Dynamic analysis of policy drivers for bioenergy commodity markets

• Published in: Energy policy 2013-01, Vol.52, p.249-263
• Main Authors: Jeffers, Robert F., Jacobson, Jacob J., Searcy, Erin M.
• Format: Article
• Language: English
• Subjects: Applied sciences; Biodiesel fuels; bioenergy industry; Bioenergy markets; Biofuels; Biomass; Biomass energy; Computer simulation; Computers; Demand; Economic data; Economic models; Electric power; Energy; Energy economics; Energy policy; Exact sciences and technology; Export-import trade; Exports; feedstocks; Fuel; General, economic and professional studies; Industry; Market prices; Markets; Methodology. Modelling; Modeling and simulation; Natural energy; policy analysis; Prices; Raw materials; Renewable energy sources; simulation models; Studies; U.S.A; United States; willingness to pay
• ISSN: 0301-4215; 1873-6777
• DOI: 10.1016/j.enpol.2012.08.072

Biomass is increasingly being considered as a feedstock to provide a clean and renewable source of energy in the form of both liquid fuels and electric power. In the United States, the biofuels and biopower industries are regulated by different policies and have different drivers, which impact the maximum price the industries are willing to pay for biomass. This article describes a dynamic computer simulation model that analyzes future behavior of bioenergy feedstock markets given policy and technical options. The model simulates the long-term dynamics of these markets by treating advanced biomass feedstocks as a commodity and projecting the total demand of each industry, as well as the market price over time. The model is used for an analysis of the United States bioenergy feedstock market that projects supply, demand, and market price given three independent buyers: domestic biopower, domestic biofuels, and foreign exports. With base-case assumptions, the biofuels industry is able to dominate the market and meet the federal Renewable Fuel Standard (RFS) targets for advanced biofuels. Further analyses suggest that United States bioenergy studies should include estimates of export demand in their projections, and that GHG-limiting policy would partially shield both industries from export dominance. ► We model a United States bioenergy feedstock commodity market. ► Three buyers compete for biomass: biopower, biofuels, and foreign exports. ► The presented methodology improves on dynamic economic equilibrium theory. ► With current policy incentives and ignoring exports, biofuels dominates the market. ► Overseas biomass demand could dominate unless a CO2-limiting policy is enacted.