Advanced biofuel is a promising replacement to fossil fuels for the purpose of protecting the environment and securing national energy supply, but the high cost of producing advanced biofuels makes it not as competitive as petroleum-based fuels. Recent technology developments in biomass fast pyrolysis and bio-oil upgrading introduced several innovative pathways to convert bio-oil into other commodity products, such as bio-asphalt, bio-cement, dextrose and benzene, toluene, xylene (BTX). Before commercializing these products, a comprehensive techno-economic analysis should be employed to examine the economic feasibility of producing them. This thesis compared the economic performance of biofuels, biochemicals, and hydrocarbon chemicals portfolios and optimized the product selection of an integrated bio-refinery.

Based on a fast pyrolysis and bio-oil fractionation system, three product portfolios were proposed: biofuels (gasoline and diesel), biochemicals (bio-asphalt, cement and dextrose) and hydrocarbon chemicals (BTX and olefins). The production process, operating costs and capital costs were simulated based on the model data, experimental data, and literature data. Minimum product selling price (MPSP), maximum investment cost (MIC) and net present value (NPV) were used to evaluate and compare the economic performance of three portfolios with a 10% internal rate of return (IRR). A bio-refinery concept integrating all products was proposed to improve the flexibility to respond to changes in the market prices of the proposed products. The ratio of bio-oil upgrading to different product groups was manipulated to maximize the NPV under different price situations.

Several major conclusions were drawn from this study. Due to high capital costs and operating costs associated with biofuels production, hydrocarbon chemical and biochemical products can be attractive bio-refinery products. However, there has been limited development of the hydrocarbon chemical and biochemical product technologies. This study attempts to address this risk by evaluating the uncertainty in the NPV and MIC. In particular, the biochemicals scenario has the highest MIC, which indicates that it has the greatest potential for remaining profitable with increased capital investment. The hydrocarbon chemicals production yields relatively high revenues and is more robust to fluctuations in market prices based on historical data. Biofuels production is economically attractive only when the price of transportation fuels is at historically high values.