Implications of Biorefinery Policy Incentives and Location-Specific Economic Parameters for the Financial Viability of Biofuels

Abstract

Cellulosic biofuels are part of a portfolio of solutions to address climate change; however, their production remains expensive and federal policy interventions (e.g., Renewable Fuel Standard) have not spurred broad construction of cellulosic biorefineries. A range of state-level interventions have also been enacted, but their implications for the financial viability of biorefineries are not well understood. To address this gap, this study evaluated the efficacy of 20 state-level tax incentives from 14 states and their interactions with other location-specific economic parameters (e.g., state income tax rates, electricity prices). To characterize implications of location-specific policies and parameters on biorefinery cash flows, we developed a new BioSTEAM Location-Specific Evaluation (BLocS) module for the open-source software BioSTEAM. Leveraging BLocS and BioSTEAM, we characterized the minimum ethanol selling price (MESP) for a cellulosic biorefinery (using corn stover as feedstock) and two conventional biorefineries (using corn or sugarcane as feedstock) for comparison. Among state-specific scenarios, nonincentivized MESPs for the corn stover biorefinery ranged from 0.74 $·L-1 (4.20 $·gallon gasoline equivalent [gge]−1) [0.69-0.79 $·L-1; 3.91-4.48 $·gge-1; Oklahoma] to 1.02 $·L-1 (5.78 $·gge-1) [0.95-1.09 $·L-1; 5.39-6.18 $·gge-1; New York], while the tax incentive-induced MESP reduction ranged from negligible (Virginia) to 5.78% [5.43-6.20%; Iowa]. Ultimately, this work can inform the design of policy incentives for biorefineries under specific deployment contexts.