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Stochastic Viability of Second Generation Biofuel Chains: Micro-economic Spatial Modeling in France

  • Bamiere, Laure
  • Martinet, Vincent
  • Gouel, Christophe
  • Le Cadre, Elodie

Within an overall project to assess the ability of the agricultural sector to contribute to bioenergy production, we set out here to examine the economic and technological viability of a bioenergy facility in an uncertain economic context, using the stochastic viability approach. We consider two viability constraints: the facility demand for lignocellulosic feedstock has to be satisfied each year and the associated supply cost has to be lower than de profitability threshold of the facility. We assess the viability probability of various supplying strategies consisting in contracting a given share of the feedstock demand with perennial dedicated crops at the initial time and then in making up each year with annual dedicated crops or wood. The demand constraints and agricultural prices scenarios over the time horizon are introduced in an agricultural and forest biomass supply model, which in turns determines the supply cost per MWh and computes the viability probabilities of the various contract strategies. A sensibility analysis to agricultural prices at initial time is performed. Results show that when they are around or under the median (of the 1993–2007 prices), the strategy consisting in contracting 100% of the feedstock supply with perennial dedicated crops is the best one.

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File URL: http://purl.umn.edu/114238
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Paper provided by European Association of Agricultural Economists in its series 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland with number 114238.

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Date of creation: 2011
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Handle: RePEc:ags:eaae11:114238
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  1. Stephan Pfaffenzeller & Paul Newbold & Anthony Rayner, 2007. "A Short Note on Updating the Grilli and Yang Commodity Price Index," World Bank Economic Review, World Bank Group, vol. 21(1), pages 151-163.
  2. Ballarin, A. & Vecchiato, D. & Tempesta, T. & Marangon, F. & Troiano, S., 2011. "Biomass energy production in agriculture: A weighted goal programming analysis," Energy Policy, Elsevier, vol. 39(3), pages 1123-1131, March.
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  4. 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.
  5. 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.
  6. Deaton, A. & Laroque, G., 1989. "On The Behavior Of Commodity Prices," Papers 145, Princeton, Woodrow Wilson School - Development Studies.
  7. In, Francis & Inder, Brett, 1997. "Long‐run Relationships Between World Vegetable Oil Prices," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 41(4), December.
  8. Philip J. Dawson & Ana I. Sanju�n & Ben White, 2006. "Structural Breaks and the Relationship between Barley and Wheat Futures Prices on the London International Financial Futures Exchange," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 28(4), pages 585-594.
  9. Rozakis, S. & Sourie, J. -C., 2005. "Micro-economic modelling of biofuel system in France to determine tax exemption policy under uncertainty," Energy Policy, Elsevier, vol. 33(2), pages 171-182, January.
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