Title page for ETD etd-08172010-154004


Type of Document Dissertation
Author Mark, Tyler B.
Author's Email Address tmark1@tigers.lsu.edu
URN etd-08172010-154004
Title Cellulosic Ethanol in Louisiana: A Three Part Economic Analysis of Feedstocks, Pricing Strategies and Location Strategies
Degree Doctor of Philosophy (Ph.D.)
Department Agricultural Economics & Agribusiness
Advisory Committee
Advisor Name Title
Salassi,Michael Committee Chair
Detre, Joshua Committee Member
Gillespie, Jeffery Committee Member
Kennedy, Lynn Committee Member
Iledare, Omowumi Dean's Representative
Keywords
  • cellulosic ethanol
  • biomass
  • location
  • energy cane
Date of Defense 2010-04-13
Availability unrestricted
Abstract
The development of an efficient biomass supply chain is pivotal for the cellulosic ethanol industry. The Louisiana Sugarcane Belt, and energy cane are the focus of this study. From both the producer and processor perspectives, cost of production, competitiveness of cellulosic ethanol, biomass pricing, changes in crop mix, and the optimal location for cellulosic ethanol processing facilities are the critical factors evaluated.

Educating potential energy cane producers on production costs and agronomic practices is the first step in the biomass supply chain. This study finds that for energy cane producers to breakeven, processors need to pay producers at least $30 per ton of biomass. The breakeven price producers require, decreases if new varieties with higher yields and for a longer sustained production cycle are developed. These new varieties also help to increase the competitiveness of the cellulosic ethanol industry relative to the corn ethanol industry by driving down feedstock and transportation costs.

For processors to induce the production of energy cane they have to provide producers with expected net returns per acre that are at least equivalent to that of sugarcane. Numerous methods on pricing biomass exist but this study investigates variable pricing strategies, based on corn, crude oil, and ethanol prices, and a two-tiered hybrid strategy that guarantees a portion of production cost plus a fixed amount per ton of biomass production. Results indicated that none of the pricing strategies induce the production of energy cane relative to sugarcane, but minor adjustments to the ethanol and hybrid strategies makes them viable options for processors.

Depending upon the pricing strategy implemented, producers alter crop allocation decisions to maximize net returns per acre. Primarily rice and soybean acres in the region decline allowing for the production of energy cane. As the crop mix changes in the region, the cost minimizing location for a cellulosic ethanol plant changes. Results indicate that for a single processor operating Belt the optimal location is St. Landry Parish. Increasing the number of processors in the region to two, decreases total transportation costs decrease and the optimal locations for the plants are Acadia and Pointe Coupee Parishes.

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