Optimization of Cost and Greenhouse Gas Emissions of a Dedicated Energy Crop Supply System to Biorefineries in Tennessee[i]Burton C. English, Professor, Dept. of Agricultural and Resource EconomicsUniversity of Tennessee (Knoxville, TN) Zidong Wang,Student, Dept. of Agricultural and Resource Economics,University of Tennessee (Knoxville, TN) T. Edward Yu,Asst. Professor, Dept. of Agricultural and Resource Economics,University of Tennessee (Knoxville, TN) James A. Larson,Professor, Dept. of Agricultural and Resource Economics,University of Tennessee (Knoxville, TN)
Producing biofuels from lignocellulosic biomass (LCB) has been suggested as a way to mitigate dependence on fossil fuels and production of greenhouse gasses (GHG). The Renewable Fuel Standard (RFS2) in the Energy Independence and Security Act (EISA) of 2007 mandates 16 billion gallons of LCB-based biofuels per year for transportation by 2022 in the United States. Considerable LCB feedstock will be needed to fulfill this goal.
Switchgrass[ii] is a perennial grass that has great potential as an LCB-based feedstock for biofuels production in the southeastern United States. However, the biorefinery plant-gate cost of switchgrass could be significant. Switchgrass is bulky making it relatively expensive to harvest and transport considering its energy content. Feedstock is harvested in a limited period of the year so the requirements for storage can be enormous and costly. In addition, weathering and precipitation during storage cause switchgrass dry matter losses and add to the cost of storage. The opportunity cost[iii] of converting cropland to switchgrass production will also influence the willingness of farmers to grow switchgrass.
Activities in a switchgrass supply chain will produce levels of GHG that are different from current land use activities. Land use change can lead to changes in emissions as different crops have different soil carbon sequestration rates. In addition, with various N fertilizer application rates and application methods, N2O emissions from different crops also vary. The application of fertilizer and chemicals, utilization of farm machinery for switchgrass production, and the production of those chemicals and equipment create GHG. Moreover, transportation of switchgrass to the biorefinery will generate GHG. Emissions from changes in land use are spatially oriented as soil type and quality could vary considerably among regions. The availability of land for switchgrass production and transportation infrastructure may also vary by region.
This study examined a switchgrass feedstock supply chain for a 50-million gallon per year biorefinery located in Tennessee taking into account both economic costs and GHG. Since some factors such as land conversion and harvest/storage system have an effect on both the economic costs and GHG, a trade-off might exist between these two objectives if one factor has a positive impact on cost [GHG] while a negative influence on GHG [cost].
A multi-objective geospatial mathematical programming model was developed to search for the optimal solutions considering tradeoffs in costs and GHG in a switchgrass supply chain in Tennessee. The components of the switchgrass supply chain considered in this study included establishment, production, harvest, storage, and transportation. By integrating economic (cost) and GHG criteria in the objective function, the respective location of the biorefinery and feedstock draw area with different emphasizes on economic and environmental factors can be identified in the state. Also, based on the output of each determined location, a tradeoff curve between costs and GHG from feedstock supply chain activities to the biorefinery can be evaluated.
Under a minimum cost criterion, a biorefinery would be located in Rutherford County in south-central Tennessee with a $70/ton feedstock cost. Nearly 80,000 acres of land were converted to switchgrass production and GHG were 124 CO2e (CO2 equivalent) kg/ton. When GHG were minimized, the location shifts to Obion County in north-west Tennessee with 80,819 acres of land converted into switchgrass. The plant-gate cost of switchgrass surged to $130/ton, but emissions were reduced by 64% to 45 CO2e kg/ton.
The major difference between the two solutions occurs from land conversion. With cost minimization, about 99% of land was converted from hay and pasture to switchgrass. The opportunity cost as a result was $2.50/ton (pasture and hay land rent/yield) and emissions from land conversion were 38 CO2e kg/ton. Under GHG minimization, land was converted from conventional crops instead of hay and pasture, which led to a higher opportunity cost of $61/ton.
An alternative optimal site considering both objectives was located in Haywood County in south-west Tennessee. Relative to the cost minimization site in Rutherford County, the cost of the switchgrass supply chain in the alternative optimal site was about 9% higher ($76 vs. $70 per ton), while emissions were cut by 51% from 124 CO2e kg/ton to 61 CO2e kg/ton.
Both feedstock costs and GHG from switchgrass supply chain activities were sensitive to the type of land converted into switchgrass production. The conversion of hay and pasture land into switchgrass production had the lowest opportunity cost but led to increased emissions. By comparison, the conversion of corn, wheat, and soybeans to switchgrass production had higher opportunity cost but resulted in a reduction in GHG. The type of land use change also affected the density of the feedstock supply region due to the spatial heterogeneity of different types of land, affecting transportation-related costs and emissions. A tradeoff relationship was found to exist between cost and GHG for the switchgrass supply chain. The imputed cost to reduce one unit of GHG from a high emission level was initially modest; and increased as emissions were further mitigated. This implied that the location of switchgrass production and the resulting changes in crop production should be considered in targeting government incentives to encourage switchgrass-based biofuel production in the state and the southeastern region. Biorefinery location has a large impact on land use change and therefore emissions of GHG.
[i] Acknowledgement: This study was partially funded by Tennessee Biofuel Initiative, Southeastern Sun Grant Center, and Southeastern Partnership for Integrated Biomass Supply Systems
[ii] Switchgrass, a perennial grass native to North America, has a high potential for biofuel production. It has high yields and a lower demand for fertilizer and chemicals than row crops. With abundant sunshine and precipitation, the southeastern states of the U.S. such as Tennessee have comparative advantages for switchgrass production.
[iii] Opportunity cost is estimated as the profit of the land in the current land use or the rental value of the land for the production of agricultural crops whichever is larger.