Biomass Economics

Biomass

Biomass is carbon based biological material from living or recently living organisms. The energy stored in the material is used by burning the plant matter or transforming it into fuels. The majority of biomass used comes from crops or agricultural waste. Biofuels are considered a beneficial alternative to fossil fuels because they can be replenished greatly faster than fossil fuels [Lehmen, Clarence]. The prices of other fuels such as petroleum have risen to record highs, which has led to an increase in research devoted to biomass. Unfortunately, high prices in gas and oil wont necessarily lead to farmers devoting more food to biofuel production [WorldCrops]. Biomass energy is a good resource to take advantage of, and I believe that its popularity will continue to grow, and it will become more available in the next four decades.

Ethanol is a liquid biofuel created from corn or sugarcane and is the most produced biofuel worldwide. In the United States, corn ethanol is usually blended with gasoline to create a mixture that is 10% ethanol. However, in Brazil their ethanol mixtures are usually 85% ethanol or not mixed with gasoline at all [Lehman, Clarence]. The second most used biofuel is biodiesel, which is primarily made from oily plants. Biodiesel is normally mixed with petroleum diesel and is currently used the most in Europe to power diesel engines. There are many other biofuels including methane gas, butanol, and dimethyl ether, but most are still in development [Lehman, Clarence]. Biofuel production worldwide has been growing rapidly, especially for ethanol. Over the past five years Ethanol production has more than tripled. Brazil is the leading producer of ethanol, accounting for 87.8% of the world's production in 2011 [Tao, Ling and Aden, Andy].

The most likely use of liquid biofuels is in the transportation industry. It already accounts for 2% (2.4 EJ) of the fuel used today [WorldCrops]. Fortunately, biofuels can be transported through the existing infrastructure for fuel delivery, so it would be easier to switch from current fuels to biofuels [WorldCrops]. The production cost of biomass and biofuels are highly sensitive to several factors: feedstock, land and labor costs, credits for byproducts, agricultural subsidies, and the food and oil market. The average cost for the production of corn ethanol ranges from $0.92/gal to $0.99/gal, compared to the cost of production of sugarcane ethanol, which is $2.40/gal, and soybean biodiesel, $2.55/gal [Tao, Ling and Aden, Andy]. The price difference is most likely because ethanol has been researched the most. The majority of the costs are from the price of feedstock. The government has helped the development of the biofuel/biomass industry by creating incentives for their production. One way they have promoted the production of ethanol within the United States is through tariffs. By raising tariffs the price of imported ethanol increases so ethanol made locally has the advantage of being less expensive [Koplo, Doug]. Another way the government has promoted biofuels is through mandated purchases. By regulating certain market shares the price of the good is normally increased, which encourages more ethanol to be produced [Koplo, Doug]. The support of the use and production of biomass as a fuel from the United States government has pushed the industry towards growth.

The possibility of improvement in biomass is immense. Advanced biofuel development, which increases the usefulness and efficiency of biofuels, is important for the sustainability of the industry [Tao, Ling and Aden, Andy]. Some advanced biofuels that are currently being researched are cellulosic ethanol via biochemical conversion route, cellulosic ethanol via thermochemical conversion route, and corn butanol. The projected costs of production for these fuels are $1.31/gal, $1.35/gal, and $1.56/gal [Tao, Ling and Aden, Andy]. The costs of production for all biomass products are expected to halve in the next decade when the processes are made more efficient. Modifying the plants so they are able to grow on non-arable land can reduce additional costs; cellulosic feedstock shows the most potential for this