Biomass Supply Strategy for Building a Sustainable Cellulosic Biofuel Business
Keywords:
Corn Stover, Supply Variability, Feedstock Diversifi- cation, Biofuels, Efficient FrontierAbstract
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 first-generation corn ethanol and second-gener-
ation cellulosic biofuels. While first-generation ethanol in the U.S. is
produced primarily from corn, a tradable commodity that is trans-
ported long distances, second-generation cellulosic biofuels are pro-
duced 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 variations translate into business risk and impacts issues associ-
ated with sustainability. 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 develop-
ing sustainable feedstock supply programs, and key trade-offs that
help reduce costs and manage feedstock supply risks.
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