skip to main content
OSTI.GOV title logo U.S. Department of Energy
Office of Scientific and Technical Information

Title: An economic evaluation of alternative biofuel deployment scenarios in the USA

Abstract

Energy market conditions have shifted dramatically since the USA renewable fuel standards (RFS1 in 2005; RFS2 in 2007) were enacted. The USA has transitioned from an increasing dependence on oil imports to abundant domestic oil production. In addition, increases in the use of ethanol, the main biofuel currently produced in the USA, is now limited by the blend wall constraint. Given this, the current study evaluates alternative biofuel deployment scenarios in the USA, accounting for changes in market conditions. The analysis is performed with a general equilibrium model that reflects the structure of the USA biofuel market as the transition to advanced biofuel begins. Results suggest that ethanol consumption would increase, albeit slowly, if current biofuel deployment rates of about 10% are maintained as persistently lower oil prices lead to a gradual increase in the consumption of liquid transportation fuels. Without the blend wall constraint, this study finds that the overall economic impact of a full implementation of the USA RFS2 policy is largely neutral before 2022. However, the economic impacts become slightly negative under the blend wall constraint since more expensive bio-hydrocarbons are needed to meet the RFS2 mandates. Results for a scenario with reduced advanced biofuel deployment basedmore » on current policy plans show near neutral economic impacts up to 2027. This scenario is also consistent with another scenario where the volume of bio-hydrocarbons deployed is reduced to adjust for its higher cost and energy content relative to deploying the mandated RFS2 advanced biofuel volumes as ethanol. The important role of technological change is demonstrated under pioneer and accelerated technology scenarios, with the latter leading to neutral or positive economic effects up to 2023 under most blend wall scenarios. Here, all scenarios evaluated in this study are found to have positive long-term economic benefits for the USA economy.« less

Authors:
 [1]
  1. Oak Ridge National Lab. (ORNL), Oak Ridge, TN (United States)
Publication Date:
Research Org.:
Oak Ridge National Lab. (ORNL), Oak Ridge, TN (United States)
Sponsoring Org.:
USDOE Office of Energy Efficiency and Renewable Energy (EERE)
Contributing Org.:
Environmental Sciences Division, Oak Ridge National Laboratory, Oak Ridge, TN, United States
OSTI Identifier:
1361362
Grant/Contract Number:
AC05-00OR22725
Resource Type:
Journal Article: Accepted Manuscript
Journal Name:
AIMS Energy
Additional Journal Information:
Journal Volume: 5; Journal Issue: 3; Journal ID: ISSN 2333-8334
Country of Publication:
United States
Language:
English
Subject:
09 BIOMASS FUELS; biofuels; oil market shift; economic impacts; blend wall; technology learning

Citation Formats

Oladosu, Gbadebo. An economic evaluation of alternative biofuel deployment scenarios in the USA. United States: N. p., 2017. Web. doi:10.3934/energy.2017.3.374.
Oladosu, Gbadebo. An economic evaluation of alternative biofuel deployment scenarios in the USA. United States. doi:10.3934/energy.2017.3.374.
Oladosu, Gbadebo. Wed . "An economic evaluation of alternative biofuel deployment scenarios in the USA". United States. doi:10.3934/energy.2017.3.374. https://www.osti.gov/servlets/purl/1361362.
@article{osti_1361362,
title = {An economic evaluation of alternative biofuel deployment scenarios in the USA},
author = {Oladosu, Gbadebo},
abstractNote = {Energy market conditions have shifted dramatically since the USA renewable fuel standards (RFS1 in 2005; RFS2 in 2007) were enacted. The USA has transitioned from an increasing dependence on oil imports to abundant domestic oil production. In addition, increases in the use of ethanol, the main biofuel currently produced in the USA, is now limited by the blend wall constraint. Given this, the current study evaluates alternative biofuel deployment scenarios in the USA, accounting for changes in market conditions. The analysis is performed with a general equilibrium model that reflects the structure of the USA biofuel market as the transition to advanced biofuel begins. Results suggest that ethanol consumption would increase, albeit slowly, if current biofuel deployment rates of about 10% are maintained as persistently lower oil prices lead to a gradual increase in the consumption of liquid transportation fuels. Without the blend wall constraint, this study finds that the overall economic impact of a full implementation of the USA RFS2 policy is largely neutral before 2022. However, the economic impacts become slightly negative under the blend wall constraint since more expensive bio-hydrocarbons are needed to meet the RFS2 mandates. Results for a scenario with reduced advanced biofuel deployment based on current policy plans show near neutral economic impacts up to 2027. This scenario is also consistent with another scenario where the volume of bio-hydrocarbons deployed is reduced to adjust for its higher cost and energy content relative to deploying the mandated RFS2 advanced biofuel volumes as ethanol. The important role of technological change is demonstrated under pioneer and accelerated technology scenarios, with the latter leading to neutral or positive economic effects up to 2023 under most blend wall scenarios. Here, all scenarios evaluated in this study are found to have positive long-term economic benefits for the USA economy.},
doi = {10.3934/energy.2017.3.374},
journal = {AIMS Energy},
number = 3,
volume = 5,
place = {United States},
year = {Wed May 03 00:00:00 EDT 2017},
month = {Wed May 03 00:00:00 EDT 2017}
}

Journal Article:
Free Publicly Available Full Text
Publisher's Version of Record

Save / Share:
  • This study evaluates the global economic effects of the USA renewable fuel standards (RFS2), and the potential contribution from advanced biofuels. Our simulation results imply that these mandates lead to an increase of 0.21 percent in the global gross domestic product (GDP) in 2022, including an increase of 0.8 percent in the USA and 0.02 percent in the rest of the world (ROW); relative to our baseline, no-RFS scenario. The incremental contributions to GDP from advanced biofuels in 2022 are estimated at 0.41 percent and 0.04 percent in the USA and ROW, respectively. Although production costs of advanced biofuels aremore » higher than for conventional biofuels in our model, their economic benefits result from reductions in oil use, and their smaller impacts on food markets compared with conventional biofuels. Thus, the USA advanced biofuels targets are expected to have positive economic benefits.« less
  • The development of a cellulosic biofuel industry utilizing domestic biomass resources is expected to create opportunities for economic growth resulting from the construction and operation of new biorefineries. We applied an economic input-output model to estimate potential economic impacts, particularly gross job growth, resulting from the construction and operation of biorefineries using three different technology pathways: 1) cellulosic ethanol via biochemical conversion in Iowa, 2) renewable diesel blendstock via biological conversion in Georgia, and 3) renewable diesel and gasoline blendstock via fast pyrolysis in Mississippi. Combining direct, indirect, and induced effects, capital investment associated with the construction of a biorefinerymore » processing 2,000 dry metric tons of biomass per day (DMT/day) could yield between 5,960 and 8,470 full-time equivalent (FTE) jobs during the construction period. Fast pyrolysis biorefineries produce the most jobs on a project level thanks to the highest capital requirement among the three pathways. Normalized for one million dollars of capital investment, the fast pyrolysis biorefineries are estimated to yield slighter more jobs (12.1 jobs) than the renewable diesel (11.8 jobs) and the cellulosic ethanol (11.6 jobs) biorefineries. While operating biorefineries is not labor-intensive, the annual operation of a 2,000 DMT/day biorefinery could support between 720 and 970 jobs when the direct, indirect, and induced effects are considered. The major factor, which results in the variations among the three pathways, is the type of biomass feedstock used for biofuels. The agriculture/forest, services, and trade industries are the primary sectors that will benefit from the ongoing operation of biorefineries.« less
  • Sound crop and land management strategies can maintain land productivity and improve the environmental sustainability of agricultural crop and feedstock production. This study evaluates the improvement of water sustainability through an integrated landscaping management strategy, where landscaping design, land management operations, crop systems, and agricultural best management practices (BMPs) play equal roles. The strategy was applied to the watershed of the South Fork Iowa River in Iowa, with a focus on implementing riparian buffers and converting low productivity land to provide cellulosic biomass while benefiting soil and water quality. The Soil and Water Assessment Tool (SWAT) was employed to simulatemore » the impact of integrated landscape design on nutrients, suspended sediments, and flow on the watershed and subbasin scales. First, the study evaluated the representation of buffer strip as a vegetative barrier and as a riparian buffer using trapping efficiency and area ratio methods in SWAT. For the riparian buffer, the area ratio method tends to be more conservative, especially in nitrate loadings, while the trapping efficiency method generates more optimistic results. The differences between the two methods increase with buffer width. The two methods may not be comparable for the field-scale vegetative barrier simulation because of limitations in model spatial resolution. Landscape scenarios were developed to quantify water quality under (1) current land use, (2) partial land conversion to switchgrass, and (3) riparian buffer implementation. Results show that when low productivity land (15.2% of total watershed land area) is converted to grow switchgrass, suspended sediment, total nitrogen, total phosphorus, and nitrate loadings are reduced by 69.3%, 55.5%, 46.1%, and 13.4%, respectively, in the watershed surface streams. The reduction was less extensive when riparian buffer strips (30 m or 50 m) were applied to the stream network at 1.4% of total land area in the watershed. At the subbasin level, the degree of nutrient and suspended sediment reduction varies extensively, ranging from a few percent up to 55%. Results indicate that effective landscape design on current agricultural land can potentially bring marked improvements in water quality and soil erosion control while producing food and fuel feedstock in the South Fork Iowa River watershed. The concept can be integrated with other watershed management programs to improve sustainability of land, water, and the ecosystem.« less
  • The development of a cellulosic biofuel industry utilizing domestic biomass resources is expected to create opportunities for economic growth resulting from the construction and operation of new biorefineries. We applied an economic input-output model to estimate potential economic impacts, particularly gross job growth, resulting from the construction and operation of biorefineries using three different technology pathways: (i) cellulosic ethanol via biochemical conversion in Iowa, (ii) renewable diesel blendstock via biological conversion in Georgia, and (iii) renewable diesel and gasoline blendstock via fast pyrolysis in Mississippi. Combining direct, indirect (revenue- and supply-chain-related), and induced effects, capital investment associated with the constructionmore » of a biorefinery processing 2000 dry metric tons of biomass per day (DMT/day) could yield between 5960 and 8470 full-time equivalent (FTE) jobs during the construction period, depending on the biofuel pathways. Fast pyrolysis biorefineries produce the most jobs on a project level thanks to the highest capital requirement among the three pathways. Normalized on the scale of $1 million of capital investment, the fast pyrolysis biorefineries are estimated to yield slighter higher numbers of jobs (12.1 jobs) than the renewable diesel (11.8 jobs) and the cellulosic ethanol (11.6 jobs) biorefineries. While operating biorefineries is not labor-intensive, the annual operation of a 2000 DMT/day biorefinery could support between 720 and 970 jobs when the direct, indirect, and induced effects are considered. The major factor, which results in the variations among the three pathways, is the type of biomass feedstock used for biofuels. Unlike construction jobs, these operation-related jobs are necessary over the entire life of the biorefineries. In conclusion, our results show that indirect effects stimulated by the operation of biorefineries are the primary contributor to job growth. The agriculture/forest, services, and trade industries are the primary sectors that will benefit from the ongoing operation of biorefineries.« less