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The Economics of Harvesting and Transporting Corn Stover for Conversion to Fuel Ethanol: A Case Study for Minnesota

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  • Petrolia, Daniel R.

Abstract

Corn stover harvest and transport cost functions were estimated for two harvest operations for a proposed biomass-to-ethanol conversion facility located in southern Minnesota, USA. This work presents an alternative methodology to estimating corn stover quantities and harvest costs at the county level, taking into account county-specific yields, transportation distances, erosion constraints, machinery specifications, and other key variables. Monte Carlo simulation was also used to estimate the probability distribution of costs under alternative assumption on key parameters whose values vary widely in the literature. Marginal stover cost for 50MM gal/year of ethanol output was estimated at $54/dt ($0.77/gal ethanol) for the more intensive harvest method and $65/dt ($0.80/gal) for the less intensive method. Costs were greater than $62/dt ($0.89/gal) for a facility producing > 200MM gal/year under the more intensive harvest method, and greater than $84/dt ($1.21/gal) for the less-intensive harvest method. Monte Carlo simulation estimated a mean marginal cost of $52/dt ($63/dt under the less intensive harvest method) for 50MM gal ethanol output, with an $11 ($9) standard deviation. Costs were found to be at or below $62/dt 90 percent of the time ($71/dt for the less-intensive method). An $11/dt standard deviation in stover cost would result in a $0.16/gal swing in ethanol cost. Overall, costs were found to be consistently higher than those found in the literature, but even under a variety of parameter assumptions, costs tended to stay within a $10/dt range of the mean.

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File URL: http://purl.umn.edu/14213
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Bibliographic Info

Paper provided by University of Minnesota, Department of Applied Economics in its series Staff Papers with number 14213.

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Date of creation: 2006
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Handle: RePEc:ags:umaesp:14213

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Related research

Keywords: biomass; corn stover; economics; ethanol; lignocellulose; Monte Carlo; Crop Production/Industries; Resource /Energy Economics and Policy;

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Cited by:
  1. Popp, Michael P. & Hogan, Robert J., Jr., 2007. "Assessment of two alternative switchgrass harvest and transport methods," Biofuels, Food and Feed Tradeoffs, Biofuels, Food and Feed Tradeoffs Conference, April 12-13, 2007, St, Louis, Missouri 48774, Farm Foundation.
  2. Carriquiry, Miguel A. & Du, Xiaodong & Timilsina, Govinda R., 2011. "Second generation biofuels: Economics and policies," Energy Policy, Elsevier, vol. 39(7), pages 4222-4234, July.
  3. Babcock, Bruce A. & Marette, Stephan & Treguer, David, 2012. "Opportunity for Profitable Investments in Cellulosic Biofuels," Staff General Research Papers 34900, Iowa State University, Department of Economics.
  4. Zou, Tianyu & Pederson, Glenn D., 2008. "Using Real Options to Evaluate Investments in Ethanol Facilities," Staff Papers 37872, University of Minnesota, Department of Applied Economics.
  5. Lazarus, William F., 2008. "Energy Crop Production Costs and Breakeven Prices Under Minnesota Conditions," Staff Papers 45655, University of Minnesota, Department of Applied Economics.
  6. Song, Jingyu & Gramig, Benjamin M., 2013. "A Spatially Explicit Watershed Scale Optimization of Cellulosic Biofuels Production," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150453, Agricultural and Applied Economics Association.
  7. Mooney, Daniel F. & Roberts, Roland K. & English, Burton C. & Tyler, Donald D. & Larson, James A., 2008. "Switchgrass Production in Marginal Environments: A Comparative Economic Analysis across Four West Tennessee Landscapes," 2008 Annual Meeting, July 27-29, 2008, Orlando, Florida 6403, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  8. Rauh, Stefan & Berenz, Stefan & Heissenhuber, Alois, 2007. "ABSCHATZUNG DES UNTERNEHMERISCHEN RISIKOS BEIM BETRIEB EINER BIOGASANLAGE MIT HILFE DER MONTECARLO-METHODE (German)," 47th Annual Conference, Weihenstephan, Germany, September 26-28, 2007 7588, German Association of Agricultural Economists (GEWISOLA).
  9. Petrolia, Daniel R., 2006. "Ethanol from Biomass: Economic and Environmental Potential of Converting Corn Stover and Hardwood Forest Residue in Minnesota," 2006 Annual meeting, July 23-26, Long Beach, CA 21422, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  10. Eidman, Vernon R. & Petrolia, Daniel R. & Huang, Huajiang & Ramaswamy, Shri, 2009. "The Economic Feasibility of Producing Ethanol from Corn Stover and Hardwood in Minnesota," Staff Papers 47055, University of Minnesota, Department of Applied Economics.
  11. Sarah C. Brechbill & Wallace E. Tyner, 2008. "The Economics Of Biomass Collection,Transportation, And Supply To Indiana Cellulosic And Electric Utility Facilities," Working Papers 08-03, Purdue University, College of Agriculture, Department of Agricultural Economics.

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