Field to flight: A techno-economic analysis of the corn stover to aviation biofuels supply chain

Amanda Bittner, Wallace Tyner and Xin Zhao

No 205091, 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California from Agricultural and Applied Economics Association

Abstract: This analysis focuses on aviation biofuel production using fast pyrolysis from corn stover. Cellulosic biofuels carry a lot of risks, because conversion technology is expensive. As a result, incentives are needed to reduce the risk for private investors. The issue is choosing which policy will provide the most reduction in risk, while providing a lowest cost to the government. Uncertainty is added in benefit-cost analysis to fuel price and four technical variables: capital cost, final fuel yield, hydrogen cost, and feedstock cost. We look at the impact of two policies: reverse auction and capital subsidy. For the reverse auction and capital subsidy, we used contract lengths of 5, 10, and 15 years to see the impact a longer contract could have on the probability of loss. A reverse auction reduced more risk of investment. As the contract length increased, the probability of loss and coefficient of variation in net present value were reduced substantially. When fuel price increased stochastically and a contract length of 15 years was used, the probability of loss was reduced to 18.4 percent.

Keywords: Resource/Energy Economics and Policy; Risk and Uncertainty (search for similar items in EconPapers)
Pages: 2
Date: 2015
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea15:205091

DOI: 10.22004/ag.econ.205091

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