Abstract

Sustainable development of the cellulosic biofuel sector will require biomass supply strategies that can minimize the cost of cellulosic biomass. While the conversion cost of cellulosic biofuel has come down significantly in the last decade, there has not been as significant change in biomass cost. Several studies have provided optimization models for minimizing biomass cost. However, most of the existing models have focused on a modelling approach to optimize a single component of biomass cost, using an integrated biomass transportation model. While separate studies have provided a model on farmer supply response that includes farmer participation and the incentives offered by biorefineries. However, there is a gap in understanding the linkage between transport cost, farmer participation and farmer incentives on biomass cost. As a result most optimization models available in literature are focused on reducing biomass transport cost. This study shows that a strong linkage exists between biomass transport cost and incentives offered to farmers. A holistic biomass supply model is developed that incorporates an integrated biomass transportation model, as well as the relationship between farmer incentives and farmer participation using data from some recent surveys. The holistic model enables a trade-off between increase in incentives and reduction in transport cost. This will help companies develop sustainable long term supply contracts between biorefineries and farmers. The study shows that biorefineries that focus on minimizing biomass cost through optimization of transport cost alone, without considering its relationships with farmer supply response will incur 15 to 20% higher biomass cost.

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