Biomass Supply Chains for Biofuel Production – Contracting Issues

Sixth Annual World Congress on Industrial Biotechnology & Bioprocessing, Montreal, Canada, 2009

28 Pages Posted: 14 Jul 2009

See all articles by Subbu Kumarappan

Subbu Kumarappan

Michigan State University - Department of Agricultural Economics

Date Written: July 22, 2009

Abstract

The advances in technology, government grants and socio-environmental issues have caused a shift from corn to cellulose as ethanol feedstock, with more than 25 cellulosic ethanol plants being constructed in various parts of US (Ethanol RFA, 2008). Such a change in production and investment climate has implications for locating these biorefineries, and integrated production with locally available feedstocks, chosen technologies, size and scope of operations. This study analyzes questions such as ‘why a cellulosic ethanol pilot plant technology was located in a particular region (site specificity)?’ and ‘what role does the feedstock type (input specificity) and its opportunity costs could play in selecting a location?’ A database of these pilot plants is being built to identify the density and variation of biomass distribution (e.g. annual vs. perennial; multiple farmers vs. single large feedstock supply cooperative) together with qualitative inputs from the feedstock suppliers in that region. This helps identify synergies between competing technologies (among enzymatic, thermochemical and combined bioprocessing technologies) and how biomass supply infrastructure would evolve in North America. The study links the characteristics of regional feedstock supply (e.g. farmers in case of Voyager Ethanol in Iowa or landfills in case of New Planet Energy in Florida) and how that is tied to the success of proposed cellulosic ethanol pilot plants. The importance of captive farming of biomass for biofuel production is examined (OBC, 2008). Preliminary evidence suggests that the bioenergy firm’s size is inversely related to vertically integrated production (through captive plantations, Altman, et al, 2007) i.e. the captive plantations can be expected to be beneficial only for the smaller sized biomass plants.

Keywords: biofuels, supply chains, business, cellulosic ethanol, contracting, hypotheses, issues

JEL Classification: L1, L14, L22, M2, Q00, Q21, Q23, Q4

Suggested Citation

Kumarappan, Subramanian, Biomass Supply Chains for Biofuel Production – Contracting Issues (July 22, 2009). Sixth Annual World Congress on Industrial Biotechnology & Bioprocessing, Montreal, Canada, 2009, Available at SSRN: https://ssrn.com/abstract=1433047 or http://dx.doi.org/10.2139/ssrn.1433047

Subramanian Kumarappan (Contact Author)

Michigan State University - Department of Agricultural Economics ( email )

East Lansing, MI 48824
United States

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