Exploring the Potential to Penetrate the Energy Markets for Tennessee-Produced Switchgrass

Shikha Chugh, Tun-hsiang Yu, Samuel Jackson, James Larson (), Burton English and Seong-Hoon Cho ()

No 196899, 2015 Annual Meeting, January 31-February 3, 2015, Atlanta, Georgia from Southern Agricultural Economics Association

Abstract: Growing biomass crops for energy production on low productivity lands that are not used for food production has been suggested as an alternative to reduce dependence on fossil fuels and to mitigate greenhouse gas emissions from transportation fuel. Switchgrass is considered a potential feedstock in various states, including Tennessee, because of its good yields on poor soils. However, its low density relative to its energy value and resulting high logistics costs impedes the profitability of switchgrass-based bioenergy. The objective of this study is to determine the optimal logistics configuration for a collection/distribution hub to market Tennessee-produced switchgrass for bioenergy production. A mathematical programming model integrated with the geographic information system is used to maximize the net present value (NPV) of profit of the hub that serves switchgrass producers and bioenergy markets. A total of six logistics configurations delivering switchgrass to local or international bioenergy markets are evaluated. The results highlight the economic challenges of penetrating the energy market for the collection/distribution hub of switchgrass: only one logistics configuration for the local market is profitable. However, serving international markets becomes feasible when investment risk is lowered. This information implies that certainty of bioenergy policies is crucial to the development of biomass feedstock for bioenergy industry.

Keywords: Agribusiness; Marketing (search for similar items in EconPapers)
Pages: 43
Date: 2015
New Economics Papers: this item is included in nep-ene
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Persistent link: https://EconPapers.repec.org/RePEc:ags:saea15:196899

DOI: 10.22004/ag.econ.196899

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