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Second generation biofuels: Economics and policies

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  • Carriquiry, Miguel A.
  • Du, Xiaodong
  • Timilsina, Govinda R.

Abstract

This study reviews economics of production of second generation biofuels from various feedstocks, including crop and wood/forestry residues, lignocellulosic energy crops, jatropha, and algae. The study indicates that while second generation biofuels could significantly contribute to the future energy supply mix, cost is a major barrier to its commercial production in the near to medium term. Depending upon type of biofuels, feedstock prices and conversion costs, the cost of cellulosic ethanol is found to be two to three times higher than the current price of gasoline on an energy equivalent basis. The median cost (across the studies reviewed) of biodiesel produced from microalgae, a prospective feedstock, is seven times higher than the current price of diesel, although much higher cost estimates have been reported. As compared with the case of first generation biofuels, in which feedstock can account for over two-thirds of the total costs, the share of feedstock in the total costs is relatively lower (30-50%) in the case of second generation biofuels. While significant cost reductions are needed for both types of second generation biofuels, the critical barriers are at different steps of the production process. For cellulosic ethanol, the biomass conversion costs needs to be reduced. On the other hand, feedstock cost is the main issue for biodiesel. At present, policy instruments, such as fiscal incentives and consumption mandates have in general not differentiated between the first and second generation biofuels except in the cases of the US and EU. The policy regime should be revised to account for the relative merits of different types of biofuels.

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Bibliographic Info

Article provided by Elsevier in its journal Energy Policy.

Volume (Year): 39 (2011)
Issue (Month): 7 (July)
Pages: 4222-4234

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Handle: RePEc:eee:enepol:v:39:y:2011:i:7:p:4222-4234

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Web page: http://www.elsevier.com/locate/enpol

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Keywords: Bioenergy Energy crops Renewable energy;

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References

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Citations

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Cited by:
  1. Moschini, GianCarlo & Cui, Jingbo & Lapan, Harvey E., 0. "Economics of Biofuels: An Overview of Policies, Impacts and Prospects," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), Italian Association of Agricultural and Applied Economics (AIEAA), issue 3.
  2. Osmani, Atif & Zhang, Jun, 2014. "Economic and environmental optimization of a large scale sustainable dual feedstock lignocellulosic-based bioethanol supply chain in a stochastic environment," Applied Energy, Elsevier, vol. 114(C), pages 572-587.
  3. Loureiro, Maria L. & Labandeira, Xavier & Hanemann, Michael, 2013. "Transport and low-carbon fuel: A study of public preferences in Spain," Energy Economics, Elsevier, Elsevier, vol. 40(S1), pages S126-S133.
  4. Hakan Eggert & Mads Greaker, 2014. "Promoting Second Generation Biofuels: Does the First Generation Pave the Road?," Energies, MDPI, Open Access Journal, vol. 7(7), pages 4430-4445, July.
  5. Janda, Karel & Kristoufek, Ladislav & Zilberman, David, 2011. "Biofuels: review of policies and impacts," CUDARE Working Paper Series, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy 1119, University of California at Berkeley, Department of Agricultural and Resource Economics and Policy.
  6. Valeria Costantini & Francesco Crespi & Ylenia Curci, 2014. "A keyword selection method for mapping technological knowledge in specific sectors through patent data:the case of biofuels sector," SEEDS Working Papers 1714, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Jun 2014.
  7. Eggert, HÃ¥kan & Greaker, Mads, 2013. "Promoting Second Generation Biofuels: Does the First Generation Pave the Road?," Discussion Papers, Resources For the Future dp-13-18-efd, Resources For the Future.
  8. Eggert, Håkan & Greaker, Mads & Potter, Emily, 2011. "Policies for Second Generation Biofuels: Current status and future challenges," Working Papers in Economics 501, University of Gothenburg, Department of Economics.
  9. Adenle, Ademola A. & Haslam, Gareth E. & Lee, Lisa, 2013. "Global assessment of research and development for algae biofuel production and its potential role for sustainable development in developing countries," Energy Policy, Elsevier, Elsevier, vol. 61(C), pages 182-195.
  10. Kamal Soundararajan & Elspeth Thomson, 2013. "Asia and European transport biofuels stalled at the same place?," Asia Europe Journal, Springer, Springer, vol. 11(3), pages 247-263, September.

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