Asset fixity and economic competitiveness of US ethanol production. (March 2019)

• Record Type: Journal Article
• Authors: Wang, Zidong; Wlodarz, Marta; McCarl, Bruce
• Is Part Of: Biomass and bioenergy. Volume 122(2019)
• Page Start: 37
• Page End: 44
• Publication Date: 2019-03
• Subjects: Asset fixity -- Cellulosic ethanol -- Mathematical modeling -- Market penetration; Biomass energy -- Periodicals; Biomass -- Periodicals; Energy-Generating Resources -- Periodicals; Bioénergie -- Périodiques; 333.9539
• DOI: 10.1016/j.biombioe.2019.01.003
• Languages: English
• ISSNs: 0961-9534

Abstract

Abstract: Once refineries are built they become fixed assets in location, general class of feedstocks that can be used and basic technology employed. These fixed characteristics are ignored by most existing national-level biofuel modeling analyses. In this study, we introduced such characteristics (asset fixity) into a model that is used in the USEPA (Environmental Protection Agency) Renewable Fuel Standard Analysis. Analysis is then done on renewable fuel issues with and without considering such fixity. The results show that neglecting fixity upwardly biases estimates of renewable fuel market penetration. Also ignoring fixity results in unrealistic location and feedstock usage for simulated refining. Additionally under asset fixity the ethanol price needed to make cellulosic ethanol economically competitive is substantially higher than current levels and predictions of models ignoring the fixity, reaching $1.06/liter. Highlights: Biorefinery construction requires significant up-front cost and becomes fixed in location and limited to certain feedstocks. Neglecting asset fixity upwardly biases ethanol penetration by allowing biorefineries to relocate and change feedstocks. Neglecting asset fixity has plants jumping all over the country without continuity. A high ethanol price ($1.06/liter) is needed for cellulosic ethanol to be cost competitive under asset fixity.