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ISRN Economics
Volume 2014 (2014), Article ID 515898, 13 pages
http://dx.doi.org/10.1155/2014/515898
Research Article

Technoeconomic and Policy Analysis for Corn Stover Biofuels

Department of Agricultural Economics, Purdue University, 403 West State Street, West Lafayette, IN 47907-2056, USA

Received 31 October 2013; Accepted 12 December 2013; Published 4 February 2014

Academic Editors: J.-L. Hu, S. Managi, and J. Zarnikau

Copyright © 2014 Ryan Petter and Wallace E. Tyner. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

Conventional fossil fuels dominate the marketplace, and their prices are a direct competitor for drop-in biofuels. This paper examines the impact of fuel selling price uncertainty on investment risk in a fast pyrolysis derived biofuel production facility. Production cost specifications are gathered from previous research. Monte Carlo analysis is employed with uncertainty in fuel selling price, biomass cost, bio-oil yield, and hydrogen price parameters. Experiments reveal that fuel price has a large impact on investment risk. A reverse auction would shift risk from the private sector to the public sector and is shown to be more effective at encouraging private investment than capital subsidies for the same expected public cost.