Growing a Sustainable Biofuels Industry: Economics, Environmental Considerations, and the Role of the Conservation Reserve Program

Biofuels are expected to be a major contributor to renewable energy in the coming decades under the Renewable Fuel Standard (RFS). These fuels have many attractive properties including the promotion of energy independence, rural development, and the reduction of national carbon emissions. However, several unresolved environmental and economic concerns remain. Environmentally, much of the biomass is expected to come from agricultural expansion and/or intensification, which may greatly affect the net environmental impact, and economically, the lack of a developed infrastructure and bottlenecks along the supply chain may affect the industry\u27s economic vitality. The approximately 30 million acres (12 million hectares) under the Conservation Reserve Program (CRP) represent one land base for possible expansion. Here, we examine the potential role of the CRP in biofuels industry development, by (1) assessing the range of environmental effects on six end points of concern, and (2) simulating differences in potential industry growth nationally using a systems dynamics model. The model examines seven land-use scenarios (various percentages of CRP cultivation for biofuel) and five economic scenarios (subsidy schemes) to explore the benefits of using the CRP. The environmental assessment revealed wide variation in potential impacts. Lignocellulosic feedstocks had the greatest potential to improve the environmental condition relative to row crops, but the most plausible impacts were considered to be neutral or slightly negative. Model simulations revealed that industry growth was much more sensitive to economic scenarios than land-use scenarios—similar volumes of biofuels could be produced with no CRP as with 100% utilization. The range of responses to economic policy was substantial, including long-term market stagnation at current levels of first-generation biofuels under minimal policy intervention, or RFS-scale quantities of biofuels if policy or market conditions were more favorable. In total, the combination of the environmental assessment and the supply chain model suggests that large-scale conversion of the CRP to row crops would likely incur a significant environmental cost, without a concomitant benefit in terms of biofuel production

Demonstration of the BioBaler harvesting system for collection of small-diameter woody biomass

As part of a project to investigate sustainable forest management practices for producing wood chips on the Oak Ridge Reservation (ORR) for the ORNL steam plant, the BioBaler was tested in various Oak Ridge locations in August of 2011. The purpose of these tests and the subsequent economic analysis was to determine the potential of this novel woody biomass harvesting method for collection of small-diameter, low value woody biomass. Results suggest that opportunities may exist for economical harvest of low-value and liability or negative-cost biomass. (e.g., invasives). This could provide the ORR and area land managers with a tool to produce feedstock while improving forest health, controlling problem vegetation, and generating local employment

The Economic Accessibility of CO2 Sequestration through Bioenergy with Carbon Capture and Storage (BECCS) in the US

Bioenergy with carbon capture and storage (BECCS) is one strategy to remove CO2 from the atmosphere. To assess the potential scale and cost of CO2 sequestration from BECCS in the US, this analysis models carbon sequestration net of supply chain emissions and costs of biomass production, delivery, power generation, and CO2 capture and sequestration in saline formations. The analysis includes two biomass supply scenarios (near-term and long-term), two biomass logistics scenarios (conventional and pelletized), and two generation technologies (pulverized combustion and integrated gasification combined cycle). Results show marginal cost per tonne CO2 (accounting for costs of electricity and CO2 emissions of reference power generation scenarios) as a function of CO2 sequestered (simulating capture of up to 90% of total CO2 sequestration potential) and associated spatial distribution of resources and generation locations for the array of scenario options. Under a near-term scenario using up to 206 million tonnes per year of biomass, up to 181 million tonnes CO2 can be sequestered annually at scenario-average costs ranging from $62 to$137 per tonne CO2; under a long-term scenario using up to 740 million tonnes per year of biomass, up to 737 million tonnes CO2 can be sequestered annually at scenario-average costs ranging from $42 to$92 per tonne CO2. These estimates of CO2 sequestration potential may be reduced if future competing demand reduces resource availability or may be increased if displaced emissions from conventional power sources are included. Results suggest there are large-scale opportunities to implement BECCS at moderate cost in the US, particularly in the Midwest, Plains States, and Texas

Short rotation woody crop decision support system

<p>From http://edis.ifas.ufl.edu/fr169</p> <p>Plantations of short-rotation woody crops (SRWCs) use fast-growing tree species that coppice, i.e., resprout from the stump, for repeated harvests that minimize planting costs. Under coppice management, 3–5 growth stages (coppices) can be harvested during the SWRC life (rotation or cycle), with each coppice lasting 2–10 years. SRWCs can produce wood for biomass, mulch, pulpwood, and other products, while also providing environmental services. For example, SRWC plantations can be irrigated with municipal wastewater or fertilized with treated biosolids or municipal compost, simultaneously increasing biomass production, reducing fertilizer costs, and intercepting nitrates and phosphates to reduce nutrient loading in waterways (Rosenqvist et al. 1997; Labrecque et al. 1997; Aronsson & Perttu 2001; Rockwood et al. 2004; Licht & Isebrands 2005; Langholtz et al. 2005; Mirck et al. 2005). SRWCs can also help build soil organic matter, recycle nutrients, and maintain vegetative cover to restore ecological functions of mined lands and other degraded lands (Stricker et al. 1993; Bungart & Huttl 2001; Rockwood et al. 2006). SRWCs established on agricultural lands as shelterbelts or buffer zones to protect riparian areas are likely to reduce soil erosion and runoff of agricultural inputs and improve wildlife habitat (Joslin & Schoenholtz 1997; Tolbert & Wright 1998; Thornton et al. 1998). In spite of these benefits, SRWC production is not always economically viable, and evaluating the economics of SRWC production is not easy.</p> <p>Because SRWCs can have multiple coppices per rotation, evaluating the economics of SRWCs is more complicated than that of conventional forestry. For example, in the evaluation of a pine plantation, the future value of harvested timber is discounted to the year of planting, and planting costs are subtracted to calculate the net present value (NPV) of one harvest rotation. NPV is then used to calculate land expectation value (LEV), i.e. the value of the land assuming the adoption of this forestry practice. However, in the case of SRWC systems, multiple coppices require that the value of every coppice is discounted to the beginning of the rotation. Furthermore, the costs associated with establishment of each rotation and coppice stage must be discounted differently, and determining the optimum harvest scheduling and replanting age is also more complicated than for conventional forestry. Theory behind economic evaluation and optimization of SRWCs is described by Medema & Lyon (1985), Tait (1986), and Smart & Burgess (2000). Economics of SRWC systems in Florida are evaluated by Langholtz et al.<em> </em>(2005; 2007).</p> <p> </p> <p>The Florida Institute of Phosphate Research (FIPR) has supported research in the development of SRWCs as commercial tree crops on phosphate mined lands in Florida. A product of this research is a SRWC Decision Support System (DSS) that can be used to evaluate the economic viability of SRWC systems. The DSS allows a user to input operational costs, planting densities, stumpage prices and other variables and calculate NPVs, LEV, equal annual equivalent (EAE), internal rate of return (IRR), and benefit/cost ratio of a SRWC system. The DSS is in the form of a Microsoft® Excel spreadsheet (Figure 1).</p> <p>The DSS allows users to enter variables in yellow cells in the “Inputs” section on the left side of the worksheet and view results in green cells in the “Outputs” section on the right. Input variables include stumpage price, capital cost, and costs of each start-up, rotation, coppice, and year. The user can specify what portion of total biomass is harvested, the number of coppices, and their harvest ages. Financial incentives for renewable energy or other environmental benefits can be incorporated on a per-ton basis in the stumpage price. The DSS uses growth and yield functions developed from measurements of two planting densities of <em>Eucalyptus amplifolia</em> in a field trial of SRWCs on a phosphate mine clay settling area (CSA) near Lakeland, FL. Yields for each growth stage are displayed, and can be modified by adjusting the initial planting density or by adjusting yields under the general parameters. Ranges of values used to assess SRWC production on CSAs are shown in Table 1.</p> <p>Under all possible combinations of the assumptions in Table 1, the profitability of <em>E. amplifolia</em> on CSAs varies widely, with LEVs ranging from -$909 to$6,740 acre^-1. Under the base case scenario identified in Table 1, the resulting LEV is $308 acre^-1 assuming an interest rate of 10$2,633 acre^-1 assuming an interest rate of 4%. LEV, EAE, and IRR results of the base case scenario under a range of discount rates and stumpage prices are shown in Table 2.</p> <p>This DSS does not automatically determine optimum harvest ages or the optimum number of stages per cycle, which both require dual optimization of continuous functions. DSS users can either input probable harvest and replanting ages and “zero in” inputs to maximize economic returns, or contact the authors to arrange a customized DSS. The DSS in either Excel or MathCad format could be modified to incorporate alternative growth and yield functions that might be developed for other SRWC species or conditions. For more information see the FIPR report “Commercial Tree Crops for Phosphate Mined Lands”, Rockwood et al. (in press).</p> <p> </p> <p>From http://edis.ifas.ufl.edu/fr169</p

Environmental and Socioeconomic Indicators for Bioenergy Sustainability as Applied to Eucalyptus

Eucalyptus is a fast-growing tree native to Australia and could be used to supply biomass for bioenergy and other purposes along the coastal regions of the southeastern United States (USA). At a farmgate price of $66 dry Mg−1, a potential supply of 27 to 41.3 million dry Mg year−1 of Eucalyptus could be produced on about 1.75 million ha in the southeastern USA. A proposed suite of indicators provides a practical and consistent way to measure the sustainability of a particular situation where Eucalyptus might be grown as a feedstock for conversion to bioenergy. Applying this indicator suite to Eucalyptus culture in the southeastern USA provides a basis for the practical evaluation of socioeconomic and environmental sustainability in those systems. Sustainability issues associated with using Eucalyptus for bioenergy do not differ greatly from those of other feedstocks, for prior land-use practices are a dominant influence. Particular concerns focus on the potential for invasiveness, water use, and social acceptance. This paper discusses opportunities and constraints of sustainable production of Eucalyptus in the southeastern USA. For example, potential effects on sustainability that can occur in all five stages of the biofuel life cycle are depicted

The economic feasibility of reclaiming phosphate mined lands with short-rotation woody crops in Florida

Clay settling areas Faustmann Non-timber benefit Phosphate-mined land Reclamation Restoration Short-rotation coppicing

U.S. Billion-Ton Update: Biomass Supply for a Bioenergy and Bioproducts Industry

The report, Biomass as Feedstock for a Bioenergy and Bioproducts Industry: The Technical Feasibility of a Billion-Ton Annual Supply (generally referred to as the Billion-Ton Study or 2005 BTS), was an estimate of 'potential' biomass based on numerous assumptions about current and future inventory, production capacity, availability, and technology. The analysis was made to determine if conterminous U.S. agriculture and forestry resources had the capability to produce at least one billion dry tons of sustainable biomass annually to displace 30% or more of the nation's present petroleum consumption. An effort was made to use conservative estimates to assure confidence in having sufficient supply to reach the goal. The potential biomass was projected to be reasonably available around mid-century when large-scale biorefineries are likely to exist. The study emphasized primary sources of forest- and agriculture-derived biomass, such as logging residues, fuel treatment thinnings, crop residues, and perennially grown grasses and trees. These primary sources have the greatest potential to supply large, reliable, and sustainable quantities of biomass. While the primary sources were emphasized, estimates of secondary residue and tertiary waste resources of biomass were also provided. The original Billion-Ton Resource Assessment, published in 2005, was divided into two parts-forest-derived resources and agriculture-derived resources. The forest resources included residues produced during the harvesting of merchantable timber, forest residues, and small-diameter trees that could become available through initiatives to reduce fire hazards and improve forest health; forest residues from land conversion; fuelwood extracted from forests; residues generated at primary forest product processing mills; and urban wood wastes, municipal solid wastes (MSW), and construction and demolition (C&amp;D) debris. For these forest resources, only residues, wastes, and small-diameter trees were considered. The 2005 BTS did not attempt to include any wood that would normally be used for higher-valued products (e.g., pulpwood) that could potentially shift to bioenergy applications. This would have required a separate economic analysis, which was not part of the 2005 BTS. The agriculture resources in the 2005 BTS included grains used for biofuels production; crop residues derived primarily from corn, wheat, and small grains; and animal manures and other residues. The cropland resource analysis also included estimates of perennial energy crops (e.g., herbaceous grasses, such as switchgrass, woody crops like hybrid poplar, as well as willow grown under short rotations and more intensive management than conventional plantation forests). Woody crops were included under cropland resources because it was assumed that they would be grown on a combination of cropland and pasture rather than forestland. In the 2005 BTS, current resource availability was estimated at 278 million dry tons annually from forestlands and slightly more than 194 million dry tons annually from croplands. These annual quantities increase to about 370 million dry tons from forestlands and to nearly 1 billion dry tons from croplands under scenario conditions of high-yield growth and large-scale plantings of perennial grasses and woody tree crops. This high-yield scenario reflects a mid-century timescale ({approx}2040-2050). Under conditions of lower-yield growth, estimated resource potential was projected to be about 320 and 580 million dry tons for forest and cropland biomass, respectively. As noted earlier, the 2005 BTS emphasized the primary resources (agricultural and forestry residues and energy crops) because they represent nearly 80% of the long-term resource potential. Since publication of the BTS in April 2005, there have been some rather dramatic changes in energy markets. In fact, just prior to the actual publication of the BTS, world oil prices started to increase as a result of a burgeoning worldwide demand and concerns about long-term supplies. By the end of the summer, oil prices topped $70 per barrel (bbl) and catastrophic hurricanes in the Gulf Coast shut down a significant fraction of U.S. refinery capacity. The following year, oil approached$80 per bbl due to supply concerns, as well as continued political tensions in the Middle East. The Energy Independence and Security Act of 2007 (EISA) was enacted in December of that year. By the end of December 2007, oil prices surpassed $100 per bbl for the first time, and by mid-summer 2008, prices approached$150 per bbl because of supply concerns, speculation, and weakness of the U.S. dollar. As fast as they skyrocketed, oil prices fell, and by the end of 2008, oil prices dropped below $50 per bbl, falling even more a month later due to the global economic recession. In 2009 and 2010, oil prices began to increase again as a result of a weak U.S. dollar and the rebounding of world economies