Centralized versus decentralized biorefinery configurations for cellulosic ethanol: Can we reconcile environmental sustainability and profitability?

Aklesso Egbendewe-Mondzozo, Scott Swinton, Bryan D. Bals and Bruce E. Dale

No 124617, 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington from Agricultural and Applied Economics Association

Abstract: This paper compares environmental and profitability outcomes for a centralized biorefinery for cellulosic ethanol that does all processing versus a biorefinery linked to a decentralized array of local depots that pretreat biomass into concentrated briquettes. The analysis uses a spatial bioeconomic model that maximizes profit from crop and energy products, subject to the requirement that the biorefinery must be operated at full capacity. The model draws upon biophysical crop input-output coefficients simulated with the Environmental Policy Integrated Climate (EPIC) model, as well as market input and output prices, spatial transportation costs, ethanol yields from biomass, and biorefinery capital and operational costs. The model was applied to 82 cropping systems simulated across 37 sub-watersheds in a 9-county region of southern Michigan in response to ethanol prices simulated to rise from $1.78 to $3.36 per gallon. Results show that the decentralized local biomass processing depots lead to lower profitability but better environmental performance, due to more reliance on perennial grasses than the centralized biorefinery. Simulated technological improvement that reduces the processing cost and increases the ethanol yield of switchgrass by 17% could cause a shift to more processing of switchgrass, with increased profitability and environmental benefits.

Keywords: Environmental Economics and Policy; Production Economics; Resource/Energy Economics and Policy (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea12:124617

DOI: 10.22004/ag.econ.124617

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