Biofuel Production

This project contributes to understanding and enhancing socioeconomic and environmental benefits of biofuels through modeling the effect of prices and policy incentives on fuel markets for “hard-to-decarbonize” transportation sectors. The main analytical tool used in this project is the BioTrans model, originally developed to assess and quantify the economic and energy security benefits of biofuels for light-duty vehicles and bioproducts. This project restructured and updated the BioTrans model to assess biofuels for the hard-to-decarbonize transportation sectors such as the aviation and shipping.

The BioTrans model is a market equilibrium model assessing the biofuel supply chain for a 30-year horizon with annual periods. It is a national (United States) model and has states as its spatial units. The model maximizes social surplus, which implies minimizing the costs, while meeting transportation fuel demands. While it takes transportation fuel markets into account endogenously, land allocation decisions and non-biofuel uses of biomass are considered exogenously. The model considers potential synergies or competition for the use of biomass among the different transportation segments as well as the competition between new biofuels and incumbent petroleum-based fuels.

The diagram in Figure 1 summarizes the main components included in BioTrans as of June 2024.

The biomass feedstocks and petroleum products in blue rectangles are those for which the model includes supply curves, and the transportation segments in red boxes are those for which the model includes demand curves. The intermediate activities reflect the steps required to convert biomass into biofuel, and the intermediate products are biofuels required for blending and retail. Each commodity must satisfy a material balance equation so that its sources and sinks match with each other. 

The ability to explore the interaction of federal and state-level biofuel policies and their impact on the volume and mix of biofuels produced in the United States is one of the key attributes of the model. As of June 2024, BioTrans contains representations of the following biofuel-related policies and incentives:
Federal
-    Renewable Fuel Standard
-    Inflation Reduction Act (IRA) tax credits (Section 13201, Section 13202, Section 13203, Section 13704)
State
-    California Low Carbon Fuel Standard
-    Oregon Clean Fuel Program
-    SAF tax credits
-    Biodiesel and biomass-based diesel blending mandates

The code for the BioTrans model is available at https://code.ornl.gov/bioenergy/biotrans_model

This workshop examines the potential benefits, feasibility, and barriers to the use of biofuels in place of heavy fuel oil (HFO) and marine gas oil for marine vessels. More than 90% of world’s shipped goods
travel by marine cargo vessels powered by internal combustion (diesel) engines using primarily low-cost residual HFO, which is high in sulfur content. Recognizing that marine shipping is the largest source of
anthropogenic sulfur emissions and is a significant source of other pollutants including particulates, nitrogen oxides, and carbon dioxide (CO2), the International Maritime Organization enacted regulations to
lower the fuel sulfur content from 3.5 wt.% to 0.5 wt.% in 2020. These regulations require ship operators either to use higher-cost, low-sulfur HFO or to seek other alternatives for reducing sulfur emissions (i.e.,
scrubbers, natural gas, distillates, and/or biofuels). The near-term options for shipowners to comply with regulations include fueling with low-sulfur HFO or distillate fuels or installing emissions control systems.
However, few refineries are equipped to produce low-sulfur HFO. Likewise, the current production rates of distillates do not allow the necessary expansion required to fuel the world fleet of shipping vessels
(which consume around 330 million metric tons). This quantity is more than twice that used in the United States for cars and trucks. The other near-term option is to install emission control systems, which also
requires a significant investment. All of these options significantly increase operational costs. Because of such costs, biofuels have become an attractive alternative since they are inherently low in sulfur and
potentially also offer greenhouse gas benefits. Based on this preliminary assessment, replacing HFO in large marine vessels with minimally processed, heavy biofuels appears to have potential as a path to
reduced emissions of sulfur, CO2, and criteria emissions. Realizing this opportunity will require deeper knowledge of (1) the combustion characteristics of biofuels in marine applications, (2) their compatibility
for blending with conventional marine fuels (including HFO), (3) needs and costs for scaling up production and use, and (4) a systems assessment of their life cycle environmental impacts and costs. It is
recommended that a research program investigating each of these aspects be undertaken to better assess the efficacy of biofuels for marine use.