Field to flight: A techno‐economic analysis of the corn stover to aviation biofuels supply chain

Abstract

AbstractAviation biofuels can help to reduce greenhouse gas (GHG) emissions in the United States, help to meet the Renewable Fuel Standard for cellulosic biofuels, and improve US energy security. Cellulosic biofuels carry a lot of risk, because conversion technology is expensive. As a result, incentives are needed to reduce the risk for private investors. Government can implement policies to reduce the risk in investment in aviation biofuels. The issue is deciding which policy will provide the most reduction in risk, while providing a lowest cost to the government. This analysis focuses on aviation biofuel production using fast pyrolysis from corn stover. Cost benefit analysis is used to calculate the net present value, internal rate of return, and benefit‐cost ratio for a plant. Uncertainty is added to fuel price and four technical variables: capital cost, final fuel yield, hydrogen cost, and feedstock cost using @Risk, a Palisade Corporation software. We look at the impact of two policies: reverse auction and capital subsidy. For the reverse auction and capital subsidy, we used contract lengths of 5, 10, and 15 years to see the impact a longer contract could have on probability of loss. Both policies reduced risk in investment of aviation biofuels. A reverse auction reduced risk of investment more. As the contract length increased, the probability of loss and coefficient of variation in net present value were reduced substantially. When fuel price increased stochastically and a contract length of 15 years was used, probability of loss was reduced to 18.4%.