Evaluating the Economic Viability of Agricultural Pellets to Supplement the Current Global Wood Pellets Supply for Bioenergy Production

Mahmood Ebadian, Shahab Sokhansanj, David Lee, Alyssa Klein and Lawrence Townley-Smith
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Mahmood Ebadian: Department of Chemical & Biological Engineering, University of British Columbia, 2360 East Mall, Vancouver, BC V6T 1Z3, Canada
Shahab Sokhansanj: Department of Chemical & Biological Engineering, University of British Columbia, 2360 East Mall, Vancouver, BC V6T 1Z3, Canada
David Lee: Agriculture and Agri-Food Canada, 2010 12th Avenue, Regina, SK S4P 0M3, Canada
Alyssa Klein: Agriculture and Agri-Food Canada, 2010 12th Avenue, Regina, SK S4P 0M3, Canada
Lawrence Townley-Smith: Agriculture and Agri-Food Canada, 2010 12th Avenue, Regina, SK S4P 0M3, Canada

Energies, 2021, vol. 14, issue 8, 1-19

Abstract: In this study, an inter-continental agricultural pellet supply chain is modeled, and the production cost and price of agricultural pellets are estimated and compared against the recent cost and price of wood pellets in the global marketplace. The inter-continental supply chain is verified and validated using an integration of an interactive mapping application and a simulation platform. The integrated model is applied to a case study in which agricultural pellets are produced in six locations in Canada and shipped and discharged at the three major ports in Western Europe. The cost of agricultural pellets in the six locations is estimated to be in the range of EUR 92–95/tonne (CAD 138–142/tonne), which is comparable with the recent cost of wood pellets produced in small-scale pellet plants (EUR 99–109/tonne). The average agricultural pellet price shipped from the six plants to the three ports in Western Europe is estimated to be in a range of EUR 183–204 (CAD 274–305/tonne), 29–42% more expensive that the average recent price of wood pellets (EUR 143/tonne) at the same ports. There are several potential areas in the agricultural pellet supply chains that can reduce the pellet production and distribution costs in the mid and long terms, making them affordable supplement to the existing wood pellet markets. Potential economic activities generated by the production of pellets in farm communities can be significant. The generated annual revenue in the biomass logistics system in all six locations is estimated to be about CAD 21.80 million. In addition, the logistics equipment fleet needs 176 local operators with a potential annual income of CAD 2.18 million.

Keywords: agricultural pellet; inter-continental supply chains; pellet production cost and price; integrated interactive mapping and simulation model; BIMAT; IBSAL (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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