Biofuel Distribution

Despite recent claims to the contrary, plant-based fuels developed in economically and environmentally sensible ways can contribute significantly to the nation’s— indeed, the world’s—energy security while providing a host of benefits for many people worldwide.

A primary objective of current U.S. biofuel law – the “Energy Independence and Security Act of 2007” (EISA) – is to reduce dependence on imported oil, but the law also requires biofuels to meet carbon emission reduction thresholds relative to petroleum fuels. EISA created a renewable fuel standard with annual targets for U.S. biofuel use that climb gradually from 9 billion gallons per year in 2008 to 36 billion gallons (or about 136 billion liters) of biofuels per year by 2022. The most controversial aspects of U.S. biofuel policy have centered on the global social and environmental implications of land use. In particular, there is an ongoing debate about whether “indirect land use change” (ILUC) would cause biofuels to become a net source, rather than sink, of carbon emissions. Estimates of ILUC induced by biofuel production can only be inferred through modeling. This paper evaluates how model structure, underlying assumptions, and the representation of policy instruments influence the results of U.S. biofuel policy simulations. The analysis shows that differences in these factors can lead to divergent model estimates of land use and economic effects. Model estimates of the net conversion of forests and grasslands induced by U.S. biofuel policy range from 0.09 ha/1000 gallons described in this paper to 0.73 ha/1000 gallons from early studies in the ILUC change debate. We note that several important factors governing LUC change remain to be examined. Challenges that must be addressed to improve global land use change modeling are highlighted.

Country borders have been chosen as system boundaries to inventory GHG emissions under the Kyoto Protocol. The use of country boundaries is clear and allows summing over all countries. The country inventories purposefully account for where and when both fossil-fuel combustion emissions occur, and changes in the biological stocks of carbon occur. The approach can be widely adopted, but this accounting is hampered by uncertain data (1, 2) and two basic shortcomings: Not all countries are required to report, and not all biological carbon stocks are inventoried. A first step to improve inventories would be to address these issues through concerted cooperation to improve the reliability of land cover and carbon stock data and establish comprehensive accounting of current stocks.

ORNL Report ORNL/TM-2010-120.
The purpose of this study is to summarize the various barriers to more widespread distribution of biofuels through our common carrier fuel distribution system, which includes pipelines, barges and rail, fuel tankage, and distribution terminals, and with a special focus on biofuels, which may come into increased usage in the future. Addressing these barriers is necessary to allow the more widespread utilization and distribution of biofuels, in support of a renewable fuels standard and possible future low-carbon fuel standards. By identifying these barriers early, for fuels not currently in widespread use, they can be addressed in related research and development. These barriers can be classified into several categories, including operating practice, regulatory, technical, and acceptability barriers. Possible solutions to these issues are discussed, including compatibility evaluation, changes to biofuels, regulatory changes, and changes in the distribution system or distribution practices. No actual experimental research has been conducted in the writing of this report, but results are used to develop recommendations for future research and additional study as appropriate.

Agricultural markets often feature significant transport costs and spatially distributed production and processing which causes spatial imperfect competition. Spatial economics considers the firms’ decisions regarding location and spatial price strategy separately, usually on the demand side, and under restrictive assumptions. Therefore, alternative approaches are needed to explain, e.g., the location of new ethanol plants in the U.S. at peripheral as well as at central locations and the observation of different spatial price strategies in the market. We use an agent-based simulation model to analyze location and spatial pricing in a general model under multi-firm competition, two-dimensional space, and a continuum of potential price strategies. The results show, e.g., that depending on the location of a processor, different price strategies can be observed, spatial price discrimination can increase with the number of competitors, and elasticity in the producers’ supply functions can be identified as stabilizing factor of processor’s location.

Traffic flows in the U.S. have been affected by the substantial increase and, as of January 2009, decrease in biofuel production and use. This paper considers a framework to study the effect on grain transportation flows of the 2005 Energy Act and subsequent legislation, which mandated higher production levels of biofuels, e.g. ethanol and biodiesels. Future research will incorporate changes due to the recent economic slowdown.

This paper examines the possibilities of breaking into the cellulosic ethanol market in south Louisiana via strategic feedstock choices and the leveraging of the area’s competitive advantages. A small plant strategy is devised whereby the first-mover problem might be solved, and several scenarios are tested using Net Present Value analysis.

Ethanol use in the U.S. rose sharply in recent years due to public policy and a spike in petroleum prices, and remains high. Public support for ethanol includes mandated minimum levels of use nationwide. However, rather little is known about consumer demand for ethanol and much less about demand by type of blend and ethanol source. We used trial survey data and conjoint analysis to overcome the lack of historical data on consumers’ preferences for ethanol blend fuels. Preliminary findings based on responses from vehicle drivers in Missouri suggest that price is the primary factor behind fuel preferences. The disclosure of ethanol originated from woody feedstocks had a significant effect on preferences ceteris paribus. Ethanol blends of 20 percent had a negatively non-significant statistical effect compared to no-ethanol fuels or those with a 10 percent content. These findings will be tested using different models expanded to a nationwide pool of motor vehicle drivers.

This article addresses development of the Illinois ethanol industry through the period 2007-2022, responding to the ethanol production mandates of the Renewable Fuel Standard by the U.S. Environmental Protection Agency. The planning for corn-based and cellulosic ethanol production requires integrated decisions on transportation, plant location, and capacity. The objective is to minimize the total system costs for transportation and processing of biomass, transportation of ethanol from refineries to the blending terminals and demand destinations, capital investment in refineries, and by-product credits. A multi-year transshipment and facility location model is presented to determine the optimal size and time to build each plant in the system, the amount of raw material processed by individual plants, and the distribution of bioenergy crops and ethanol.

This paper examines the impact of declining energy prices on biofuels production and use and its implications to agricultural commodity markets. It uses PEATSim, a dynamic partial equilibrium, multi-commodity, multi-country global trade model of the agriculture sector to analyze the interaction between biofuel, crop and livestock sectors. The ability of countries to achieve their energy goals will be affected by future direction of petroleum prices. A 50 percent decline in petroleum prices (absent of mandates) would result in rapid decline in biofuel use worldwide accompanied by a decline in feedstock and biofuel prices. About a 21 percent decline in U.S. cost of ethanol production is needed to make ethanol competitive with gasoline and to offset the effect of lower energy prices.