IDEAS home Printed from https://ideas.repec.org/a/eee/forpol/v38y2014icp32-39.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1389934113001664
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.forpol.2013.08.004?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. Becker, Dennis R. & Skog, Kenneth & Hellman, Allison & Halvorsen, Kathleen E. & Mace, Terry, 2009. "An outlook for sustainable forest bioenergy production in the Lake States," Energy Policy, Elsevier, vol. 37(12), pages 5687-5693, December.
    2. Lieberman, Marvin B, 1987. "Market Growth, Economies of Scale, and Plant Size in the Chemical Processing Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 36(2), pages 175-191, December.
    3. Gallagher, Paul W. & Shapouri, Hosein, 2005. "Usda's 2002 Ethanol Cost-Of-Production Survey," Staff General Research Papers Archive 12307, Iowa State University, Department of Economics.
    4. Shapouri, Hosein & Gallagher, Paul, 2005. "USDA's 2002 Ethanol Cost-of-Production Survey," Agricultural Economic Reports 308482, United States Department of Agriculture, Economic Research Service.
    5. Rendleman, C. Matthew & Shapouri, Hosein, 2007. "New Technologies in Ethanol Production," Agricultural Economic Reports 308483, United States Department of Agriculture, Economic Research Service.
    6. Kocoloski, Matt & Michael Griffin, W. & Scott Matthews, H., 2011. "Impacts of facility size and location decisions on ethanol production cost," Energy Policy, Elsevier, vol. 39(1), pages 47-56, January.
    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. Golecha, Rajdeep & Gan, Jianbang, 2016. "Biomass transport cost from field to conversion facility when biomass yield density and road network vary with transport radius," Applied Energy, Elsevier, vol. 164(C), pages 321-331.
    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.

    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. Stephen P. Holland & Jonathan E. Hughes & Christopher R. Knittel & Nathan C. Parker, 2013. "Unintended Consequences of Transportation Carbon Policies: Land-Use, Emissions, and Innovation," NBER Working Papers 19636, National Bureau of Economic Research, Inc.
    2. Timilsina, Govinda R. & Dulal, Hari B., 2008. "Fiscal policy instruments for reducing congestion and atmospheric emissions in the transport sector : a review," Policy Research Working Paper Series 4652, The World Bank.
    3. Kocoloski, Matt & Michael Griffin, W. & Scott Matthews, H., 2011. "Impacts of facility size and location decisions on ethanol production cost," Energy Policy, Elsevier, vol. 39(1), pages 47-56, January.
    4. Pohit, Sanjib & Biswas, Pradip Kumar & Kumar, Rajesh & Jha, Jaya, 2009. "International experiences of ethanol as transport fuel: Policy implications for India," Energy Policy, Elsevier, vol. 37(11), pages 4540-4548, November.
    5. Ferris, John N. & Joshi, Satish V., 2007. "Agriculture as a source of fuel prospects and impacts, 2007 to 2017," Biofuels, Food and Feed Tradeoffs Conference, April 12-13, 2007, St, Louis, Missouri 48771, Farm Foundation.
    6. Ghoddusi, Hamed, 2017. "Price risks for biofuel producers in a deregulated market," Renewable Energy, Elsevier, vol. 114(PB), pages 394-407.
    7. Dick, Ndukwe Agbai & Wilson, Paul, 2018. "Analysis of the inherent energy-food dilemma of the Nigerian biofuels policy using partial equilibrium model: The Nigerian Energy-Food Model (NEFM)," Renewable and Sustainable Energy Reviews, Elsevier, vol. 98(C), pages 500-514.
    8. Haji Esmaeili, Seyed Ali & Szmerekovsky, Joseph & Sobhani, Ahmad & Dybing, Alan & Peterson, Tim O., 2020. "Sustainable biomass supply chain network design with biomass switching incentives for first-generation bioethanol producers," Energy Policy, Elsevier, vol. 138(C).
    9. Xiaoxian Zhang & Fang Ma, 2015. "Emergy Evaluation of Different Straw Reuse Technologies in Northeast China," Sustainability, MDPI, vol. 7(9), pages 1-18, August.
    10. Gonela, Vinay & Zhang, Jun & Osmani, Atif & Onyeaghala, Raphael, 2015. "Stochastic optimization of sustainable hybrid generation bioethanol supply chains," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 77(C), pages 1-28.
    11. Bradley, James R., 2005. "Optimal control of a dual service rate M/M/1 production-inventory model," European Journal of Operational Research, Elsevier, vol. 161(3), pages 812-837, March.
    12. Nealer, Rachael & Matthews, H. Scott & Hendrickson, Chris, 2012. "Assessing the energy and greenhouse gas emissions mitigation effectiveness of potential US modal freight policies," Transportation Research Part A: Policy and Practice, Elsevier, vol. 46(3), pages 588-601.
    13. Parra, David & Zhang, Xiaojin & Bauer, Christian & Patel, Martin K., 2017. "An integrated techno-economic and life cycle environmental assessment of power-to-gas systems," Applied Energy, Elsevier, vol. 193(C), pages 440-454.
    14. Sampath Rajagopalan & Medini R. Singh & Thomas E. Morton, 1998. "Capacity Expansion and Replacement in Growing Markets with Uncertain Technological Breakthroughs," Management Science, INFORMS, vol. 44(1), pages 12-30, January.
    15. Seyed Ali Haji Esmaeili & Ahmad Sobhani & Sajad Ebrahimi & Joseph Szmerekovsky & Alan Dybing & Amin Keramati, 2023. "Location Allocation of Biorefineries for a Switchgrass-Based Bioethanol Supply Chain Using Energy Consumption and Emissions," Logistics, MDPI, vol. 7(1), pages 1-22, January.
    16. Cai, Zhen & Narine, Lana Landra & D'Amato, Anthony & Aguilar, Francisco Xavier, 2016. "Attitudinal and revenue effects on non-industrial private forest owners' willingness-to-harvest timber and woody biomass," Forest Policy and Economics, Elsevier, vol. 63(C), pages 52-61.
    17. Philip Metzger, 2023. "Economics of In-Space Industry and Competitiveness of Lunar-Derived Rocket Propellant," Papers 2303.09011, arXiv.org.
    18. Zhang, Fengli & Johnson, Dana M. & Wang, Jinjiang, 2016. "Integrating multimodal transport into forest-delivered biofuel supply chain design," Renewable Energy, Elsevier, vol. 93(C), pages 58-67.
    19. Hao Lv & Hao Ding & Dequn Zhou & Peng Zhou, 2014. "A Site Selection Model for a Straw-Based Power Generation Plant with CO 2 Emissions," Sustainability, MDPI, vol. 6(10), pages 1-16, October.
    20. Li, Jun & Zhao, Renyong & Xu, Youjie & Wu, Xiaorong & Bean, Scott R. & Wang, Donghai, 2022. "Fuel ethanol production from starchy grain and other crops: An overview on feedstocks, affecting factors, and technical advances," Renewable Energy, Elsevier, vol. 188(C), pages 223-239.

    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:forpol:v:38:y:2014:i:c:p:32-39. 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/locate/forpol .

    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.