Biomass-for-Biofuel Supply Chain Design and Management Tools

My work in the area of biomass-for-biofuels began as an accident. I had just started working as an assistant professor at Mississippi State University (MSU), and being eager to secure research funding I responded to a call for proposals from the university’s newly founded Sustainable Energy Research Center (SERC). I didn’t get the grant, but what I learned from that experience was much more valuable to me.

The personal computer industry, retail and other types of business have already taken advantage of sophisticated supply chain designs and management tools. However, as I was collecting the literature on biomass supply chains, I came to realize that there had not been a lot of operations research (OR) related work for this sector. I saw that there were a number of reasons to why this was the case. First, America is a highly industrialized country. Since the agricultural sector does not generate as much revenue, it has far less potential for savings by using sophisticated mathematical models to better manage its supply chain. Second, there are a number of uncertainties involved with production, inventory and distribution of agricultural products. For example, biomass production yields depend on weather conditions, insect population, plant disease, and other variables that are hard to control. As a result, the appropriate supply chain models to use would need to be of a stochastic nature, which often are more difficult to solve. Despite these facts, my hope is that the OR community will see how innovative biomass supply options and logistical arrangements can potentially reduce the costs and uncertainty of producing biofuels, a leading renewable energy source.

Biofuels, such as ethanol and biodiesel, are liquid fuels that can be used in combination with fossil fuels like gasoline and diesel. Currently, every car on the road can use E10 and E15, which is gasoline mixed with 10 and 15 percent ethanol respectively. Flex-fuel vehicles can use E85. Because these are clean and environmentally friendly sources of energy, biofuels are recognized as one of the future power sources in the United States. The Renewal Fuel Standard (RFS) in the Energy Independence and Security Act of 2007 requires an increase of the minimum annual level of renewable fuels used in U.S. transportation fuel. This requirement is expected to increase from 9 billion gallons in 2008 to 36 in 2022. In 2011, the United States’ production of ethanol is expected to reach 13.5 billion gallons. While this increase in production has displaced the need for millions of barrels of crude oil; it has also sparked a national debate: food versus fuel.

Conventional ethanol is produced by converting corn, wheat or soybean grains into freely available sugars, which are fermented into ethanol. Unfortunately, these crops are also used for food. By using farmland to grow crops for fuel, there is a risk of causing the price of food and animal feed to rise, and possibly reducing their availability in developing countries. To avoid these undesirable effects, developers are turning to advanced biofuels. Beginning in 2016, all of the increases required by the RFS must be met with cellulosic ethanol and other biofuels derived from feedstock other than cornstarch. In order to satisfy the expected demand, a number of research avenues are being explored.

One possible alternative source is biomass, waste material from plants. However to reach the goals set by RFS for 2022, 700 million tons of biomass would need to be sustainably delivered annually to biorefineries. Recent reports prepared by Idaho National Laboratory (INL) and Oak Ridge National Laboratory (ORNL) in collaboration with a number of universities conclude that although there are sufficient biomass resources to meet these goals, many of these resources are inaccessible using the current biomass supply system. The reason is the many logistical challenges faced in providing an efficient and reliable supply of quality feedstock to biorefineries. Biomass, in the form of agricultural products and residues, forest residues, or waste, is bulky, heterogeneous and has poor flowability characteristics (when in formats such as a bale). As a result biomass is difficult to load/unload and expensive to transport. These materials are also dispersed over a wide geographic area which effects collection and transportation costs. Being seasonal in nature, biomass has to be inventoried in order to provide year around supply at a biorefinery. Other issues stem from the fact that weather, insects, and disease can affect yields; and the material deteriorates and loses dry matter with time and is low in energy density. Finally, ethanol is corrosive to pipelines and therefore must be shipped by truck and rail, which are traditionally more expensive modes of transportation. A report by INL indicates that for the biofuels industry to be a self-sustaining enterprise, the biomass, or lignocellulosic feedstock, supply system logistics (all processes involved in getting the biomass from the field to the conversion facility) cannot consume more than 25 percent of the total cost of the biofuel production. The experience with ethanol production shows that about 18-36 percent of the cost of ethanol is due to the logistics of supplying biomass.

Operations research can address these issues. Mathematical programming can be used to identify supply chain designs and management practices that optimize system-wide costs for biofuels. The tools I am talking about have shown to be very efficient for companies in other industries. The hope is that the use of these tools will result in cost savings, and make biofuels a viable energy option. One can use supply chain design models, which are extensions of the stochastic location-transportation problem, and capture the specific nature of biomass including perishability, seasonality, etc. One can extend the models to take into account that different modes of transportation can be used to ship biomass, such as, rail, barge and truck. The selection of a particular mode depends on factors such as its availability (as it is the case with barge), transportation volume, cost, and distance. These mathematical models will then identify the number, location, and size of collection facilities; size and location of the biorefineries; transportation mode between biomass supply sites and biorefineries; and the assignment of biomass supply sites to biorefineries that minimize system wide costs. Another extension of these models is to consider how the selection of a particular transportation mode and biofuel production technology affects the amount of carbon emitted in the environment. The models will then identify supply chain designs by exploring the trade-offs that exist between costs and the amount of carbon emitted in the environment.

Once the supply chain configuration is established, one can build mathematical models to manage production of biomass and distribution of biomass and biofuels. Extensions of the economic lot-sizing problem can be used to identify a portfolio of biomass feedstock options that minimize the cost of harvesting (harvesting schedules that do not overlap enable reuse of equipment), cost of inventory (harvesting schedules that are spread year round minimize the inventory and losses due to biomass deterioration), and cost of transportation. Multi-criteria optimization models can be developed to identify a portfolio of biomass feedstock that minimize costs and maximize the positive impact to the environment.

The area of bioenergy is in fact a great venue for collaboration with other scientists in engineering and non-engineering fields. Although my initial proposal in this area was not funded, it did open doors for collaboration with colleagues from chemical engineering; agricultural and biological engineering; civil and environmental engineering; agricultural economics; and forestry, who understand the impact that my knowledge about supply chain management has in this emerging industry. This work also attracted the attention of economic development-related offices in the state because biomass-for-biofuels has attracted the attention of a number of investors in Mississippi and other southern states. Mississippi is rich in forests, which have been an important source of supply to the furniture industry. However, this industry recently has been in decline due to outsourcing overseas, leaving farmers to look for other opportunities to use their products. That is just one example of how biofuel can positively affect the economy. The fact is that using these abundant and renewable biomass resources has the potential to stimulate the creation of more green jobs, generate additional revenues for farmers, positively impact the environment, and reduce the America’s dependency on oil.

Research supported by NSF Grant CMMI-1052671 (CAREER Award)

-Post by Prof Sandra Eksioglu, Mississippi State University

sde47 at ise dot msstate dot edu