Transcript Why POW?

Analysis of U.S. Renewable Fuels Policies
Using Modified MARKAL and GTAP-Bio
Models
Kemal Sarica, Wallace E. Tyner
Purdue University
October 10, 2011
30th USAEE/IAEE North American Conference
Outline
• Scope
• Model and Modifications
– Land in biomass supply chain
– Biomass supply for corn and cellulose
– Update in biochemical cellulosic ethanol tech.
– Thermochemical process technology
– Fuel dispenser infrastructure (differentiating
E10 and other ethanol blends)
• Scenarios
• Results
Scope
• Evaluate the impacts and costs of
prospective US biofuels with
– competitive energy system infrastructure,
– a more realistic approach considering key
factors of production,
– alternative technologies for liquid fuel
production
Model
• Use of the US EPA MARKAL model
version 2010.
• Model is a bottom up partial equilibrium
energy systems model that makes use
of a detailed representation of energy
technologies.
• This paper concentrates on Renewable
Fuel Standard (RFS), biofuel subsidies,
and alternative technologies to reach
the targets specified.
U.S. Renewable Fuel Standard
Model
Oil
Residential
(heating. Lightening,
cooking, appliances,
etc)
Refinery
Natural Gas
Corn
Natural Gas
Compression
(CNG)
Corn Ethanol
Tech
Hydro
Uranium
Power
Plants
Transportaion & Distribution
Heating
Plants
Commercial
Services (heating,
lightening,
appliances, etc)
Industrial
Sector
Transport (Cars,
trucks, railways,
aircrafts, etc)
Blending
Coal
Corn Stover
Cellulosic
Ethanol
Tech
Agriculture Sector
Model Modifications - Biomass
• Biomass is different from other energy
sources in MARKAL. Use of land for biomass
production is competitive with ongoing crop
production for other demands (e.g., food).
• It is not necessary to sacrifice production of
oil to produce uranium or vice versa.
• The current RES of US EPA MARKAL model
or any national or international MARKAL
model only crudely reflects the biomass
competition for land.
Model Modifications
• US EPA MARKAL has been modified
– to introduce the complete supply chain of
biomass production including land
– We have added ethanol from corn, and
ethanol and bio-gasoline from corn stover,
miscanthus and switchgrass
• Land data comes from the Agro
Ecological Zone classification system
used in GTAP-BIO (GTAP DB 2004).
Model Modifications
AEZ 10
Cropland
Corn
Planting
AEZ 11
Cropland
Harvesting of
Corn Grain
Harvesting of
Corn Grain
and Stover
Corn Grain
Corn Grain
To rest of
supply chain
(transport,
storage, etc.)
Stover
AEZ 12
Cropland
AEZ 13
Cropland
To rest of
supply chain
(transport,
storage, etc.)
Miscanthus
Planting
Harvesting
of
Miscanthus
AEZ 16
Cropland
AEZ 7
Cropland
AEZ 8
Cropland
AEZ 9
Cropland
Switchgrass
Planting
Harvesting of
Switchgrass
Mischantus
To rest of
supply chain
(transport,
storage, etc.)
Switchgrass
To rest of
supply chain
(transport,
storage, etc.)
Model Modifications
Corn and corn stover
• Corn and corn stover production are
coupled.
• Model can decide the level of stover
production in conjunction with corn grain
production.
• We assume constant yield for corn
production in the current version as
there is no additional corn demand in
MARKAL.
Model Modifications –
Land Supply for MARKAL
• We have developed a stepped land supply
function for land supply from GTAP
simulations.
– With higher commodity prices comes higher
land rent, ceterus paribus.
– Land rent is related to commodity prices, and
commodity prices are related to the proportion
of land used to supply biofuel plants.
Model Modifications –
Cellulosic Ethanol
• Updated MARKAL cellulosic biofuel
production technologies.
– Data from 2009 National Academies study
• Two options based on time frame
representing low and medium
improvement.
• Corn stover, miscanthus and
switchgrass are the feedstocks
Model Modifications
Descriptive parameters of the biochemical ethanol techs introduced to the model
Cellulosic Ethanol
from Stover, 2010
Units
Investment Cost
Operating &
Maintenance
Life
Input
Output: Ethanol
Output: Electricity
Emission: CO2
Available from
Cellulosic Ethanol Cellulosic Ethanol Cellulosic Ethanol
from Stover, 2020 from Crops, 2010 from Crops, 2020
2010 $ / liter /
year
1.71
1.49
1.90
1.65
2010 $ / liter
0.35
0.28
0.40
0.32
# of year
30
5.32
30
4.61
30
5.71
30
4.95
1
1
1
1
0.51
4.40
2010
0.63
3.81
2020
0.96
4.93
2010
1.18
4.27
2020
kg / liter
gasoline
equivalent liter
kWh / liters
kg / liter
Year
Model Modifications Hydrocarbons
• Introduced two thermochemical
technologies for processing of biomass
into the US EPA MARKAL model.
• First one is the use of coal with biomass
with carbon sequestration and storage
(CCS) technology,
– Promising since it makes the use of cheap
coal resources with biomass and removes
the excess carbon emissions.
Model Modifications Hydrocarbons
• Second is the direct use of biomass
throughout the thermochemical process
without CCS.
• Both designs offer zero carbon
emissions using a lifecycle approach
• Selected designs are competitive
alternatives to the cellulosic ethanol
production choices for RFS targets
Model Modifications
Descriptive parameters of the thermochemical technologies introduced to the model
Units
Investment Cost
Operating & Maintenance
Life
Input: Coal
Input: Biomass
Output: Mix of Gasoline and Diesel
Output: Electricity
Emission: CO2
Emission: CO2 to CCS
Available from
2010 $ / liter / year
2010 $ / liter
# of year
kg / liter
kg / liter
gasoline equivalent liter
kWh / liters
kg / liter
kg / liter
year
Coal + Biomass to FTL w/
CCS
Biomass to FTL w/o
CCS
2.41
0.10
20
1.90
2.29
1.00
1.15
0.58
4.05
2015
2.45
0.10
20
0.00
4.52
1.00
1.10
4.16
0.00
2015
Model Modifications
Fuel Dispensers
• Ethanol blends up to 10% (E10)
compatible with current infrastructure.
• Higher blends, such as E85 require
separate dispenser and storage.
• US EPA MARKAL model modified to
capture required investments for
distributing the blends higher than E10.
Scenarios
1. No government intervention (no RFS &
subsidy)
2. Biofuels with RFS targets.
3. Subsidy based on current legislation
(volumetric).
– Subsidy for the corn ethanol $0.45/gallon,
– Cellulose biofuel (regardless of what biofuel)
$1.01/gal.
Scenarios (cont’d)
4. Subsidy based on energy content.
– Cellulosic ethanol has a subsidy of $0.67
– Cellulosic bio-gasoline is at $1.01/gal. Corn
ethanol remains at $0.45/gal.
5. Combination of the RFS and the energy
equivalent subsidy (2 and 4).
Results
(Oil Price)
Oil Price (2010 $ per barrel)
140
120
100
80
60
40
20
0
2010
2015
2020
2025
2030
Results
(Marginal Economic Cost to Achieve Corn Ethanol Targets)
2010 $ / gallon Ethanol equivalent fuel
2.50
2.00
1.50
1.00
0.50
0.00
2015
2020
RFS w/o Coal-Biomass FTL
2025
RFS w/ Coal-Biomass FTL
2030
Corn Ethanol Logistics
• US corn ethanol consumption has reached
what is called the “blend wall.” About 12.6
bil. gal. is all that can be blended at 10%,
the US blend rate.
• To go beyond that to 15 bil. gal. will require
huge investments in flex fuel vehicles and
fuel dispensers.
• That is why the marginal economic cost of
corn ethanol is so high. The average cost
is much lower.
Results
(Average Economic Cost to Achieve Corn Ethanol Targets)
2010 US $ per Gallon Ethanol Equivalent
0.35
0.3
0.25
0.2
0.15
0.1
0.05
0
2015
2020
RFS w/o Coal-Biomass FTL
2025
RFS w/ Coal-Biomass FTL
2030
Results
(Needed subsidies to achieve cellulosic fuel targets)
2010 $ / gallon Ethanol equivalent fuel
0.040
0.035
0.030
0.025
0.020
0.015
0.010
0.005
0.000
2015
2020
RFS w/o Coal-Biomass FTL
2025
RFS w/ Coal-Biomass FTL
2030
Results
(Total system cost increase per gallon of cellulosic fuel)
2010 US $ per Gallon Ethanol Equivalent
0.25
0.20
0.15
0.10
0.05
0.00
2015
2020
RFS w/o Coal-Biomass FTL
2025
RFS w/ Coal-Biomass FTL
2030
Results
2010 $ / gallon Ethanol equivalent fuel
(Subsidies needed to achieve cellulosic fuel targets)
Yield Comparison
0.35
0.30
0.25
0.20
0.15
0.10
0.05
0.00
2015
2020
Thermochemical Yield 60 gal/ton
2025
2030
Thermochemical Yield 50 gal/ton
Conclusions
• Without subsidy or mandate:
– Corn ethanol will be produced as long as
blend wall permits.
– Cellulosic ethanol will not be in biofuels mix
if forecasted thermochemical technologies
are realized.
– Stover use up to 125 mil. tons is expected.
Energy crops will follow stover afterwards.
– Thermochemical “drop-in” fuel production
seems to be an attractive option.
Conclusions
• Under mandated RFS scenarios,
– Cellulosic eth. production is not expected due to eth.
prod. hitting blend wall and fierce competition with
thermochemical cellulosic fuel production .
– Due to blend wall, and cost effectiveness,
thermochemical cellulosic fuel production dominates
biochemical supply chain.
– Energy crop production 220 – 230 mil. tons by 2025 is
expected coupled with 126 mil. tons stover use starting
by 2015.
– Expected land needed is 10 – 12 mil. hectares
depending on tech. used.(less w/ CBTL.)
– Related average land rent may go up to $150/hectare.
Conclusions
Under subsidy scenarios,
• Under volumetric subsidy scenarios,
– Corn ethanol production will be very close to
reference case.
– Cellulosic fuel production is not expected due to
blend wall even if the subsidy regime is more
favorable.
– Thermochemical fuel production dominates
market with 25 BG production.
Conclusions
Under subsidy scenarios,
• Under energy content subsidy scenarios,
– Corn ethanol production is very similar to
volumetric subsidy (13 BG).
– Cellulosic ethanol production cannot enter the
market due to lower subsidy.
– Higher land rent values are observed because the
per unit of energy subsidy is higher in this case
and the thermochemical pathway becomes more
attractive.
Conclusions
• Land use pattern / area changes considerably based
on subsidy regime and available technologies.
• For the RFS cases, existence of coal/biomass
thermochemical technology reduces land
requirement for cellulosic fuel due to complimentary
nature with corn ethanol.
• Biochemical cellulosic ethanol technologies do not
seem be to an economical choice due to
– blend wall, and
– low yield / high cost levels
compared to thermochemical rivals.
Conclusions
• The required subsidy costs on cellulosic fuels
vary widely depending on whether or not the
coal/biomass technology is enabled.
• Coal combined thermochemical pathway does
not need any subsidy to meet RFS targets with
the assumed conversion yields and capital and
operating costs.
• Findings are very sensitive to yield levels of the
technologies considered (thermochemical).
Thank you!
Questions and Comments
For more information:
http://www.ces.purdue.edu/bioenergy
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etails.asp?username=wtyner