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Economic Evaluation of Large-Scale Biorefinery Deployment: A Framework Integrating Dynamic Biomass Market and Techno-Economic Models

Author

Listed:
  • Jonas Zetterholm

    () (Department of Energy Engineering, Division of Energy Science, Luleå University of Technology, SE-971 87 Luleå, Sweden)

  • Elina Bryngemark

    () (Economics, Department of Business Administration, Technology and Social Sciences, Luleå University of Technology, SE-971 87 Luleå, Sweden)

  • Johan Ahlström

    () (Department of Space, Earth and Environment, Division of Energy Technology, Chalmers University of Technology, SE-412 96 Gothenburg, Sweden)

  • Patrik Söderholm

    () (Economics, Department of Business Administration, Technology and Social Sciences, Luleå University of Technology, SE-971 87 Luleå, Sweden)

  • Simon Harvey

    () (Department of Space, Earth and Environment, Division of Energy Technology, Chalmers University of Technology, SE-412 96 Gothenburg, Sweden)

  • Elisabeth Wetterlund

    () (Department of Energy Engineering, Division of Energy Science, Luleå University of Technology, SE-971 87 Luleå, Sweden
    International Institute for Applied Systems Analysis (IIASA), Schlossplatz 1, A-2361 Laxenburg, Austria)

Abstract

Biofuels and biochemicals play significant roles in the transition towards a fossil-free society. However, large-scale biorefineries are not yet cost-competitive with their fossil-fuel counterparts, and it is important to identify biorefinery concepts with high economic performance. For evaluating early-stage biorefinery concepts, one needs to consider not only the technical performance and process costs but also the economic performance of the full supply chain and the impacts on feedstock and product markets. This article presents and demonstrates a conceptual interdisciplinary framework that can constitute the basis for evaluations of the full supply-chain performance of biorefinery concepts. This framework considers the competition for biomass across sectors, assumes exogenous end-use product demand, and incorporates various geographical and technical constraints. The framework is demonstrated empirically through a case study of a sawmill-integrated biorefinery producing liquefied biomethane from forestry and forest industry residues. The case study results illustrate that acknowledging biomass market effects in the supply chain evaluation implies changes in both biomass prices and the allocation of biomass across sectors. The proposed framework should facilitate the identification of biorefinery concepts with a high economic performance which are robust to feedstock price changes caused by the increase in biomass demand.

Suggested Citation

  • Jonas Zetterholm & Elina Bryngemark & Johan Ahlström & Patrik Söderholm & Simon Harvey & Elisabeth Wetterlund, 2020. "Economic Evaluation of Large-Scale Biorefinery Deployment: A Framework Integrating Dynamic Biomass Market and Techno-Economic Models," Sustainability, MDPI, Open Access Journal, vol. 12(17), pages 1-27, September.
  • Handle: RePEc:gam:jsusta:v:12:y:2020:i:17:p:7126-:d:407168
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    References listed on IDEAS

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    More about this item

    Keywords

    supply chain; partial equilibrium; biofuel; soft-linking; price formation;

    JEL classification:

    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics
    • Q0 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation
    • Q3 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products

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