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An Economic Breakeven Model of Cellulosic Feedstock Production and Ethanol Conversion with Implied Carbon Pricing

Listed author(s):
  • Miranowski, John
  • Rosburg, Alicia

The objectives of this paper include: 1) developing an economic framework to estimate long run equilibrium breakeven prices that cellulosic ethanol processors can pay for the marginal or last unit of biomass feedstock they purchase and still breakeven and that cellulosic feedstock producers need to receive for supplying the last unit of feedstock delivered to a commercial-scale plant; 2) estimating the gap or difference between the biorefinery’s willingness to pay (WTP) or derived demand for the last unit of cellulosic feedstock and the suppliers’ willingness to accept (WTA) or marginal cost (MC) of supplying the last unit of feedstock; 3) completing a life-cycle analysis (LCA) of each feedstock alternative or a “well-to-wheels” accounting of the potential greenhouse gas (GHG) savings associated with feedstock-specific ethanol relative to gasoline; and 4) calculating the carbon price or credit necessary for a biofuel market to exist in the long run. The model is designed to address various policy issues related to cellulosic biofuel production, including cellulosic biofuel production costs, the cost of cellulosic feedstock production when accounting for all costs incurred, government intervention costs either through tax credits and other incentives needed to sustain biofuel markets or through mandates to achieve the revised Renewable Fuels Standard (RFS.2), and finally, the implicit price or credit for CO2e embodied in cellulosic biofuel.

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Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers Archive with number 13166.

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Date of creation: 04 Feb 2010
Handle: RePEc:isu:genres:13166
Contact details of provider: Postal:
Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070

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  1. Amani Elobeid & Simla Tokgoz & Dermot J. Hayes & Bruce A. Babcock & Chad E. Hart, 2006. "Long-Run Impact of Corn-Based Ethanol on the Grain, Oilseed, and Livestock Sectors: A Preliminary Assessment, The," Center for Agricultural and Rural Development (CARD) Publications 06-bp49, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  2. 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.
  3. Simla Tokgoz & Amani Elobeid & Jacinto F. Fabiosa & Dermot J. Hayes & Bruce A. Babcock & Tun-Hsiang (Edward) Yu & Fengxia Dong & Chad E. Hart & John C. Beghin, 2007. "Emerging Biofuels: Outlook of Effects on U.S. Grain, Oilseed, and Livestock Markets," Food and Agricultural Policy Research Institute (FAPRI) Publications 07-sr101, Food and Agricultural Policy Research Institute (FAPRI) at Iowa State University.
  4. Bothast, Rodney J., 2005. "Cellulosic Ethanol Technology Assessment," Energy from Agriculture, Energy from Agriculture: New Technologies, Innovative Programs and Success Stories, December 14-15, 2005, St. Louis, Missouri 7622, Farm Foundation.
  5. Duffy, Michael, 2007. "Estimated Costs for Production, Storage, and Transportation of Switchgrass," Staff General Research Papers Archive 12917, Iowa State University, Department of Economics.
  6. Emily Heaton & Stephen Long & Thomas Voigt & Michael Jones & John Clifton-Brown, 2004. "Miscanthus for Renewable Energy Generation: European Union Experience and Projections for Illinois," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 9(4), pages 433-451, October.
  7. Khanna, Madhu, 2008. "Cellulosic Biofuels: Are They Economically Viable and Environmentally Sustainable?," Choices, Agricultural and Applied Economics Association, vol. 23(3).
  8. Smeets, Edward M.W. & Lewandowski, Iris M. & Faaij, André P.C., 2009. "The economical and environmental performance of miscanthus and switchgrass production and supply chains in a European setting," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(6-7), pages 1230-1245, August.
  9. Duffy, Michael & Nanhou, Virginie, 2002. "Costs of Producing Switchgrass for Biomass in Southern Iowa," Staff General Research Papers Archive 10346, Iowa State University, Department of Economics.
  10. Perlack, R.D. & Turhollow, A.F., 2003. "Feedstock cost analysis of corn stover residues for further processing," Energy, Elsevier, vol. 28(14), pages 1395-1403.
  11. Tiffany, Douglas G. & Jordan, Brendan & Dietrich, Erin & Vargo-Daggett, Becca, 2006. "Energy and Chemicals from Native Grasses: Production, Transportation and Processing Technologies Considered in the Northern Great Plains," Staff Papers 13838, University of Minnesota, Department of Applied Economics.
  12. 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.
  13. Taheripour, Farzad & Tyner, Wallace E., 2008. "Ethanol Policy Analysis - What Have We Learned So Far?," Choices, Agricultural and Applied Economics Association, vol. 23(3).
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