Three Essays on Bioenergy Production in the United States

Abstract

This dissertation examines future prospects of bioenergy production in the United States. The analysis examines three issues on liquid fuel and cellulosic ethanol. First, the amount that costs need to decrease in order to make cellulosic ethanol competitive, considering both production and market penetration costs. Second, the potential effect of mandate relaxations and carbon market related payments on liquid fuel production potential. Third, the effects of ignoring or considering asset fixity of refinery construction on liquid fuel production and market penetration.

These analyses are framed using a theoretical graphical analysis then are empirically carried out using a version of the U.S. agricultural sector mathematical programming model FASOMGHG which is augmented and expanded to accommodate the issues examined. The main findings are: 1) processing costs of cellulosic ethanol need to be reduced by at least 70% to make cellulosic ethanol production fully cost competitive; 2) removal of market penetration barriers also are also a big contributor to the market presence of bioethanol; 3) carbon pricing and other market mechanisms provide incentives for more ethanol production; 4) greenhouse gas payments entail additional revenues flowing to the bioethanol industry and as a result, increase volumes of total ethanol produced and 5) asset fixity provides a major barrier to ethanol production increases.

Furthermore under asset fixity: 1) cellulosic ethanol production is reduced when mandates hold; 2) cellulosic ethanol production is virtually eliminated when mandates are not in place; 3) asset fixity has a more significant impact on the amount of ethanol produced when no market penetration barriers are in place; 4) asset fixity influences the generation of biodiesel by changing its feedstock structure.