18.4.4 Biofuel Challenges and Opportunities

Planning for the future needs of India’s large and growing population has driven much discussion regarding the importance of agriculture. Agriculture occupies center stage for India’s social security and overall economic welfare, as 70% of the population depends on it as a means of livelihood. Since Independence, India has experienced significant production increases in food grains (green revolution), oilseeds (yellow revolution), milk (white revolution), fish (blue revolution), and fruits/vegetables (golden revolution). All of these revolutions became possible by applying cutting-edge science, coupled with positive policy support and the hard work of Indian farmers. The post-independence period marks a turning point in the history of Indian agriculture, as the rate of growth grew from less than 0.5% annually between 1904 and 1945 to 2.7% between 1950 and 1984 [14].

This growth has been achieved as a result of the high priority accorded to agriculture. Policy makers adopted a twofold strategy for regenerating agriculture immediately after independence. The first element was to implement land reforms to remove institutional bottlenecks and the second was to undertake massive investment in irrigation and other infrastructure in order to update existing agricultural technology [14]. According to World Bank data, the agricultural sector value added (% GDP) in India during 2008-2012 was about 18% [15].

India’s continued growth depends on energy availability, and the country is struggling to meet its growing energy demands. With 0.5% of the world’s oil and gas resources but 16% of the world’s population, the country is heavily dependent on expensive oil imports [16]. Energy self-sufficiency has outpaced food self-sufficiency as a national priority and India is aggressively pursuing alternative energy resources. India is also the world’s third largest producer of greenhouse gas (GHG) emissions [17], adding to its motivation to develop more green energy resources.

Biofuel production is considered one of the most promising options to promote energy security and reduce emissions in India and, in 2009, the Government of India approved the National Policy on Biofuels and launched the National Biodiesel Mission. Presently, biofuel production in India is limited for a number of reasons [18]. For example, India is the world’s second largest producer of sugarcane (after Brazil), but its sugar supplies are matched by an equally large demand, and therefore the country cannot afford to divert any sugarcane for other purposes. This means that India’s ethanol production comes only from molasses, a by-product of sugar [19]. Secondly, India is a net importer of edible oils; therefore, to avoid any biofuel policies that could aggravate the country’s already dire situation of food insecurity for more than 220 million Indians [20], the country cannot afford to divert any of its edible oil supplies into biodiesel manufacturing. Finally, the arable land availability for growing biomass feedstock for biofuels applications is a significant constraint. Given these conditions, India’s bioenergy program has focused primarily on sugar by-products (sugarcane molasses) and on cultivating non-food crops on what the government perceives as “marginal lands” — that is, lands with suboptimal soil and water conditions, which are not already being used by intensive agriculture [21].

Agricultural residues seemed to be the most promising near-term feedstock for cellulosic biofuel production. A nationwide assessment of available agricultural residues estimated that there were 134.4 million metric tonnes (MMT) of rice residues, 109.9 MMT of wheat straw, and 199.1 MMT of sugarcane residues (Table 19.3) [22]. These estimates account for almost 80% of the residue generated by the crops that were studied. However, a significant portion of the residues generated is already consumed for fodder and other uses, thus limiting their availability for biofuel production (Table 19.3) [22]. Other plant residues that could be used for bioenergy production include 18.9 MMT from cotton cultivation, processing wastes from forest products such as bamboo and reed, or even pine needles, which have an estimated annual availability of 1.6 MMT. However, many of these resources present problems with respect to collection and logistics [22]. Physical properties as well as the cellulose and fermentable pentosans content in each of these materials are different and, therefore, processing technologies will likely differ if they are to be used as raw material for ethanol production [22].

The plant will operate 24/7, but the receiving facility will be open 24 hours per day for six days. At 0600 Sunday morning, there will be enough feedstock accumulated in at — plant storage for the normal 2.5-day buffer (60 h). Hauling operations begin again at 0600 Monday morning. At-plant storage is decreased to a 1.5-day buffer (36 h) to supply the material for weekend operation.

To discuss the 24-h-hauling concept, it is convenient to consider two SSL operations, a “day-haul” operation and a “night-haul” operation. For the day-haul operation, the racks are hauled as they are loaded.

For the night-haul operation, the required number of empty racks, enough for one day’s operation, are pre-positioned at the SSL. (Cost of pre-positioning the racks is not considered in this example.) The SSL crew loads these racks during their 10-h workday, and they are hauled during the night. Each truck arriving during the night leaves a trailer with two empty racks and hauls a trailer with two full racks. The next morning the loading crew will go to work on the empty racks delivered during the night and fill them during their workday.

Transporting woody biomass represents another important spatial aspect of logistics costs. Typically, these costs are derived as a series of rates relating to factors such as road speed, fuel consumption, machine hours, and payload. When combined with other costs, these rates can be converted to an absolute value based on hauling distance or time (trip) and the total number of trips required to transport the material. Within a GIS, hauling routes that minimize travel distance and time can be estimated for a route from a starting location (source of biomass) to an ending location (facility) using a road network, source and delivery points, and road network routing [20]. The total number of trips required to transport woody biomass from a given location can be estimated from the total amount of woody biomass available at that location, the associated densities of the woody biomass, and the payload of the truck-trailer configuration. Moreover, trip distance or time and number of trips can be tied together based on the spatial relationship between the source of woody material and the road network.

Minimizing travel distance and time between the source of biomass and a delivery site is straightforward within a GIS. However, on a forested landscape there are many potential sources of biomass for which to determine optimal routes to delivery sites. In this situation, it is easier to think of loading points along a transportation system that can be attributed a minimized trip distance and time. From loading points on the road network, polygons can be created that define the areas closest to each individual loading point, in an automated fashion (Thiessen polygons). Each Thiessen polygon can then be attributed with the transportation costs of its point on the road network, which can be efficiently related to estimates of biomass using spatial relationships.

14.10.2 Estimating Harvest Costs Across a Landscape

Similar to determining transportation costs across a landscape, harvesting costs are derived from rates such as fuel consumption and machine hours. Additionally, absolute costs derived from harvesting rates depend on the total amount and density of standing biomass. While the amount and density of biomass is typically quantified for polygons or a raster surface, the boundaries of those polygons or cells of the raster surface may not represent boundaries of areas that will be harvested. A separate spatial table that defines harvest unit boundaries is often needed to account for management objectives and the logistics of harvesting.

In practice, predicting the location of a harvesting unit boundary is difficult prior to its actual creation. However, within a GIS rules can be created that generalize harvesting policy, management objectives, and stochastic events to create potential harvesting units across a landscape. These rules can quickly become complex and can incorporate a wide range of factors, such as topography, proximity to streams, available tree biomass, maximum harvest unit size, proximity of harvest units to recently harvested land, fire mortality and beetle kill. Often, due to the complexity of building rules for harvest unit boundaries and the reliability of the outputs, a surrogate boundary table such as the Thiessen polygons described in Section 14.10.5 is used to represent harvesting units.

Once harvest unit boundaries are defined, rules and thresholds based on factors such as topography and soil condition can be used to determine the appropriate harvesting system. In addition, total woody biomass, densities, and residues can be calculated for harvest boundaries by spatially relating the geometry of each harvest unit to the estimates of biomass stocks. Absolute costs for the harvest unit are then calculated using the cost rates associated with the selected harvesting system and the weight of the residuals calculated from a treatment.

The forestry and timber sector provides a good case study on the dynamics of competi­tion between various sustainability standards and certification systems. It also provides a background for the emergence of the Roundtable on Sustainable Biofuels. The decline of social sustainability standards as part of certification for forest sustainability suggests potential pitfalls in the inclusion of social sustainability standards for biomass energy production and value chains.

Public concerns over deforestation in the tropics, loss of biodiversity, and the perceived low quality of land management in developing nations, from which energy biomass is often sourced [17,18], led to discussion among civil society organization (CSOs), transnational corporations (TNCs) and governments around securing adherence to sustainability stan­dards in forest management. As a spin-off from these international discussions, the private Forest Sustainability Council (FSC) was successfully established in 1993. A decade later, the FSC had certified more than 53 million hectares of forest in 78 countries.

The FSC was the primary certification system for much of the 1990s and early 2000s. Yet by the second decade of the twenty-first century, its privileged position in the sector had been challenged. As of 2005, a least 23 different national, regional, and global standards competed with the FSC. One competitor, the Programme for the Endorsement of Forest Certification (PEFC), was established in 1999 by forest owners and the timber industry as an umbrella scheme for national standards. By mid-2002, the PEFC had become the world’s largest forest certification scheme in terms of certified forest land [17]. PEFC requires that local stakeholders be involved in both standard-setting and decision-making before a system can be endorsed [19].

The marginalization of the FSC and the widespread support for the PEFC and other pro­grams originating from within the industry has disappointed many environmental groups, which see the industry initiatives as inherently weaker. For example, unlike the FSC, the PEFC does not rely on independent on-the-spot inspections, demand annual inspections, or implement regular checks. This should be no surprise, however, as competing forestry standards allow for producers and suppliers to choose from the standards systems that best fit their needs, reduce their costs, and maximize their profits [20].

In contrast, the management practices required by PEFC include several social sus­tainability criteria, including ecosystem services that provide habitats and shelter for peo­ple and wildlife, offer spiritual and recreational benefits, protection of workers’ rights and welfare, encourage local employment, and respect indigenous people’s rights. The PEFC conducted a stakeholder dialogue on Sustainable Biomass and Forest Certification in November of 2012 in conjunction with the International Energy Agency’s Bioenergy initiative. The goal of the meeting was to explore sustainability issues related to expanding use of forest biomass for energy and other industries. Addressing the added pressures on communities caused by forest-based biofuel production is necessary, as sustainable forest management may not be enough to ensure social sustainability, as those standards may not adequately address specific intensified production and harvesting methods related to forest fuels [21].

In contrast to SRWC biomass, woody biomass from stand thinning is obtained from inter­mediate treatments in forest stands managed for sawlog or pulp production, or managed for non-market values like recreation and wildlife habitat that may be enhanced or protected by thinning treatments. In forestry, thinning operations are partitioned into pre-commercial and commercial thinning. Pre-commercial thinning incurs a cost, typically requiring invest­ment of $100-150/acre ($247-371/ha), but generally results in better growth and higher production for the stand over the rotation. In addition, pre-commercial thinning is often used to reduce fire risk or manage insects and disease, regardless of impacts on long-term commercial output. Commercial thinning treatments are deployed in even-aged silvicultural systems, when feasible, 10-20 years before a terminal harvest. At this point in stand growth, stems are large enough to yield at least one small diameter sawlog, and revenue from the sale of merchantable sawtimber outweighs the logging costs associated with operations. At some critical threshold price, or under certain financial incentives, markets for woody biomass may help to further offset logging costs and help to make commercial thinning financially viable in stands where it otherwise might not be through supplemental revenue.

A number of supply chain pathways have been explored for thinning materials to be used for biofuels or bioenergy that are low in both ash and moisture content. In southern pine plantations, thinned stems are typically harvested with wheeled feller-bunchers that are able to proceed through plantation rows in alternating fashion, removing a stem from the left, then one from the right, and so forth. Pre-bunched stems may then be collected by a grapple skidder or forwarder. Or, in order to reduce the moisture content of stems for subsequent processing, pre-bunched stems may undergo in-woods drying before being removed for processing. Efforts to reduce the ash content of woody materials from thinning operations have evaluated extraction methods that fully support stems using forwarders or wheeled loaders, minimizing dragging and resulting soil contamination associated with grapple skidding.

In the western United States, a major potential source of biomass is thinning materials removed from fuel treatment operations on national forests. Frequently these types of treatments result in net costs, with relatively low value material removed from treatment units. Recent analysis of U. S. national Forest Inventory and Analysis data [3] using the BioSum model has shown that fuel treatment costs in the western United States range from very moderate (e. g., $100/acre) to infeasible (>$10 000/acre) on the landscape, depending on logging system used, topography, and transportation distance to utilization facilities. Remote stands on steep slopes that require cable logging or specialized equipment for treatment tend to be prohibitively expensive to treat.

Price risk for crops arises from changes in market conditions during the crop production period. Prices for both inputs and outputs can change from the time the farmer decides to plant the crop until the time the crop is sold. This statement is true for single season crops as well as perennials and multiseason crops. Shocks to supply of a commodity can arise from many sources, including widespread weather events such as drought or an unusually favorable growing season over a wide area. Shocks to demand can also occur due to a range of factors, including reduced supplies of a competing product such as petroleum with respect to biofuels. Unexpected loss of processing capacity due to damage or financial failure can also shock the demand for an intermediate product such as cellulosic biomass. International trade disruptions and changes in currency exchange rates can affect the prices of many goods and services as well. Crop farmers have experienced very substantial volatility in prices for seed, fertilizer, fuel, and crop products over the past decade.

Selecting the appropriate crop for energy production for a given area is critical to commercial scale success. The choice is fundamentally determined by the product of two primary factors, adaptation and intended use. Firstly, the species must be adapted to the local climate. For example, tropical species such as Napier grass will have limited application in more northern climates, while species like miscanthus are more adapted to those areas. Extensive research and development has produced production guidelines for many biomass crops and data are readily available to producers [6-8].

The second factor (i. e., use) will be determined by the end user’s specifications. Bioenergy crops will not be planted at large scales unless there are markets available for those crops. Those markets will be developed by biopower, biofuel, and bioproducts manufacturers. Some technologies are feedstock agnostic and can consume a wide array of feedstocks. Other technologies, most commonly biochemical platforms, are more selective and may have a more narrow specification for the species and types of feedstocks they accept. Either way, the biomass producer must ensure they are growing an acceptable type and quality of feedstock for the consumer.

An additional facet of crop selection is the determination of perennial versus annual energy crops. Most energy crops are perennial in nature. Species such as switchgrass, miscanthus, and energy canes can all have lifespans exceeding 10-15 years [6]. Woody crops, like poplar and willow, can extend 15-20 years depending on the desired rotation [9]. However, there are some energy crops that are annual in nature. Biomass sorghum, sweet sorghum, and grain sorghum all can be used as energy crops. These annuals offer flexibility in land utilization and farmer adoption.

Perennial bioenergy crops are desired for a range of reasons, mainly their low input and management intensity compared to other crops [10]. Annual crops, like sorghum, function more like traditional row crops and typically require higher levels of inputs. Yet these crops may be attractive to some landowners. Flexibility in contracting with both perennial and annual crops would allow an energy crop supply chain manager to offer both long-term (perennials) and short-term (annuals) contracts to attract landowners of differing interests and management goals. Having multiple types of contracts will truly increase the pool of available agricultural land.

Contracting with farmers for production of energy crop biomass can take many forms as well. The choice between perennial and annual crops will significantly determine contract attributes [11]. For perennial energy crops, long-term contracts (5-10 years) will likely be the norm. These longer-term contracts will be required to allow for recovery of the higher up-front establishment costs. Additionally, they provide more security and lower risk to the end user, whose project financing will require as much guarantee around feedstock supply as possible. In contrast, however, selection of an annual energy crop such as sorghum would allow for more short-term contracting and may attract landowners and farmers who have different approaches to land management. Those landowners and farmers would typically not participate in long-term contracts as they make more decisions on an annual basis. From a processor’s perspective, being able to contract for cropping systems that combine annuals and perennials will provide the most flexibility regarding the type of contract and type of landowner/farmer they can recruit.

Undoubtedly, contracts will likely vary substantially from farm to farm. Commercial biomass entities need to be prepared with a base level contract that spells out the specific criteria that must be met (e. g., who is performing the management, what is the floor price, what are the materials specifications, etc.). Some landowners and farmers will want to self — perform all management activities while others will prefer to have custom operators fulfill those duties. There will not be one single type of contract used for commercial applications.

There will also be multiple types of contracts to address the many different farm situations that exist.

Harvesting of cellulosic biomass, specifically herbaceous biomass, is done with a machine, or more typically a set of machines, that travel over the field and collect the biomass. These machines are designed with the traction required for off-road operation, thus they typically are not well suited for highway operation. Therefore, the transfer point between “in-field hauling” and “highway hauling” is critical in the logistics system. In-field hauling is defined as the operations required to haul biomass from the point a load is created in the field to a storage location chosen to provide the access needed for highway trucks. This hauling includes hauling in the field plus some limited travel over a public road to the storage location.

In most places, regulations govern on-road trucking and limit vehicle dimensions and gross vehicle weight (GVW). Different laws may apply to different road segments along a route depending on local, state, provincial, and federal jurisdictions. For example, in some US states maximum GVW may be set at 45 360 kg, but vehicles greater than 36 290 kg are prohibited from traveling federal interstate highways, requiring smaller payloads or sub­optimal truck routing onto high GVW roads. Overweight and over-dimensions exemption permits are generally available but many jurisdictions bar such permits for cargo that can practically be divided into smaller loads, such as biomass. Even if overweight permits for divisible cargo are allowed, permit fees and transaction costs may exceed added revenue associated with larger payloads. In addition to GVW restrictions, seasonal road closures related to mud and snow conditions can limit transportation at certain times of the year. In general, these types of regulations have a direct influence on transportation options for both individual harvest sites and facility-specific transportation logistics systems.

Policy can have profound impacts on the economic sustainability of cellulosic-based bio­chemical systems. Renewable fuel standards can create guaranteed markets for specified quantities demanded of wholesale or retail products. Direct costs are passed on to con­sumers if the constraint is binding, although reduced demand for other fuels may create some offsetting savings for consumers. Tax credits and deductions can reduce the after-tax cost of investments in facilities and start-up costs. Governments have been willing to give up tax revenue in the short run to create jobs and income and tax revenue over the longer term, particularly in economically depressed areas. Cost-share payments for crop establish­ment have been made by governments to farmers who sign contracts with new crop-to-fuel systems. Loan guarantees to new processors have also been used to reduce investor risk. Energetic discussions take place around the sustainability criteria and implications of gov­ernment programs.

15.5 Summary

Economic sustainability of cellulosic energy cropping systems requires that cellulosic feed­stock production is a profitable alternative for farmers, as well as other suppliers, handlers, and processors in the supply chain. Crop production is a risky proposition for farmers. Various types of risk including yield risk, price risk, risk of financial collapse, and contract risk must be addressed when considering cellulosic energy cropping systems. A variety of risk management and risk mitigation alternatives are available for farmers and processors. Longer-term commitments by farmers and commitment to single outlet markets by farm­ers are likely to require more start-up cost sharing and risk mitigation through contracts. Adequate profitability in realistic projected budgets, adequate equity to survive start-up and shocks, product contracts to assure energy product prices through the first few years, and strong scientific support for crop development are important components of a successful start-up and economically sustainable system. Explicit criteria for resource, environmental, and social sustainability can be incorporated into the expected profit maximization model. Sustainability incentives and criteria can be included in contracts and standard operating procedures. Continued investment in technological improvement to increase yields, reduce resource use and environmental emissions, and generally reduce the cost and increase profitability and stability of the enterprise are critical to long-term sustainability.