Modeling the Penetration of the Biomass-Ethanol Industry and Its Future Benefits

The authors of this paper developed an equilibrium model to estimate how and when the future biomass-ethanol technologies will develop into a commercial industry and what economic impacts will be created. The model has 10 components: (a) Biomass-ethanol production costs, by feedstock, for three process designs; (b) Demand curves for ethanol used as a gasoline additive; (c) Neat ethanol demandcurves; (d) Biomass feedstock supply curves; (e) Biomass-ethanol supply curves; (f) Equilibrium market prices and quantities of biomass ethanol sold; (g) Number of new facilities, by feedstock; (h) Biomass feedstock prices and quantities consumed to produce ethanol; (i) Primary impacts on related economic sectors: petroleum, utilities, agriculture; (j) Economic impacts: GDP, new jobs, federaltax revenues. This paper presents an overview of the model structure, major assumptions, and data sources. The model estimates ethanol production costs, when ethanol fuels become commercial, the size of the industry and number of plants over time, the cost and quantities of feedstocks consumed, changes in gasoline prices, changes in oil imports, and net economic impacts. A brief synopsis ofmajor conclusions are presented at the end. Further detail is available from the authors. This research was made possible through the support of the U.S. Department of Energy.