Ethanol Supply Chain Research Articles

Optimization and benefit analysis of the supply chain for sweet sorghum bioenergy production in China

<p>Bio-liquid fuel is one of the effective ways to alleviate energy shortages and reduce greenhouse gas emissions. Sweet sorghum, as an energy crop used in fuel ethanol production, has enormous potential for development. However, due to seasonality, vulnerability, and logistical scheduling costs during transportation, the sweet sorghum ethanol supply chain faces significant difficulties and challenges in its development. To address the research gap, this paper proposes a multi-objective sustainable supply chain optimization model for Chinese sweet sorghum bioenergy based on mixed-integer linear programming. In this framework, the crop growth process model is first spatially extended to obtain the feedstock sources of the sweet sorghum ethanol supply chain. Then a site selection model for the feedstock collection stations and ethanol processing plants is constructed based on the geographic information system (GIS) to determine the candidate locations of the basic units of the sweet sorghum ethanol supply chain. Finally, a multi-objective supply chain optimization model based on the mixed-integer linear programming methodology is created to achieve the sweet sorghum ethanol supply chain layout and optimization at the national level. This framework takes into account the fuel ethanol market demand in China and the current state of the sweet sorghum ethanol supply chain industry, achieving national-level layout and optimization of the sweet sorghum ethanol supply chain. The total aboveground biomass (dry weight) of sweet sorghum on marginal land in China can be converted into approximately 37.212 million tons of fuel ethanol production, meeting the requirement to promote a nationwide 10% substitution rate for automotive ethanol gasoline. The lowest-cost supply chain layout scheme suggests establishing large ethanol processing plants near the Hu Huanyong Line, as this area benefits from abundant sweet sorghum yield on marginal lands and lower east-west direction transportation costs. However, the lowest carbon emission supply chain layout scheme recommends reducing the raw material supply area and increasing the ethanol transportation route to lower carbon emissions. The results of the sensitivity analyses indicate that lowering feedstock production and increasing ethanol demand increases the overall cost and carbon emissions of the sweet sorghum ethanol supply chain, while using rail transportation methods, increasing feedstock production, and decreasing ethanol demand reduces costs and carbon emissions.</p>

Building Agro-Industrial Capabilities in the Sugarcane Supply Chain in Brazil

Background: This study aims to explore how domestic entrepreneurs can benefit from the thriving global agribusiness by establishing themselves in agro-industrial segments that can best remunerate capital and labour. The ways in which domestic entrepreneurs in Brazil enter different segments of the agribusiness industry were assessed with specific attention to implications for the development of local agro-industrial capabilities. Methods: We assessed the current market share of domestic companies in relation to foreign multinationals in various segments of the sugar and ethanol supply chain in Brazil. Results: Foreign multinationals are market leaders in the fertilizers, machinery and trading segments (domestic companies market share is 20.3%, 33.3% and 42.9% in those segments respectively). However, Brazilian companies have achieved higher market share in segments such as plant breeding, sugarcane processing and farming (domestic market share is 93.2%, 67.4% and 75.5% respectively). Plant breeding, farming and trading benefit from governmental support in research, subsidized credits and market policies respectively. Conclusions: By investing in agro-industrial sectors developing countries can benefit from agribusiness expansion for their economic growth. Investments in science and technology and domestic regulatory actions can help to build country capabilities, although the impacts are sometimes limited to the agro-industrial sectors where domestic companies are more competitive. These lessons can help other developing countries to assess their opportunities and challenges for agro-industrial development.

Revenue maximization and pricing: an ethanol supply chain and logistical strategy perspectives

Revenue maximization and pricing: an ethanol supply chain and logistical strategy perspectives

Integrated ethanol and gasoline supply chain planning under environmental constraints: A case study of Brazil

The petroleum infrastructure, hydrocarbon costs, and process and distribution networks influence integrated supply chains of mixed biofuels and petroleum derivatives (gasoline and diesel). Furthermore, the seasonality of biomass feedstock poses more complexities when optimizing such a combined bio-fossil-fuel industry. As such, a multi-period mixed-integer linear programming (MILP) planning model proposal addresses this supply chain mixed fuels, whereby strategic and tactical decisions under environmental constraints account for different process design in response to demand fluctuations along the long-term horizon. This work is applied in the bio-fossil-fuel market in Brazil by considering diverse plant configurations and different feedstock with their seasonality. Results yield an optimal facility location and plant configurations optimizing over time the evolution of installed capacities, capacity utilization, carbon credit and emissions profiles. The study involves ethanol streams to be added in the gasoline mix considering exclusive and flex sugarcane and corn-based processing plants.

How did COVID-19 affect green-fuel supply chain? - A performance analysis of Brazilian ethanol sector

The COVID-19 pandemic affected many supply chains worldwide, including the Brazilian green-fuel ethanol supply chain. Our analysis considered sustainability variables (social, environmental, and economic) to investigate the pandemic's effects on the ethanol industries of 15 ethanol producing Brazilian states, comparing data from 2020 to 2019 and applying a novel Data Envelopment Analysis (DEA): the Double Frontier Slack-Based Measure Malmquist Productivity Index (DF-SBM MPI). The findings show that all states suffered negative impacts from the pandemic and some incurred a risk of collapsing it. The least negatively impacted states were São Paulo and Mato Grosso. São Paulo's ethanol sector is a benchmark for income derived from trade in carbon-credits by RenovaBio certified mills, while Mato Grosso's sector is able to take advantage of the largest spread between ethanol and gasoline prices, certainly a competitive advantage for ethanol producers. We recommend the implementation of public policies to support, mainly, the most affected states by assisting their mills to become environmentally certified participants to take advantage of income opportunities available in the carbon-credit trading market. We recommend, among other actions, a temporary ethanol sales tax reduction, an extension of debt repayment schedules, and stimulating an increase in the fleet of flex-fuel vehicles.

CO2 Emissions from Fuel Consumption in the Logistic Stages of the Brazilian Bioethanol Supply Chain

The study reports the CO2 emissions from diesel combustion in the following stages of the Brazilian ethanol supply chain: (a) agricultural operations (management), (b) sugarcane transportation to the mill, and (c) biofuel transportation to the destination. To assess the sensitivity of the results to different origins, five regions representative of ethanol production were selected, and the final destination was the port of Santos. The transportation stage from the mill to the port included the possible effects of using multimodal alternatives, such as road–rail and road–pipeline. The results indicate that diesel consumption varies greatly by region of origin, and agricultural management, such as tilling, planting, and harvesting operations, accounts for about 70% of total diesel emissions to the ethanol supply chain. Rail and pipeline transportation are ultimately important for mitigating emissions from fuel consumption in logistics corridors for exporting ethanol. It is a valuable contribution to supporting private actions and public policies related to the mitigation of emissions in the logistic stages of bioethanol, especially related to the optimization of the agricultural management process and improvement of the multimodal transport infrastructure, respectively. It is also a lesson to countries intending to produce ethanol from sugarcane.

Unique water scarcity footprints and water risks in US meat and ethanol supply chains identified via subnational commodity flows

Within the US, supply chains aggregate agricultural production and associated environmental impacts in specific downstream products and companies. This is particularly important for meat and ethanol, which consume nearly half of global crop production as feed and feedstocks. However, lack of data has thus far limited the ability to trace inputs and impacts of commodity crops through domestic supply chains. For the first time, we use a commodity-flow model to link spatially distributed water resource impacts of corn and soy to individual meat and ethanol processing facilities. This creates transparency in the supply chains, illuminating substantial variation in embedded irrigation water and water scarcity footprints among meat and ethanol processed at different facilities. By calculating unique blue water scarcity footprints for end-products, we show that beef processed in Iowa or Illinois, for example, has fewer water impacts than chicken processed in California and pork processed in Oklahoma. We find that over 75% of irrigated feed embedded in meat is consolidated in six companies and 39% of irrigated feedstock for ethanol is consolidated in five companies, with potentially negative impacts to supply costs and risk management. This subnational variation and consolidation of impacts in key supply chains creates opportunities for producers and consumers of agriculture-based products to make management, investment, and sustainability decisions about those products.

Exploring the emergence of a biojet fuel supply chain in Brazil: An agent‐based modeling approach

AbstractThe aviation industry accounts for more than 2% of global CO2 emissions. Biojet fuel is expected to make an essential contribution to the decarbonization of the aviation sector. Brazil is seen as a key player in developing sustainable aviation biofuels owing to its long‐standing experience with biofuels. Nevertheless, a clear understanding of what policies may be conducive to the emergence of a biojet fuel supply chain is lacking. We extended a spatially explicit agent‐based model to explore the emergence of a biojet fuel supply chain from the existing sugarcane–ethanol supply chain. The model accounts for new policies (feed‐in tariff and capital investment subsidy) and new considerations into the decision making about production and investment in processing capacity. We found that in a tax‐free gasoline regime, a feed‐in tariff above 3 R$/L stimulates the production of biojet fuel. At higher levels of gasoline taxation (i.e., 2.46 R$/L), however, any feed‐in tariff is insufficient to ensure the production of biojet fuel. Thus, at these levels of gasoline taxation, it is needed to introduce regulations on the production of biojet fuel to ensure its production. Given the current debate about the future direction of the biofuel policy in Brazil, we recommend further research into the effect of market mechanisms based on greenhouse gas emissions on the emergence of a Brazilian biojet fuel supply chain.

Examining the relationship between vertical coordination strategies and technical efficiency: Evidence from the Brazilian ethanol industry

AbstractThe sugarcane industry in Brazil, one of the world's leading producers of ethanol and sugar, is undergoing significant changes driven by geographic expansion and technological innovations. These changes are forcing sugarcane producers and processors, to re‐evaluate their vertical coordination and growth strategies. This paper presents an empirical analysis of the relationship between the vertical coordination strategies at the production‐processing interface of the Brazilian ethanol supply chain and the technical efficiency of the mills. It utilizes data envelopment analysis and a Tobit censored model in combination with unique data on 204 mills that account for around half of Brazil's sugar and ethanol production. Results indicate that vertical integration and the location of the mill have a statistically significant impact on efficiency. The findings show that the technical efficiency is not the main driver of vertical integration implying that such decisions are primarily motivated by strategic considerations. The mills are likely to forgo gains in technical efficiency in exchange for improving their strategic position through vertical integration. These findings shed light on the underlying motivation for the observed level of vertical integration that accompanies the expansion of the Brazilian sugarcane industry. [EconLit citations: L22, Q12, Q16].

Subnational mobility and consumption-based environmental accounting of US corn in animal protein and ethanol supply chains

Corn production, and its associated inputs, is a relatively large source of greenhouse gas emissions and uses significant amounts of water and land, thus contributing to climate change, fossil fuel depletion, local air pollutants, and local water scarcity. As large consumers of this corn, corporations in the ethanol and animal protein industries are increasingly assessing and reporting sustainability impacts across their supply chains to identify, prioritize, and communicate sustainability risks and opportunities material to their operations. In doing so, many have discovered that the direct impacts of their owned operations are dwarfed by those upstream in the supply chain, requiring transparency and knowledge about environmental impacts along the supply chains. Life cycle assessments (LCAs) have been used to identify hotspots of environmental impacts at national levels, yet these provide little subnational information necessary for guiding firms' specific supply networks. In this paper, our Food System Supply-Chain Sustainability (FoodS3) model connects spatial, firm-specific demand of corn purchasers with upstream corn production in the United States through a cost minimization transport model. This provides a means to link county-level corn production in the United States to firm-specific demand locations associated with downstream processing facilities. Our model substantially improves current LCA assessment efforts that are confined to broad national or state level impacts. In drilling down to subnational levels of environmental impacts that occur over heterogeneous areas and aggregating these landscape impacts by specific supply networks, targeted opportunities for improvements to the sustainability performance of supply chains are identified.

Another driver of the Brazilian fuel ethanol supply chain: the consumers’ preferences

Many factors have been discussed in the literature as the causes for setbacks in the Brazilian ethanol supply chain, such as the low price of petroleum and the high price of sugar in the financial crisis in 2008. However, there is an important gap that was not explored yet, how do drivers choose to refuel their cars? Do the supply chain managers know their consumers? Based on that, this paper aims to demonstrate how the ethanol supply chain stakeholders perceive consumers’ preferences and compare them to the factors that are taken into consideration by Brazilian flexible-fuel vehicles drivers when choosing types of fuel gasoline or ethanol. For that, we illustrated the case by using a sample of announcements collected from Brazilian news media featuring the supply chain managers’ view and the survey taken by drivers to understand the consumer's actions. Our results indicate that there is a significant difference between the actual preferences of fuel consumers and the perceived consumers’ preferences by the stakeholders. This disparity is probably the (or one of the) main cause of the second setback in the Brazilian supply chain (2009–2012). Based on these results we point out the strategic implications in managing this supply chain and also the role of public policy in improving the diffusion of ethanol in Brazil.

Using system dynamics modeling to evaluate the feasibility of ethanol supply chain in Brazil: The role of sugarcane yield, gasoline prices and sales tax rates

This paper explores how sugarcane yield, gasoline prices and sales tax rates affect the production and consumption of ethanol from sugarcane in Brazil. The system dynamics model of the sugarcane and ethanol production chain explores the impact of these variables to evaluate the feasibility of ethanol production. Using the VENSIM software different arrangements for sugarcane yield, gasoline prices and sales tax were simulated (horizon of 20 years). Brazil's Federal Government policy of gasoline price below the international price and the diversity of state sales tax rates produce distortions in the ethanol market and impose considerable constraints on the development of the ethanol industry. The simulations show that to ensure the feasibility of ethanol production, the pump price of regular gasoline would need to be US$1.95 per liter, which is far higher than the US$1.26 per liter currently charged. Public policies involving the liberalization of gasoline prices and the homogenization of the sales taxes on ethanol among the Brazilian states could reduce the distortions caused by these policies. These policies could contribute to reduce uncertainty in the ethanol sector and encourage technological and productive investments. Future research could add and evaluate the impacts of the environmental benefits of ethanol production and consumption (Carbon Trade Market, Payment for Environmental Services and Bioelectricity production) and of sugarcane byproducts on its feasibility. The sensitivity analysis revealed the effectiveness of the model to support policies and managerial decisionmaking process in the sugarcane ethanol sector.

Ethanol and sugarcane expansion in Brazil: what is fueling the ethanol industry?

This case study describes Brazilian ethanol industry and strategic issues faced by sugarcane farmers and processors as a result of recent industry expansion into the states of Goias and Mato Grosso do Sul. It provides detailed description of the ethanol supply chain in Brazil from field to market and discusses market drivers influencing the industry. Shaped by government regulations, market liberalization, globalization, and technological change, the Brazilian ethanol industry provides a rich context for learning and applying strategic analysis tools. The case is designed to be used in a graduate or undergraduate agribusiness management or strategic management course. The specific teaching objective for this case is to refine and reinforce students’ understanding of industry analysis and the effect of market drivers on competitive forces in an industry. Students will be expected to conduct an industry analysis and provide strategy recommendations to managers of ethanol plants and farmers. The case study incorporates all of the essential information for students to understand the underlying economics of the ethanol value chain and how the external forces shape strategic growth opportunities.

Analyzing Economic and Environmental Performance of Switchgrass Biofuel Supply Chains

This study optimized the net present value (NPV) of profit of various switchgrass-based ethanol supply chains and estimated associated greenhouse gas (GHG) emissions in west Tennessee. Three configurations of feedstock harvesting and storage, including a large round baler system, a large square baler system, and a chopping/densification system, were evaluated. A mixed-integer mathematical programming model incorporating high-resolution spatial data was used to determine the optimal locations and capacities of cellulosic ethanol plants and feedstock preprocessing facilities, and associated feedstock-draw areas by maximizing the NPV of profit over 20 years. The optimized outputs were then used to estimate the GHG emissions produced in the biofuel supply chain (BSC) per year. The study shows that BSC configurations have important implications for the economic and environmental performance of the system. The harvest and storage configurations affect the locations of conversion and preprocessing facilities, and associated feedstock-draw areas, hence impacting the cost and emissions of both feedstock and biofuels transportation. The findings suggest the BSC system that harvests feedstock with forage choppers and utilizes stretch-wrap balers to increase feedstock density has the highest NPV of profit. The BSC system that uses large square balers for harvest and storage emits the lowest amount of GHGs per year. In addition, the sensitivity analysis suggests that biofuel price and scaling factor of facility capital was influential to the economics of BSC systems. The breakeven price of biofuel for the three BSCs was around $0.97 L−1.

Supply chain optimization of sugarcane first generation and eucalyptus second generation ethanol production in Brazil

The expansion of the ethanol industry in Brazil faces two important challenges: to reduce total ethanol production costs and to limit the greenhouse gas (GHG) emission intensity of the ethanol produced. The objective of this study is to economically optimize the scale and location of ethanol production plants given the expected expansion of biomass supply regions. A linear optimization model is utilized to determine the optimal location and scale of sugarcane and eucalyptus industrial processing plants given the projected spatial distribution of the expansion of biomass production in the state of Goiás between 2012 and 2030. Three expansion approaches evaluated the impact on ethanol production costs of expanding an existing industry in one time step (one-step), or multiple time steps (multi-step), or constructing a newly emerging ethanol industry in Goiás (greenfield). In addition, the GHG emission intensity of the optimized ethanol supply chains are calculated. Under the three expansion approaches, the total ethanol production costs of sugarcane ethanol decrease from 894US$/m3 ethanol in 2015 to 752, 715, and 710US$/m3 ethanol in 2030 for the multi-step, one step and greenfield expansion respectively. For eucalyptus, ethanol production costs decrease from 635US$/m3 in 2015 to 560 and 543US$/m3 in 2030 for the multi-step and one-step approach. A general trend is the use of large scale industrial processing plants, especially towards 2030 due to increased biomass supply. We conclude that a system-wide optimization as a marginal impact on overall production costs. Utilizing all the predefined sugarcane and eucalyptus supply regions up to 2030, the results showed that on average the GHG emission intensity of sugarcane cultivation and processing is −80kg CO2/m3, while eucalyptus GHG emission intensity is 1290kg CO2/m3. This is due to the high proportion of forest land that is expected to be converted to eucalyptus plantations. Future optimization studies may address further economic or GHG emission improvement potential by optimizing the GHG emission intensity or perform a multi-objective optimization procedure.

Assessing the Impact of a Vinasse Pilot Plant Scale-Up on the Key Processes of the Ethanol Supply Chain

One of the byproducts generated in the cane sugar production is molasses, which is used for ethanol distillation. However, one of the problems of distilleries is vinasse. Vinasse is highly water pollutant and is dumped untreated in lakes or rivers and damages the environment. The company FALA developed a pilot plant that uses vinasse to produce a type of livestock feed called MD60. In this paper, the impact of the pilot plant’s scale-up in the key processes of the company’s supply chain is analyzed. With the help of a sensitivity analysis, this study finds the values that would allow the company to improve its order fulfillment indicator and to increase profits, assuming an expected demand by the introduction of this new product into the market. The results show that (1) the pilot plant fulfills 32% of the orders, (2) according to the current vinasse storage capacity, it is possible to fulfill up to 77% of the orders by scaling up the pilot plant, (3) to satisfy 100% of the orders, it is necessary to use all the vinasse generated, and (4) the highest profit is reached by processing all the vinasse and by considering the upper sale price.

Design of Cellulosic Ethanol Supply Chains with Regional Depots

The conversion of lignocellulosic biomass to fuels has the potential to reduce our dependence on fossil fuels. To ensure biomass supply meets biofuel demand, it is necessary to have an effective biomass supply network. Toward this end, the concept of regional biomass processing depot, where biomass is pretreated and/or densified to a higher density intermediate, has been introduced to improve the performance of supply network in terms of costs and emissions. In this article, we develop a mixed-integer nonlinear programming model for the capacity and inventory planning problem of biofuels supply chain including depots. Importantly, the proposed model accounts for variable locations of depots, which is a subject that has not been studied in the literature. In addition, our models account for biomass selection and allocation, technology selection and capacity planning at depots and biorefineries, and biomass seasonality.

Supply Chain Network Design of Ethanol in Thailand

The proposed model is location-allocation model developed to design and manage the plants-to-customers ethanol supply chain in Thailand with the objective to minimize the total cost. The results showed that Thailand should have only one ethanol export depot and central depot located along wharfs in Samut Prakan province and along the highway in Non Sung district, Nakhon Ratchasima province, respectively. This model also provided the solutions on opening and expanding of production capacity of ethanol plants over time and appropriate ethanol allocation both of direct distribution and through the central depot for long term (2012-2021).

Financial Hedging and Sustainability Modeling Considering Uncertainties: A Case Study of Ethanol Supply Chain

Incorporating financial hedging and sustainability in a supply chain is crucial for profit maximization or cost minimization. Uncertainties in supply chain develop into risks that affect the profit maximization or cost minimization expectations. In order to deliver end-products to destination markets in an efficient and effective manner, a supply chain management model that incorporates risk management measures is crucial. This paper develops a mathematical model that integrates hedging strategies in a biofuel supply chain with a corn and cellulosic raw material production setting. The paper is structured by first developing an optimization model considering maximization of the supply chain profit with risk without hedging for both corn and cellulosic biorefinery plants. Secondly, we incorporate sustainability concepts including environmental and social aspects. Finally, a heuristic method is developed for the hedging and a two-stage stochastic linear programming with Multi-cut Benders Decomposition Algorithm (MBD) is used to solve the problem. A case study in North Dakota is adopted for this study. The results for hedging and non-hedging are compared and sensitivity analyses conducted.

A Comparative Analysis of the Equity Outcomes in Three Sugarcane–Ethanol Systems

This article identifies equity outcomes associated with three biofuel systems in Brazil, Ethiopia, and Guatemala. Acknowledging that winners and losers are socially and politically generated, the article identifies some of the factors behind the distribution of winners and losers along different stages of three sugarcane–ethanol supply chains. Analyzing the outcomes for equity within each case study reveals an uneven distribution that, we argue, is related to the procedure and structure of the given sugarcane–ethanol system, and the recognition of the impacts on different actors within those structures. Increasing equity in sugarcane–ethanol systems will require greater openness in decision-making processes, in order that multiple voices are taken into account in the promotion, production, and consumption of biofuels—particularly those of smaller and less powerful actors.