevier, vol. 280(C).
    10. Kächele, Rebecca & Nurkowski, Daniel & Martin, Jacob & Akroyd, Jethro & Kraft, Markus, 2019. "An assessment of the viability of alternatives to biodiesel transport fuels," Applied Energy, Elsevier, vol. 251(C), pages 1-1.
    11. Cueva Zepeda, Lolita & Griffin, Gregory & Shah, Kalpit & Al-Waili, Ibrahim & Parthasarathy, Rajarathinam, 2023. "Energy potential, flow characteristics and stability of water and alcohol-based rice-straw biochar slurry fuel," Renewable Energy, Elsevier, vol. 207(C), pages 60-72.
    12. Sara E. AbdElhafez & Tarek Taha & Ahmed E. Mansy & Eman El-Desouky & Mohamed A. Abu-Saied & Khloud Eltaher & Ali Hamdy & Gomaa El Fawal & Amr Gamal & Aly M. Hashim & Abdallah S. Elgharbawy & Mona M. A, 2022. "Experimental Optimization with the Emphasis on Techno-Economic Analysis of Production and Purification of High Value-Added Bioethanol from Sustainable Corn Stover," Energies, MDPI, vol. 15(17), pages 1-33, August.
    13. Park, Hyeongmin & Joo, Junghee & Kim, Jiwon & Lee, Jechan & Kim, Sung-Kon, 2023. "A sustainable strategy for organic waste upcycling: Concurrent production of energy and Li-ion battery anode from chicken litter," Energy, Elsevier, vol. 278(C).
    14. Jaime Guerrero & Simón Sala & Alejandro Fresneda-Cruz & Irene Bolea & Alessandro A. Carmona-Martínez & Clara Jarauta-Córdoba, 2023. "Techno-Economic Feasibility of Biomass Gasification for the Decarbonisation of Energy-Intensive Industries," Energies, MDPI, vol. 16(17), pages 1-13, August.
    15. Hu, Sheng-Chun & Cheng, Jie & Wang, Wu-Ping & Zhu, Ya-Hong & Kang, Kang & Zhu, Ming-Qiang & Huang, Xiao-Hua, 2022. "Preparation and analysis of pyroligneous liquor, charcoal and gas from lacquer wood by carbonization method based on a biorefinery process," Energy, Elsevier, vol. 239(PA).
    16. Lü, Fan & Liu, Yang & Shao, Liming & He, Pinjing, 2019. "Powdered biochar doubled microbial growth in anaerobic digestion of oil," Applied Energy, Elsevier, vol. 247(C), pages 605-614.
    17. Struhs, Ethan & Mirkouei, Amin & You, Yaqi & Mohajeri, Amir, 2020. "Techno-economic and environmental assessments for nutrient-rich biochar production from cattle manure: A case study in Idaho, USA," Applied Energy, Elsevier, vol. 279(C).
    18. Jesse D. Young & Nathaniel M. Anderson & Helen T. Naughton, 2018. "Influence of Policy, Air Quality, and Local Attitudes toward Renewable Energy on the Adoption of Woody Biomass Heating Systems," Energies, MDPI, vol. 11(11), pages 1-24, October.
    19. Vasilakou, Konstantina & Nimmegeers, Philippe & Thomassen, Gwenny & Billen, Pieter & Van Passel, Steven, 2023. "Assessing the future of second-generation bioethanol by 2030 – A techno-economic assessment integrating technology learning curves," Applied Energy, Elsevier, vol. 344(C).
    20. Lee Cartier & Svan Lembke, 2021. "Climate Change Adaptation in the British Columbia Wine Industry Can Carbon Sequestration Technology Lower the BC Wine Industry’s Greenhouse Gas Emissions?," Applied Economics and Finance, Redfame publishing, vol. 8(4), pages 11-30, July.
    21. McKenzie Thomas & Kimberly L. Jensen & Dayton M. Lambert & Burton C. English & Christopher D. Clark & Forbes R. Walker, 2021. "Consumer Preferences and Willingness to Pay for Potting Mix with Biochar," Energies, MDPI, vol. 14(12), pages 1-16, June.
    22. Nathaniel Anderson & Hongmei Gu & Richard Bergman, 2021. "Comparison of Novel Biochars and Steam Activated Carbon from Mixed Conifer Mill Residues," Energies, MDPI, vol. 14(24), pages 1-19, December.

    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. Zhang, Zhikun & Zhu, Zongyuan & Shen, Boxiong & Liu, Lina, 2019. "Insights into biochar and hydrochar production and applications: A review," Energy, Elsevier, vol. 171(C), pages 581-598.
    2. Andrew N. Amenaghawon & Chinedu L. Anyalewechi & Charity O. Okieimen & Heri Septya Kusuma, 2021. "Biomass pyrolysis technologies for value-added products: a state-of-the-art review," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(10), pages 14324-14378, October.
    3. Nathaniel Anderson & Hongmei Gu & Richard Bergman, 2021. "Comparison of Novel Biochars and Steam Activated Carbon from Mixed Conifer Mill Residues," Energies, MDPI, vol. 14(24), pages 1-19, December.
    4. Anand, Abhijeet & Kumar, Vivek & Kaushal, Priyanka, 2022. "Biochar and its twin benefits: Crop residue management and climate change mitigation in India," Renewable and Sustainable Energy Reviews, Elsevier, vol. 156(C).
    5. Ng, Wei Cheng & You, Siming & Ling, Ran & Gin, Karina Yew-Hoong & Dai, Yanjun & Wang, Chi-Hwa, 2017. "Co-gasification of woody biomass and chicken manure: Syngas production, biochar reutilization, and cost-benefit analysis," Energy, Elsevier, vol. 139(C), pages 732-742.
    6. Cruce, Jesse R. & Quinn, Jason C., 2019. "Economic viability of multiple algal biorefining pathways and the impact of public policies," Applied Energy, Elsevier, vol. 233, pages 735-746.
    7. Robert M. Campbell & Nathaniel M. Anderson & Daren E. Daugaard & Helen T. Naughton, 2018. "Technoeconomic and Policy Drivers of Project Performance for Bioenergy Alternatives Using Biomass from Beetle-Killed Trees," Energies, MDPI, vol. 11(2), pages 1-20, January.
    8. Linmao Ma & Jing Yu & Long Zhang, 2019. "An Analysis on Barriers to Biomass and Bioenergy Development in Rural China Using Intuitionistic Fuzzy Cognitive Map," Energies, MDPI, vol. 12(9), pages 1-23, April.
    9. Mohsin Raza & Abrar Inayat & Ashfaq Ahmed & Farrukh Jamil & Chaouki Ghenai & Salman R. Naqvi & Abdallah Shanableh & Muhammad Ayoub & Ammara Waris & Young-Kwon Park, 2021. "Progress of the Pyrolyzer Reactors and Advanced Technologies for Biomass Pyrolysis Processing," Sustainability, MDPI, vol. 13(19), pages 1-42, October.
    10. Wenran Gao & Hui Li & Karnowo & Bing Song & Shu Zhang, 2020. "Integrated Leaching and Thermochemical Technologies for Producing High-Value Products from Rice Husk: Leaching of Rice Husk with the Aqueous Phases of Bioliquids," Energies, MDPI, vol. 13(22), pages 1-15, November.
    11. Vlachokostas, Ch. & Michailidou, A.V. & Achillas, Ch., 2021. "Multi-Criteria Decision Analysis towards promoting Waste-to-Energy Management Strategies: A critical review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 138(C).
    12. Genel, Salih & Durak, Halil & Durak, Emre Demirer & Güneş, Hasret & Genel, Yaşar, 2023. "Hydrothermal liquefaction of biomass with molybdenum, aluminum, cobalt metal powder catalysts and evaluation of wastewater by fungus cultivation," Renewable Energy, Elsevier, vol. 203(C), pages 20-32.
    13. Primaz, Carmem T. & Ribes-Greus, Amparo & Jacques, Rosângela A., 2021. "Valorization of cotton residues for production of bio-oil and engineered biochar," Energy, Elsevier, vol. 235(C).
    14. Liu, Zhongzhe & Singer, Simcha & Tong, Yiran & Kimbell, Lee & Anderson, Erik & Hughes, Matthew & Zitomer, Daniel & McNamara, Patrick, 2018. "Characteristics and applications of biochars derived from wastewater solids," Renewable and Sustainable Energy Reviews, Elsevier, vol. 90(C), pages 650-664.
    15. Feng, Ping & Hao, Lifang & Huo, Chaofei & Wang, Ze & Lin, Weigang & Song, Wenli, 2014. "Rheological behavior of coal bio-oil slurries," Energy, Elsevier, vol. 66(C), pages 744-749.
    16. Qin, Fanzhi & Zhang, Chen & Zeng, Guangming & Huang, Danlian & Tan, Xiaofei & Duan, Abing, 2022. "Lignocellulosic biomass carbonization for biochar production and characterization of biochar reactivity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 157(C).
    17. Kumar N, Sasi & Grekov, Denys & Pré, Pascaline & Alappat, Babu J., 2020. "Microwave mode of heating in the preparation of porous carbon materials for adsorption and energy storage applications – An overview," Renewable and Sustainable Energy Reviews, Elsevier, vol. 124(C).
    18. Wan Adibah Wan Mahari & Nur Fatihah Zainuddin & Wan Mohd Norsani Wan Nik & Cheng Tung Chong & Su Shiung Lam, 2016. "Pyrolysis Recovery of Waste Shipping Oil Using Microwave Heating," Energies, MDPI, vol. 9(10), pages 1-9, September.
    19. Manolis, E.N. & Zagas, T.D. & Karetsos, G.K. & Poravou, C.A., 2019. "Ecological restrictions in forest biomass extraction for a sustainable renewable energy production," Renewable and Sustainable Energy Reviews, Elsevier, vol. 110(C), pages 290-297.
    20. Fanta Barry & Marie Sawadogo & Maïmouna Bologo (Traoré) & Igor W. K. Ouédraogo & Thomas Dogot, 2021. "Key Barriers to the Adoption of Biomass Gasification in Burkina Faso," Sustainability, MDPI, vol. 13(13), pages 1-14, June.

    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:230:y:2018:i:c:p:330-343. 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.