Abstract for: Quantifying Supply Risk at a Cellulosic Biorefinery
In order to increase the sustainability and security of the nation’s energy supply, the U.S. Department of Energy through its Bioenergy Technology Office has set a vision for one billion tons of biomass to be processed for renewable energy and bioproducts annually by the year 2030. The Renewable Fuels Standard limits the amount of corn grain that can be used in ethanol conversion sold in the U.S. Therefore making the DOE’s vision a reality requires significant growth in the advanced biofuels industry. Risk mitigation is central to growing the industry beyond its infancy to a level necessary to achieve the DOE vision. This paper focuses on reducing the supply risk that faces a firm that owns a cellulosic biorefinery. It uses risk theory and simulation modeling to build a risk assessment model based on causal relationships of underlying, uncertain, supply driving variables. Using the model the paper quantifies supply risk reduction achieved by converting the supply chain from a conventional supply system (bales and trucks) to an advanced supply system (depots, pellets, and trains). Results imply that the advanced supply system reduces supply system risk from 83% in the conventional system to 4% in the advanced system.