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Biofuel Economics

Biofuel Economics. Intensive Program in Biorenewables Ames, Iowa June 9, 2009 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911. World GDP Growth. Source: IMF, Global Insight, FAPRI. GDP Growth by Market. Source: IMF, Global Insight, FAPRI.

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Biofuel Economics

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  1. Biofuel Economics Intensive Program in Biorenewables Ames, Iowa June 9, 2009 Chad Hart Assistant Professor/Grain Markets Specialist chart@iastate.edu 515-294-9911

  2. World GDP Growth Source: IMF, Global Insight, FAPRI

  3. GDP Growth by Market Source: IMF, Global Insight, FAPRI

  4. GDP Growth by Country Source: IMF, Global Insight, FAPRI

  5. Oil Prices Source: IMF, Global Insight, FAPRI

  6. Ethanol Prices Source: FAPRI

  7. Ethanol Imports Source: FAPRI

  8. Biodiesel Exports Source: FAPRI

  9. Argentine Biodiesel Production Mostly soybean oil, biodiesel mandate (B5) starts in 2010 Source: FAPRI

  10. Brazilian Biofuel Production Continues to supply ethanol exports to the rest of the world Mostly soybean oil, biodiesel mandate (B5) by 2010 Source: FAPRI

  11. Canadian Ethanol Production Roughly 70% corn, 30% wheat Source: FAPRI

  12. Chinese Ethanol Production Mostly corn-based Source: FAPRI

  13. EU Biofuel Production Roughly 75% rapeseed oil, 18% soybean oil, and 7% sunflower oil Approximately 58% wheat, 16% corn, and 26% barley Source: FAPRI

  14. South Asia Biofuel Production Molasses is the major feedstock Palm oil is the feedstock, consumption mandate started this year Source: FAPRI

  15. U.S. Biofuel Production Just over 1 billion gallons of cellulosic by 2018 Roughly 60% soybean oil and 40% other fats and oils Source: FAPRI

  16. Spectrum of Biofuels • Grain/Sugar Ethanol • Biodiesel • Green Gasoline/Diesel • Cellulosic Ethanol • Butanol • Pyrolysis Liquids • Syngas Liquids Most Mature Least Mature Source: NREL, 2006

  17. Renewable Fuels Standard (RFS) 50% GHG Emission Reduction 60% GHG Emission Reduction 20% GHG Emission Reduction If construction started after Dec. 2007

  18. Dept. of Energy Projections Source: Energy Information Administration, Annual Energy Outlook 2009

  19. Currently Available Biomass Source: NREL, 2005

  20. Biofuel Challenges • Production costs • Conversion, ag. production, etc. • Infrastructure barriers • Developing supply chain for biomass • Continued development of biofuel distribution system • Growth in biofuel-compatible vehicles

  21. Biofuel Challenges • Investment risks • Higher capital costs, emerging technology • Biomass production shifts • Inducing farmers to produce new crops • Consumer understanding • About the fuels • About the tradeoffs

  22. Progress on Cellulosic Costs Source: NREL, 2007

  23. Comparing Costs, 150 Million Gallons Gasoline Equivalent, 2005 $ Source: Wright and Brown, Biofuels, Bioproducts, & Biorefining 1(2007):49-56

  24. Infrastructure Costs Costs for Agricultural Straws and Switchgrass Source: DOE, Biomass Multi-Year Program Plan, March 2008

  25. Infrastructure Costs Costs for Agricultural Stovers Source: DOE, Biomass Multi-Year Program Plan, March 2008

  26. Conversion Costs Costs for Corn Stover, 2007 $ Source: DOE, Biomass Multi-Year Program Plan, March 2008

  27. Conversion Costs Costs for Hybrid Poplar, 2007 $ Source: DOE, Biomass Multi-Year Program Plan, March 2008

  28. Switchgrass in the Plains • Found ethanol yields per acre comparable to corn grain ethanol • But indicated that switchgrass would likely be targeted to marginal land where row crop production is less profitable Source: Schmer, Vogel, Mitchell, and Perrin, Proceedings of the National Academy of Sciences 105(2008):464-469

  29. Source: DOE

  30. Source: DOE

  31. Competing for Acreage Source: FAPRI

  32. Estimated Costs for Iowa Switchgrass Source: Duffy, “Estimated Costs for Production, Storage and Transportation of Switchgrass”

  33. Estimated Costs for Iowa Switchgrass Source: Duffy, “Estimated Costs for Production, Storage and Transportation of Switchgrass”

  34. Hay Data & Cellulosic Yields Schmer et al. Yields = 2.3 to 5 tons/acre Source: USDA-NASS

  35. Thank you for your time!Any questions?My web site:http://www.econ.iastate.edu/faculty/hart/

  36. Competing for Acreage If new energy crop prices are $53/ton and costs are $200/acre, what does the new energy crop yield (tons/acre) have to be to induce farmers to shift production to the energy crop? What if the price is $35/ton?

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