Soil Science Society of America (SSSA)

Is biomass production profitable?

Cellulosic ethanol has emerged as a leading candidate biofuel that could contribute significantly to meeting U.S. liquid fuel demand while reducing net greenhouse gas emissions. Feasibility of large-scale cellulosic ethanol production depends not only on the development of cost effective processing methods, but also on the availability of large quantities of cellulosic biomass for conversion to ethanol.

A group of researchers from Michigan State Univ. looked at the expected profitability of six cellulosic feedstock crops is compared with two corn-based systems under southern Great Lakes region conditions over a projected 10-yr period.

At 2006–2009 costs and yields from literature, none would be more profitable than the corn-based systems. Comparative breakeven price analysis identifies the cellulosic feedstock price that would make crops equally profitable with continuous corn. Breakeven prices of cellulose are $110 to $130 Mg–1 for poplar, switchgrass, and mixed grasses.

For miscanthus, breakeven cellulose prices are $200 Mg–1 at current costs, but only $45 Mg–1 if rhizome costs fall to near European levels, well within the range of temporary U.S. farm bill cost share levels for biomass harvest, transportation, and storage.

The researchers state that without targeted subsidies, native prairie and fallow old field systems would not be competitive with corn or the other four cellulosic crops reviewed at current yields and foreseeable prices.
Comparative breakeven yields at a cellulose price of $60 Mg–1 would require yield gains above benchmark literature values of 50% for switchgrass, 60% for poplar and mixed grasses, 140% for fallow old fields, 180% for native prairie, and 190% for miscanthus at current rhizome costs, but no added yield for miscanthus with rhizomes at plausible reduced cost.

The impact of a biofuel economy on the U.S. agricultural landscape is potentially huge. To derive a significant portion of U.S. energy use from cellulosic biomass requires a half billion to a billion metric tons of plant products annually. The resulting high demand for land will have unknown consequences for sustaining food and fiber production for human populations, for biodiversity in managed and unmanaged ecosystems, and for the biogeochemical processes that underlie regulation of the biosphere.

The environmental and economic consequences of large-scale cellulosic biomass production will depend in part on which species are cultivated and how they are managed. Profitable production of cellulosic biofuel feedstock is a precondition for large-scale biofuel production to become feasible.

For revenues to exceed costs by itself is not a sufficient condition for growers to switch to cellulosic biomass crops. Farmers will also need to cover the opportunity cost of the crops that are displaced by cellulosic biomass crops.

Broad inquiry into sustainable cellulosic biomass production should include a range of biomass sources, including trees, mixed grasses, native prairie, and natural succession species.

The researchers state that economic studies of biofuel feedstocks have tended to focus on the most promising crops, often corn stover, switchgrass, and recently miscanthus. Different studies have shown costs per unit dry matter for corn stover and miscanthus to be lower than that estimated for switchgrass production.

The research group state that at current yields and foreseeable prices, the profitability of dedicated cellulosic biofuel crops in the southern Great Lakes region falls far short of continuous corn. The value of the corn grain product makes corn stover the likely cellulosic feedstock for this region under a wide range of cost, price, and output scenarios.

The opportunity cost of continuous corn, a major factor in the breakeven prices and yields estimated by the researchers, hinges on soil fertility. Yet the yield and associated profitability of annual row crops such as corn and soybean is particularly sensitive to field conditions including slope, soil type, and fertility levels. The profitability of these row crops can be greatly reduced on marginal lands. Little information is currently available on the profitability of cellulosic biomass crops relative to corn under marginal field conditions, where the perennial root systems of switchgrass, miscanthus, and poplar may provide a significant yield advantage.

The researchers state that among feedstock crops, the most likely cellulosic feedstock alternative to corn stover is miscanthus, despite the fact that it is the least competitive given current input costs in the United States. If reduced rhizome costs can be realized, then miscanthus already breaks even at current expected yields and the assumed price of $60 Mg–1. Though not yet a reality, what makes this possibility significant is that the cost reduction has already been demonstrated in European markets.

The researchers state that, in conclusion, most current perennial, dedicated cellulosic biomass crops are unlikely to displace corn on cropland in the southern Great Lakes region at foreseeable prices for cellulosic biomass.

The one exception that potentially could compete with corn is miscanthus if produced using low-cost rhizomes, although more agronomic experience is needed to verify its winter hardiness, potential invasiveness, and pest susceptibility.

The potential for profitable production of dedicated cellulosic biomass crops may be greater on non-crop land where opportunity costs to the grower may be lower. They state that further research is needed into the production possibilities of biofuel crops on lands not currently used for intensive crop farming.

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