infrastructure

ORNL Report ORNL/TM-2010-120.
The purpose of this study is to summarize the various barriers to more widespread distribution of biofuels through our common carrier fuel distribution system, which includes pipelines, barges and rail, fuel tankage, and distribution terminals, and with a special focus on biofuels, which may come into increased usage in the future. Addressing these barriers is necessary to allow the more widespread utilization and distribution of biofuels, in support of a renewable fuels standard and possible future low-carbon fuel standards. By identifying these barriers early, for fuels not currently in widespread use, they can be addressed in related research and development. These barriers can be classified into several categories, including operating practice, regulatory, technical, and acceptability barriers. Possible solutions to these issues are discussed, including compatibility evaluation, changes to biofuels, regulatory changes, and changes in the distribution system or distribution practices. No actual experimental research has been conducted in the writing of this report, but results are used to develop recommendations for future research and additional study as appropriate.

In the corn ethanol industry, the ability of plants to obtain favorable prices through marketing decisions is considered important for their overall economic performance. Based on a panel of surveyed of ethanol plants we extend data envelopment analysis (DEA) to decompose the economic efficiency of plants into conventional sources (technical and allocative efficiency) and a new component we call marketing efficiency. The latter measure allows us to evaluate plants’ ability to contract favorable prices of corn and ethanol relative to spot market prices and its implications for their overall economic performance. Results show that plants are very efficient from a technical point of view. Dispersion in overall economic performance observed across units is mainly explained by differences in allocative and marketing sources. Our results are consistent with the view that plants with higher production volumes may perform better, in part, because they can secure more favorable prices through improved marketing performance. Plants also seem to achieve significant improvements in marketing performance through experience and learning-by-doing. These results are consistent with two facts; 1) economies of scale may not be the only reason behind the increase in the average size of plants in the ethanol industry and; 2) there might be incentives for horizontal consolidation across plants.

Supply chain management involves all of the activities in industrial organizations from raw material procurement to final product delivery to customers. The main aim in supply chain management is to satisfy production requirements, while optimizing the economic objectives. In traditional fossil fuel supply chains, huge amounts of fossil fuels are transported via pipelines or tankers with very small costs. These fuels can be transformed into other sources of energy or transportation fuels at their destination points. This supply chain structure results in creation of global energy markets and has made the fossil fuel based energy systems the dominating energy technologies in the world. Unfortunately, the consumption of fossil fuels now represents the major cause of climate change, and as a consequence, the viability of the fossil fuel supply chain is becoming increasingly questioned.

Furthermore, whilst biofuels represent a sustainable alternative, the biofuel transportation channels are not as well developed as fossil fuels, are more expensive, and may be restricted by the perishability of the raw product. Thus, the development of biofuel supply chains may introduce a move from global energy markets to locally distributed energy supply chains: local plantations transformed into biodiesel in local production facilities and –usually- consumed within the same region.

Different species have been researched by many researchers as possible sources of biofuel. Although only in use for a relativity short period, Jatropha curcas is being championed as a revolutionary biofuel feedstock thanks to its environmental, economic and social benefits. Being a very resilient seed, it can grow in land which may not be considered nutritious for most crops. It can resist drought for up to three years and can be intercropped with many staple crops such as coffee and sugar. Since it is not a food source, it doesn’t involve in the ‘food vs. fuel’ debate. It is usually found and best grows in the more economically depressed regions of the world. Plantations of Jatropha and production of biofuel can create new job opportunities and an economic resource for people living in subsistence areas and these places can greatly benefit from further development of Jatropha. However, its success will depend on construction of a successful infrastructure for its supply chain. The cultivation of the plant, the production of the biodiesel, its distribution and marketing channels are developmental challenges. Thus, according to Caniëls et al. (2007) the Jatropha supply chain is characterized by being “highly dynamic and subject to uncertainties” and is a “dynamic adaptive system”, such that “the conventional preoccupation of the bulk supply chain management studies with detailed optimization and control is not so well suited to the requirements posed by this dynamic and unpredictable situation” .

The rapidly expanding biofuel industry has changed the fundamentals of U.S. agricultural commodity markets. Increasing ethanol and biodiesel production has generated a fast-growing demand for corn and soybean products, which competes with the well-established domestic livestock industry and foreign buyers. Meanwhile, the co-products of biofuel production are replacing or displacing coarse grains and oilseed meal in feed rations for livestock. These developments in the agricultural and energy markets change the distribution of domestic grains and feeds and the utilization of shipping modes, which is likely affect the prices and basis of grains and other feedstocks in spatial markets.

The location of ethanol plants is determined by infrastructure, product and input markets, fiscal attributes of local communities, and state and federal incentives. This empirical
analysis uses probit regression along with spatial clustering methods to analyze investment activity of ethanol plants at the county level for the lower U.S. 48 states from 2000 to 2007.
The availability of feedstock dominates the site selection decision. Other factors, such as access to navigable rivers or railroads, product markets, producer credit and excise tax
exemptions, and methyl tertiary-butyl ether bans provided some counties with a comparative advantage in attracting ethanol plants.

A method is presented, which estimates the potential for power production from agriculture residues. A GIS decision support system (DSS) has been developed, which implements the method and provides the tools to identify the geographic distribution of the economically exploited biomass potential. The procedure introduces a four level analysis to determine the
theoretical, available, technological and economically exploitable potential. The DSS handles all possible restrictions and
candidate power plants are identied using an iterative procedure that locates bioenergy units and establishes the needed cultivated area for biomass collection. Electricity production cost is used as a criterion in the identication of the sites of economically exploited biomass potential. The island of Crete is used as an example of the decision-making analysis. A signicant biomass potential exists that could be economically and competitively harvested. The main parameters that affect the location and number of bioenergy conversion facilities are plant capacity and spatial distribution of the available biomass potential.