A simulation study of the biomass supply chain for the production of advanced biofuels: the use of sugarcane straw

• Grant number: 22/16630-2
• Support Opportunities: Scholarships in Brazil - Doctorate
• Start date: October 01, 2023
• End date: January 31, 2026
• Field of knowledge: Applied Social Sciences - Economics - Industrial Economics
• Principal Investigator: José Maria Ferreira Jardim da Silveira
• Grantee: Stéphani Cetimia Mariotti Ruiz
• Host Institution: Instituto de Economia (IE). Universidade Estadual de Campinas (UNICAMP). Campinas , SP, Brazil

Abstract

To advance the economic and financial viability of advanced biofuels, it is necessary to enable the market for agricultural residues. As this is a new market, supply chain management is a key factor for economic viability, creating new forms of contracts, new ways to manage feedstock supply efficiency and governance structures that provide the underpinning of advanced biofuels production. In this context, what are the prevailing or coexisting conditions for sustaining the straw market for 2G ethanol production? Thus, the objective of this study is to analyze the conditions for the commercialization of agricultural residues aimed at the operation of a second-generation ethanol biorefinery, based on the presence of heterogeneous suppliers and information asymmetry in the biomass market. The method used will be the agent-based model (ABM) to build the computational environment for interaction between agents that supply raw material and biorefineries producing 2G ethanol. The computational model will be based on the ABM models of Vanni et al. (2019) and Nyguen et al. (2013). The main variables and parameters in the model are connected with the capital structure of the agents (CAPEX and OPEX), the negotiated price (price offered by the biorefinery and the target price of the suppliers) and the linkage of decision-making with the institutional environment (demand for ethanol). The simulation model allows for some experiments. The first will be to evaluate the instability of ethanol prices on the economic returns of 2G ethanol and, consequently, on biomass acquisition prices. There are situations where offers to suppliers are seen to be lower than their opportunity costs to collect biomass. The second experiment will be related to the conditions of storage suppliers, expressing the role of strategies simulated by agent interaction, which can be confronted with experiments based on game theory. In both cases, the focus is on the situations that generate risks for a stand-alone 2G ethanol facility, compared to the integrated alternatives. Further research steps include the introduction of competition to biomass between two or more biorefineries. (AU)