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Economics of Biofuel FeedstockDr. Cole Gustafson April 10, 2012

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Page 1: Economics biofuel041012 gustafson

“Economics of Biofuel Feedstock”

Dr. Cole GustafsonApril 10, 2012

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Corn vs. Biofuel Feedstocks• Economics of Corn Production

– Market price– Low cost of production

• Feedstock Economics– Contract/Price– Sustainable– Lower GHG– Low Cost– Scaleable

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North Dakota Projects

• Wheat straw to biofuel• Energy beets• Flair gas to fertilizer• USDA feedstock market standards• Economics of corn stalk harvesting

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Energy Beet Plant Design

• 20 mgy• Feedstock, 20 miles, 30,000 acres• 70% thermal energy from feedstock• Capital investment $40 million w/ working

capital

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Energy Beet Industry Development• Phase I

– 2009 APUC, $58,245, Initial Feasibility– 2009 REC, $330,000, Burn Test, Yield Trials,

Juice Storage, Grower Education,

• Phase II– 2011 APUC, $73,317, EPA Advanced Biofuel– 2011 REC, $1,000,000, Frontend Processing,

Yield Trials, Juice Storage, Promotion

• Phase III– Commercialization

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Year Conventional Biofuel

Advanced Biofuel

Cellulosic Biofuel Biomass-based Diesel

2008 9.0

2009 10.5 0.60 0.5

2010 12.0 0.95 0.10 0.7

2011 12.6 1.35 0.25 0.8

2012 13.2 2.00 0.50 1.0

2013 13.8 2.75 1.00 *

2014 14.4 3.75 1.75 *

2015-2022 15.0 5.50-21.0 3.00-16.0 *

2007 Energy Independence and Security Act

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Biomass Contracts

• What, When, Where?• Moisture• Premiums/Discounts

– Foreign matter (dirt)– Purity– Spoilage

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Highly Variable Quality

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Lower Than Expected Quantity

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Logistics and Transportation

• Wheat straw biorefinery

• Is collection economically feasible?

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Potential Wheat Straw Supply

• 1.16 million tons (bone dry)• 10% moisture• Plant height 34.6”• Combine height 7.6”• Producers are willing to supply• Adequate time to harvest

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Farm Focus Group

Reason Percent Response Number of Participants

Too distant to haul 0.00% 0

No market 38.89% 7

Environmental concern 11.11% 2

Fertility loss 50.00% 9

Loss of wildlife habitat 0.00% 0

No time 0.00% 0

Total 100.00% 18

Table 2.7. Reasons Why Participants Do Not Collect More Straw

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Farm Focus Group

Participant Number Wheat Straw ($/ton)1 - 2 35.00 3 40.00 4 30.00 5 25.00 6 20.00 7 25.00 8 50.00 9 40.00 10 50.00 11 20.00 12 30.00 13 15.00 14 15.00 15 15.00 16 50.00 Average 30.67

Table 2.12. Price of Wheat Straw Participants Willing to Accept

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Potential Constraints

1) Rotary Combines2) Tenant vs. Land Owner3) USDA/NRCS

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Stover Harvest to Maintain Carbon

Continuous Corn Corn Soybean Rotation

Grain Yield

Stover Plow Chisel/No Till

Plow Chisel/No Till

Bu/ac t/ac t/ac t/ac t/ac t/ac

103 2.2 0.0 0.0 0.0 0.0

156 3.3 0.0 1.0 0.0 0.0

200 4.5 1.1 2.1 0.0 0.9

259 5.6 2.2 3.2 0.0 2.1

312 6.7 3.3 4.3 0.9 3.2

363 7.8 4.4 5.4 2.1 4.3

415 8.9 5.5 6.6 3.2 5.4 Sou

rce:

PR

X 2

010,

Joh

nson

200

6

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Competition

• Who else is interested in biomass?– Livestock bedding– Livestock feed– Fertility– Ground Cover– ????

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Questions?

[email protected](701) 231-7096