Course: BFM 101 Biofuels Fundamentals

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The Chicken and Egg Dilemma
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Conclusions
Conclusions
Growth of bioenergy in the U.S. will depend on creation of physical and intangible infrastructure.  Policy, in particular, is an intangible infrastructure element necessary to encourage investments in conversion facilities, to encourage feedstock development and production, and for cost-sharing in improvement of rural transportation and warehousing.  Transportation of feedstocks is a major contributor to overall costs of bioenergy production.   Transportation costs push large-scale commercial conversion facilities against the economies of scale necessary to operate competitively and efficiently.  This effective limit on fuelshed size limits the volume capacity of biofuel facilities.  Further economic analysis is necessary to better understand the cost trade-offs between scale and location of conversion facilities, feedstock preprocessing technologies and the scale and location of preprocessing facilities, and storage and transportation of end products.  Conversion of cellulosic materials to biofuels is more difficult and costly compared to use of sugars and starches from grains.  Much effort is being directed toward technological advances necessary to reduce costs in order to move cellulosic biofuel production from pilot scales to commercial scales.  Land availability, competing land uses, yield potential, yield gaps, producer profitability and other important  constraints influence the potential supply of biomass.  Desirable traits for bioenergy crops, such as high productivity, low input requirements and wide habitat breadth, are also traits of invasive species.  Hence, the expansion of biomass plantings and harvesting represents a potential increased risk of invasive species on the landscape.  In highly disturbed areas with little probability of restoration, however, harvest established invasive species may have potential ecosystem services benefits.  Biotechnology  is being applied towards advancements in biomass sources, biomass and feedstock processing, and feedstock conversion.  However, there are risks to ecosystem and human health associated with use of genetically modified organisms in bioenergy. Traditional strategies for managing risks include crop insurance,  revenue insurance, production contracting and investments in technology.  Traditional strategies for agricultural risk management are not yet applicable in bioenergy crop production, particularly in the case of cellulosic biofuel production.  Also, farmer knowledge regarding agronomic and financial management of bioenergy cropping is limited.  The current situation in bioenergy development and utilization appears to be a real “chicken-or-egg” problem.  How to get growers to grow biomass if there’s no market?  How do markets arise without growers?  One side will need to move first, and most likely the demand side.   Many experts agree that if demand is there, agricultural production is capable of ramping-up quickly.  However, much will depend on oil prices and intangible infrastructure.

Resources provided by the eXtension Farm Energy Community of Practice at http://www.extension.org/ag+energy

The Chicken and Egg Dilemma
References