A Framework for Defining the Economic Feasibility of Cellulosic Biofuel Pathways

Abstract

This paper incorporates pathway-specific financial assumptions into techno-economic analyses of cellulosic biofuel pathways under price uncertainty. Five cellulosic biofuel pathway scenarios are developed in a discounted cash flow rate of return spreadsheet to determine pathway-specific costs of debt. The cost of equity for the scenarios is calculated based on the financial characteristics of the US biorenewable industrial sector. A 20-year net present value (NPV) and probability of default for each scenario are stochastically calculated. Mean NPVs vary from a low of –$774 million to a high of –$135 million. Probabilities of default range from a high of 100% to a low of 80.5%. Sensitivity analyses find that the use of pathway-neutral financial assumptions overestimates NPV and underestimates probability of default.