Date of Award
Master of Science
Industrial and Manufacturing Systems Engineering
Renewable fuel is attracting increasing attention as a substitute for fossil based energy. The US Department of Energy (DOE) has identified pyrolysis based platforms as promising biofuel production pathways. Although the biofuel market remains in its early stage, it is expected to play an important role in climate policy in the future in the transportation sector. In this thesis, we will first propose a biofuel supply chain model to study the supply chain design and operational planning for advanced
biofuel production, then a biofuel market model is developed to study the interactions between farmers, biofuel producers, blenders, and consumers along the biofuel supply chain in the market competitive
For the biofuel supply chain model, the focused production pathway is corn stover fast pyrolysis with upgrading to hydrocarbon gasoline equivalent fuel. The model is formulated with a Mixed Integer
Linear Programming (MILP) to investigate facility locations, facility capacities at the strategic level, and feedstock flow and biofuel production decisions at the operational level. In the model, we accommodate different biomass supply and biofuel demand scenarios with supply shortage penalty and storage cost for excess biofuel production. Numerical results illustrate the supply chain design and operational planning decision making for advanced biofuel production. Unit costs for advanced biofuel under changing of scenarios are also analyzed. The case study demonstrates the economic feasibility of biofuel production at a commercial scale in Iowa.
The second part of the thesis work focuses on analyzing the interaction between the key stakeholders along the supply chain. A bottom-up equilibrium model is built for biofuel market to study the competition
in the advanced biofuel market, explicitly formulating the interactions between farmers, biofuel producers, blenders, and consumers. The model simulates the profit maximization of multiple market
entities by incorporates their competitive decisions in farmers' land allocation, biomass transportation, biofuel production, and biofuel blending. As such, the equilibrium model is capable of and appropriate
for policy analysis, especially for those that have complex ramifications and result in different reactions from multiple stakeholders. For example, the model can be used to analyze the impact of biofuel policies on market outcomes, pass-through of taxes or subsidies, and consumers' surplus or producers' profit implications. The equilibrium model can also serve as an analytical tool to derive market prices of biomass, advanced biofuel, and the value of the Renewable Identification Numbers. Moreover, the model can be used to analyze the impact of the market structure or firms' ownership setting that may arise due to oligopoly competition in the advanced biofuel market.
Zhang, Leilei, "Biofuel supply chain and bottom-up market equilibrium model for production and policy analysis" (2013). Graduate Theses and Dissertations. 13024.