Strategic Design of Bioethanol Supply Chains Including Commodity Market Dynamics

Abstract

The blending between biobased and conventional fuels is mandatory according to European directives. Bioethanol has had beneficial effects for energy security issues in some countries of the world (e.g., U.S., Brazil), but it is still not widespread in Italy. This paper analyzes the establishment of a corn-based bioethanol supply chain in northern Italy through a mixed-integer linear programming modeling framework, which allows its financial performance to be evaluated by optimizing the spatially explicit layout in terms of production technologies, biomass production sites, and the transport network. The paper relaxes the too stiff and limiting assumption of keeping constant, for long-term horizons, the price/cost of raw materials, products, and utilities. The economic assessment is based on the forecasted price dynamics of the commodities related to ethanol production. Specifically, three price-forecast models are introduced and tuned according to the Italian context. The robustness of the supply chain wi...