Abstract for: Bioenergy market competition for biomass: A system dynamics review of current policy
Interest has grown in the use of biomass as an energy source and the United States has various policies in place that incentivize the use of biomass for electricity and liquid transportation fuels. However, many of these policies – such as Renewable Portfolio Standards for electricity and Renewable Fuel Standards for fuels – create different economic signals that may create competition for biomass. To date, growth projections of the US biopower and biofuels industries have been performed independently without consideration of the effects of competition. Furthermore, foreign exports of biomass may further increase biomass prices to the point that domestic bioenergy production becomes uneconomical. This paper presents a system dynamics analysis of economic competition for commoditized biomass feedstocks given three independent buyers: domestic biopower, domestic biofuels, and foreign exports. The Bioenergy Market Model simulates the long-term dynamics of supply and demand in these markets by treating biomass feedstocks as a collective commodity, dynamically calculating the market clearing price, and partitioning the feedstock to buyers based on a unique value-comparative algorithm. Results suggest that market dominance by exporters is a realistic scenario, and if a greenhouse gas-limiting policy is enacted, the domestic industries receive adequate incentive to protect them from this exporter domination.