Date of Award

Fall 12-9-2016

Level of Access Assigned by Author

Campus-Only Thesis

Degree Name

Master of Science (MS)

Department

Economics

Advisor

Sharon Klein

Second Committee Member

Jonathan Rubin

Third Committee Member

Gary Hunt

Abstract

Increased environmental concerns have led to the development of renewable energy sources. This is especially apparent in the race to develop commercially viable liquid fuels to power the transportation sector. The University of Maine’s Forest Bioproducts Research Institute (FBRI) has entered into this race by developing a unique process called Acid Hydrolysis Dehydration (AHDH), which converts forest harvest residues into drop-in biodiesel. The purpose of this research is to determine the cost and profit of producing AHDH biodiesel from Maine-based forest residues. This study builds on previous work, which calculated the cost of delivered biomass to a processing plant located at Old Town Fuel and Fiber. Our model extends previous research by following production through the processing stage by: 1) estimating the processing costs for the biofuel for any size processing plant ranging from 143 – 6,830 dry metric tonnes per day of feedstock; 2) varying existing capital and operating cost estimates to reflect different returns to scale seen in the cellulosic ethanol industry; and 3) adding a profit calculation for any size plant in the aforementioned range. Results show that AHDH biodiesel from forest residues costs $0.79 – $2.25/gallon after taxes to produce in Maine (evaluated for an 895 dry tonne per day plant size). The range in costs estimated by the model is a result of different methods used to account for the cost of co-products produced by the process, different uses for char, and different assumptions about the cost of delivered feedstock. Profit calculations indicate that biodiesel can be produced profitably. This process is expected to generate excess profits for the biofuel producer ranging from $49.5 – $55.4 million/year primarily generated through the production of the high value co-product furfural (again evaluated at an 895 dry tonne per day plant size). It should however be noted that profits of this magnitude will likely never be realized as the current furfural market could not support the quantity of furfural that a plant of this size without a significant drop in the furfural selling price. Therefore, a biofuel investor should consider constructing a smaller plant which would produce no more furfural than market growth projections could support.

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