The Economics of Biomass Collection and Transportation and Its Supply to Indiana Cellulosic and Electric Utility Facilities

Abstract

With cellulosic energy production from biomass becoming popular in renewable energy research, agricultural producers may be called upon to plant and collect corn stover or harvest switchgrass to supply feedstocks to nearby facilities. Determining the production and transportation cost to the producer of corn stover or switchgrass and the amount available within a given distance from the plant will result in a per metric ton cost the plant will need to pay producers in order to receive sufficient quantities of biomass. This research computes up-to-date biomass production costs using recent prices for all important cost components including seed, fertilizer, herbicide, mowing/shredding, raking, baling, storage, handling, and transportation. The cost estimates also include nutrient replacement for corn stover. The total per metric ton cost is a combination of these cost components depending on whether equipment is owned or custom hired, what baling options are used, the size of the farm, and the transport distance. Total costs per dry metric ton for biomass with a transportation distance of 60 km ranges between $63 and $75 for corn stover and $80 and $96 for switchgrass. Using the county quantity data and this cost information, we then estimate biomass supply curves for three Indiana coal-fired electric utilities. This supply framework can be applied to plants of any size, location, and type, such as future cellulosic ethanol plants. Finally, greenhouse gas emissions reductions are estimated from using biomass instead of coal for part of the utility energy and also the carbon tax required to make the biomass and coal costs equivalent. Depending on the assumed CO2 price, the use of biomass instead of coal is found to decrease overall costs in most cases.