Biomass Supply Strategy for Building a Sustainable Cellulosic Biofuel Business
Strategic Planning for Energy and Environment, Forthcoming
11 Pages Posted: 8 Nov 2015
Date Written: September 5, 2015
Companies venturing into the cellulosic biofuels business will be required to make portfolio decisions based on feedstock availability and variations in biomass supplies. Fundamental differences exist in biomass supplies for 1st generation corn ethanol and 2nd generation cellulosic biofuels. While 1st generation ethanol U.S. is produced primarily from corn, a tradable commodity that is transported long distances, 2nd generation cellulosic biofuels are produced from cellulosic biomass and there are greater limitations due to transportation distances. As a result, cellulosic biofuels producers will be exposed to local variations in biomass supplies. Studies have shown that 20-30% variations in collectable stover supply are typical. Such large variation translates into business risk and impacts sustainability issues. Hence, companies venturing into cellulosic biofuels will be required to develop strategies to reduce the impact of feedstock supply variations. A sustainable biomass supply chain will need strategies for developing supply market structures, contracting programs with farmers, and a feedstock diversification program that reduces the impact of these large variations. This study focuses on identifying potential options for managers to consider when developing sustainable feedstock supply programs, and key trade-offs that help reduce costs and manage feedstock supply risks.
Keywords: Corn Stover, Supply Variability, Feedstock Diversification, Biofuels, Efficient Frontier
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