Sustainable biomass supply chain network design with biomass switching incentives for first-generation bioethanol producers

Abstract

Sustainable energy requires renewable energy sources to reduce reliance on fossil fuels. As a renewable energy source, first-generation bioethanol has been produced from corn. However, the production of such a biofuel increases corn-based food prices resulting in serious food versus fuel debates. Financial incentives would motivate first-generation bioethanol producers switching to second-generation bioethanol production. This study investigates the effects of two financial incentives (incentive payments and emissions penalties) motivating first-generation bioethanol producers to use second-generation biomass. These financial incentives are integrated into linear programming models to maximize the profit of the bioethanol supply chains in the state of North Dakota. Numerical results indicate that first-generation bioethanol production is more efficient than the second-generation bioethanol. Hence, the social value of using corn as a source for food instead of fuel must be at least $2.38/bushel. Furthermore, to switch from the first to the second-generation biofuel production, bioethanol producers must either receive at least an incentive payment of $0.8495 per gallon of second-generation bioethanol or pay at least a penalty of $3.2573 per Kg CO2e emitted due to first-generation bioethanol production. The results of this study support policymaker decisions in developing incentive programs to promote sustainable second-generation bioethanol in the US.