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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.

Suggested Citation

  • Petrolia, Daniel R., 2006. "The Economics of Harvesting and Transporting Corn Stover for Conversion to Fuel Ethanol: A Case Study for Minnesota," Staff Papers 14213, University of Minnesota, Department of Applied Economics.
  • Handle: RePEc:ags:umaesp:14213
    DOI: 10.22004/ag.econ.14213
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    File URL: https://ageconsearch.umn.edu/record/14213/files/p06-12.pdf
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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 Conference, April 12-13, 2007, St, Louis, Missouri 48774, Farm Foundation.
    2. Chovau, Simon & Degrauwe, David & Van der Bruggen, Bart, 2013. "Critical analysis of techno-economic estimates for the production cost of lignocellulosic bio-ethanol," Renewable and Sustainable Energy Reviews, Elsevier, vol. 26(C), pages 307-321.
    3. 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).
    4. Daniel R. Petrolia, 2008. "An Analysis of the Relationship between Demand for Corn Stover as an Ethanol Feedstock and Soil Erosion," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 30(4), pages 677-691.
    5. Chen, Chien-Wei & Fan, Yueyue, 2012. "Bioethanol supply chain system planning under supply and demand uncertainties," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(1), pages 150-164.
    6. Shafie, S.M. & Mahlia, T.M.I. & Masjuki, H.H., 2013. "Life cycle assessment of rice straw co-firing with coal power generation in Malaysia," Energy, Elsevier, vol. 57(C), pages 284-294.
    7. 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.
    8. Brechbill, Sarah C. & Tyner, Wallace E. & Ileleji, Klein E., 2008. "The economics of biomass collection and transportation and its supply to Indiana cellulosic and electric utility facilities," Risk, Infrastructure and Industry Evolution Conference, June 24-25, 2008, Berkeley, California 48732, Farm Foundation.
    9. Brown, Tristan R. & Thilakaratne, Rajeeva & Brown, Robert C. & Hu, Guiping, 2013. "Regional differences in the economic feasibility of advanced biorefineries: Fast pyrolysis and hydroprocessing," Energy Policy, Elsevier, vol. 57(C), pages 234-243.
    10. Cobuloglu, Halil I. & Büyüktahtakın, İ. Esra, 2015. "Food vs. biofuel: An optimization approach to the spatio-temporal analysis of land-use competition and environmental impacts," Applied Energy, Elsevier, vol. 140(C), pages 418-434.
    11. 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.
    12. 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.
    13. 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.
    14. Babcock, Bruce A. & Marette, Stéphan & Tréguer, David, 2011. "Opportunity for profitable investments in cellulosic biofuels," Energy Policy, Elsevier, vol. 39(2), pages 714-719, February.
    15. 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.
    16. Kwabena Krah & Daniel R Petrolia & Angelica Williams & Keith H Coble & Ardian Harri & Roderick M Rejesus, 2018. "Producer Preferences for Contracts on a Risky Bioenergy Crop," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 40(2), pages 240-258.
    17. Lazarus, William F., 2008. "Energy Crop Production Costs and Breakeven Prices Under Minnesota Conditions," Staff Papers 45655, University of Minnesota, Department of Applied Economics.
    18. 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.
    19. Rauh, S. & Berenz, S. & Heißenhuber, A., 2008. "Abschätzung des unternehmerischen Risikos beim Betrieb einer Biogasanlage mit Hilfe der Monte-Carlo-Methode," Proceedings “Schriften der Gesellschaft für Wirtschafts- und Sozialwissenschaften des Landbaues e.V.”, German Association of Agricultural Economists (GEWISOLA), vol. 43, March.
    20. 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).
    21. Williams, Jeffery & Brammer, Jon & Llewelyn, Richard & Bergtold, Jason, 2016. "An Economic Analysis of Harvesting Biomass from Sorghums and Corn," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2015, pages 1-13.
    22. 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).

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