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Biofuel Supply Chain Challenges and Analysis
Sooduck ChungMichael Farrey
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Objectives of Research
Identify current biofuel supply chain challenges. Ethanol can only be sustainable if it is cost competitive
Performed cost analysis of ethanol production using switchgrass Performed deep dive into supply chain issues specific to
switchgrass
22
2
Growth in Ethanol Fuel Production
Ethanol Production 1.8B gal (2001) → 9.2B gal (2008) (520% ↑)
Source: U.S. DoE, Alternative Fuels & Advanced Vehicle Center33
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
2001 2002 2003 2004 2005 2006 2007 2008
Million
Gallon
s
Year
U.S. Ethanol Production
Biofuel Supply Chain
Overview of Biofuel Supply Chain
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Feedstock Production
Feedstock Logistics
Biofuels Production
Biofuels Distribution
Biofuels Enduse
•Choosing which feedstock to grow
•Growing Feedstock
•Harvesting
•Storage
•Preprocessing
•Delivery
•Conversion of feedstock into biofuel
•Delivery to the mixing stations
•Blend with fossil fuels
•Serving end customers
3
Biofuel SC Challenges
Feedstock Production Challenges
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Cost reduction Sustainability New feedstock
Improvement of yield
Inexpensive cultivation techniques
Environmental implication
Net energy balance
Behavioralinertia of farmers
Croplandavailability
Improvement of yield
Biofuel SC Challenges
Feedstock Logistics Challenges
66
Stable Supply Design of network Preprocessing
Seasonality of harvest
Fluctuation ofyield
Crop rotation
Network of storage facilities
New delivery schemes
Density-cost tradeoff
4
Biofuel SC Challenges
Biofuel Production Challenges
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Conversion yield Co-products Benchmark
Researchenzymes and
bacteria
Developing advanced catalysts
Biodegradable plastic from switchgrass
Best practices of related industries
High protein animal feed from corn
Research thermal breakdown of
materials
Biofuel SC Challenges
Biofuel Distribution Challenges Geographical dislocation of supply and demand
Delivery Capacity
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Supply
DemandDemand
5
Biofuel SC Challenges
Biofuel Enduse Challenges
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Meeting growing demand
Forecast offuture demand
Assessment of impact of
higher yield
Increasing blend
Chemical stability
Possible corrosion
Diversity of Feedstock
Ethanol Feedstock
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Virgin
GrainCornWheatSorghum
Non-grainSugarcaneSweet PotatoSwitchgrass
Non-virgin (Recycled)
Crop residueWood residue
Ethanol
Monosaccharide (Sugars)
Fermentation
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Diversity of Feedstock
Yield of biofuel from each feedstock
Source for Switchgrass: Sokhansanj et al. (2009), Schmer et al. (2007)1111
010002000300040005000600070008000
Ethanol Yield (L/ha)
Source: Brown, L. Plan B 2.0: Rescuing a Planet Under Stress and a Civilization in Trouble
Switchgrass Ethanol SC Challenges
Switchgrass Production Issues Dislocation of available cropland and cropland with high
switchgrass yield
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• Cropland available for switchgrass production • Cropland with high switchgrass yield
Kansas & Northern Missouri
Source: Sungrant BiowebSource: U.S. Department of Agriculture
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Cost Analysis of Switchgrass Ethanol
Cost analysis of harvesting and preprocessing options Combinations of preprocessing and plant size
Preprocessing: Bailing (No preprocessing), Grinding, Pelletizing Plant Size: Small (2000 Mg/day), Large (5000 Mg/day)
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Bale Bale
Loaf
Ground SG
Pellet
Small Refinery
No preprocessing
Large Refinery6 Combinations!
Cost Analysis of Switchgrass Ethanol
Combined method: lowest transportation costs Within 22 miles
→ grind switchgrass
Over 22 miles
→ pelletize switchgrass
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b
Refinery
22 Mi
Grinding
Pelletizing
8
Cost Analysis of Switchgrass Ethanol
1515
To Small Refinery (Capacity: 2000 Mg/day)
To Large Refinery (Capacity: 5000 Mg/day)
Baled Ground Pelletized Baled Ground Pelletized Combined
Supply Chain Stages
DetailsCost/Gallon
Cost/Gallon
Cost/Gallon
Cost/Gallon
Cost/Gallon
Cost/Gallon
Cost/Gallon
Planting & Cultivation
CurrentTechnology
$0.413 $0.413 $0.413 $0.413 $0.413 $0.413 $0.413
Harvest and Storage
Baling System
$0.236 $0.236
Loafing System
$0.174 $0.174 $0.174 $0.174 $0.174
Grinding at Farm
$0.101 $0.101 $0.066
Grinding at Plant
$0.101 $0.101
Pelletizing $0.179 $0.179 $0.061Transport to Refinery $0.174 $0.108 $0.049 $0.196 $0.131 $0.060 $0.103Subtotal (from cropland to refinery)
$0.924 $0.796 $0.816 $0.946 $0.819 $0.827 $0.817
$240,000 Annual Savings!!
Cost Analysis of Switchgrass Ethanol
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To Small Refinery / Grounded
To Large Refinery / Combined
Subtotal (from cropland to refinery) $0.796 $0.818
Cost to Produce Cellulosic Ethanol $2.200 $2.200
Cost to Transport Ethanol (1500 Miles, from South Dakota to SFC or NYC)
$0.837 $0.837
Total Costs $/ Gal $3.833 $3.854
Delivered cost of switchgrass ethanol
Avg. U.S. gasoline price = $2.864 (all states) On average 23% of this price is taxes
→ Switchgrass ethanol is not yet economically sustainable!
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Conclusion
Most urgent supply chain issues Biofuel cost
Still requires government subsidy
Farmers’ resistance to new feedstocks Must be solved to improve cost competitiveness
Delivery capacity Shortage of delivery capacity would increase landed cost of biofuel
Tradeoff High yield cropland ↔ Land cost
Feedstock density ↔ Low cost
Size of refinery ↔ Shipping cost to refinery
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1818
10
Biofuel SC Challenges
Feedstock Production Challenges Cost reduction
Improvement of yield
Sustainability Assessment of environmental implication and net carbon reduction Net energy balance Improvements in farming techniques to increase yield
Adoption of new feedstocks Behavioral inertia of farmers Cropland availability
1919
Biofuel SC Challenges
Biofuel Production Challenges Increasing conversion yield
How to reduce 'recalcitrance' (In the case of cellulosic ethanol) Improving understanding of thermal breakdown of materials Improving knowledge of microbes and enzymes
Development of valuable co-products e.g. Biodegradable plastic from switchgrass
Leverage best practices of related industries Petroleum refining, chemical manufacturing, and bioengineering
2020
11
Biofuel SC Challenges
Feedstock Logistics Challenges Stable feedstock supply
Seasonality of feedstock harvest & Quality degradation over time Annual fluctuation of yield Crop rotation
Design of logistics network Number of storage facilities & their network Inventing new ways of delivery
Preprocessing Tradeoff of feedstock density vs. cost
2121
Biofuel SC Challenges
Biofuel Distribution Challenges Geographical dislocation of supply and demand
Biofuels are currently refined near crop location, typically rural, then shipped to where the demand is
Delivery Capacity Not enough ethanol rail cars and hazmat drivers. Not enough blending stations and transportation capacity Possibility of using pipeline to deliver ethanol
2222
12
Biofuel SC Challenges
Biofuel Enduse Challenges Matching supply and demand
Adoption of E85 compatible engines will require much more ethanol and capacity to transport ethanol compared to today
Increasing biofuel blend Chemical stability during transportation Possible corrosion
2323