Energizing the Landscape: An analysis of switchgrass production costs, commodity crop economics, and nascent gasification technologies in the United States.

Abstract

The United States has set ambitious goals for bioenergy that, if met, would require the widespread production of additional sources of biomass on the landscape. In this dissertation, I explore three important economic aspects of the development of the bioenergy industry, namely switchgrass production costs, competition between switchgrass crops and existing commodity crops, and the use of biomass in emerging energy technologies. First, I derive near-term production costs, returns, and profitability of switchgrass (Panicum virgatum), a perennial bioenergy crop, across a region spanning 14 states. Costs vary across the region, ranging from less than $300 ha-1 to more than $1,400 ha-1, yet switchgrass for bioenergy may be profitable in certain locations with commoditized switchgrass prices at or above $50 Mg-1. Second, I describe the financial profile of the two most prevalent commodity crops grown in the United States, corn and soybeans. I find both crops experience an increase in production costs across the entire study period, but these increases are outpaced by commodity prices, ultimately leading to higher operating profit margins. Furthermore, approximately half of all major corn and soybean producing counties have experienced, in at least one year from 2005 to 2011, a policy inefficiency in which crop insurance overcompensates for the loss of crops, which hinders the introduction of dedicated bioenergy crops on the landscape. Third, I assess the viability of solar-heated gasification systems and find that given current energy market conditions, financial incentives such as tax credits, bond yield reductions, or price subsidies would be necessary to generate a positive return over the life of facilities. In total, bioenergy in the United States will face substantial hurdles and will need to overcome industrial inertia in the agriculture and energy sectors. However, with the correct tools and incentives, it may be possible for bioenergy from switchgrass to become an increasingly important piece of the United States energy profile.