i 

FUELS

Projected Biomass Utilization for

Fuels and Power in a Mature Market

TRANSPORTATION ENERGY FUTURES SERIES:

Projected Biomass Utilization for Fuels and Power in a Mature Market

A Study Sponsored by 

U.S. Department of Energy 

Office of Energy Efficiency and Renewable Energy

0DUFK2013 

Prepared by 

NATIONAL RENEWABLE ENERGY LABORATORY

Golden, Colorado 80401-3305 

managed by

Alliance for Sustainable Energy, LLC

for the

U.S. DEPARTMENT OF ENERGY

under contract DC-A36-08GO28308 

This report was prepared as an account of work sponsored by an agency of the United States 

Government. Neither the United States Government nor any agency thereof, nor any of their 

employees, makes any warranty, expressed or implied, or assumes any legal liability or 

responsibility for the accuracy, completeness, or usefulness of any information, apparatus, 

product, or process disclosed, or represents that its use would not infringe privately owned rights. 

Reference herein to any specific commercial product, process, or service by trade name, 

trademark, manufacturer, or otherwise, does not necessarily constitute or imply its endorsement, 

recommendation, or favoring by the United States Government or any agency thereof. The views 

and opinions of authors expressed herein do not necessarily state or reflect those of the United 

States Government or any agency thereof.
iv

ABOUT THE TRANSPORTATION ENERGY FUTURES PROJECT

This is one of a series of reports produced as a result of the Transportation Energy Futures (TEF) 

project, a U.S. Department of Energy (DOE)-sponsored multi-agency project initiated to identify 

underexplored strategies for abating greenhouse gases and reducing petroleum dependence 

related to transportation. The project was designed to consolidate existing transportation energy 

knowledge, advance analytic capacity-building, and uncover opportunities for sound strategic 

action. 

Transportation currently accounts for 71% of total U.S. petroleum use and 33% of the nation’s 

total carbon emissions. The TEF project explores how combining multiple strategies could 

reduce GHG emissions and petroleum use by 80%. Researchers examined four key areas – lightduty vehicles, non-light-duty vehicles, fuels, and transportation demand – in the context of the 

marketplace, consumer behavior, industry capabilities, technology and the energy and 

transportation infrastructure. The TEF reports support DOE long-term planning. The reports 

provide analysis to inform decisions about transportation energy research investments, as well as 

the role of advanced transportation energy technologies and systems in the development of new 

physical, strategic, and policy alternatives. 

In addition to the DOE and its Office of Energy Efficiency and Renewable Energy, TEF 

benefitted from the collaboration of experts from the National Renewable Energy Laboratory and 

Argonne National Laboratory, along with steering committee members from the Environmental 

Protection Agency, the Department of Transportation, academic institutions and industry 

associations. More detail on the project, as well as the full series of reports, can be found 

at http://www.eere.energy.gov/analysis/transportationenergyfutures. 

Contract Nos. 

DC-A36-08GO28308 and DE-AC02-06CH11357 
v 

AVAILABILITY

This report is available electronically at http://www.osti.gov/bridge 

Available for a processing fee to 

U.S. Department of Energy and its 

contractors, in paper form, from: 

U.S. Department of Energy 

Office of Scientific and Technical 

Information

P.O. Box 62 

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phone: 865.576.8401 

fax: 865.576.5728 

email: mreports@adonis.osti

Available for sale to the public, 

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online ordering: 

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CITATION

Please cite as follows: 

Ruth, M.; Mai, T.; Newes, E.; Aden, A.; Warner, E.; Uriarte, C; Inman, D.; Simpkins, T.; Argo, 

A. (0DUFK 2013). Projected Biomass Utilization for Fuels and Power in a Mature Market. 

Transportation Energy Futures Series. Prepared for the U.S. Department of Energy by National 

Renewable Energy Laboratory, Golden, CO. DOE/GO-102013-3707. 153 pp. 
vi

REPORT CONTRIBUTORS AND ROLES 

National Renewable Energy Laboratory 

Mark Ruth Lead and primary author 

Trieu Mai Model developer 

Emily Newes Data analyst and contributing author 

Andy Aden Biomass data expert

Ethan Warner Life cycle analyst 

Caroline Uriarte Data analyst

Daniel Inman Data analyst

Travis Simpkins Model developer 

Andrew Argo Biomass data expert 
vii

ACKNOWLEDGMENTS

We are grateful to colleagues who reviewed portions or the entirety of this report in draft form, including:

Ingrid Ardjosoediro, Commodity Expert and Agricultural Economist, Global Policy Analysis Division, 

Foreign Agriculture Service, U.S. Department of Agriculture (USDA)

Marilyn Buford, National Program Leader, Silviculture Research, Forest Management Sciences, Forest 

Service, USDA

Vince Camobreco, Environmental Protection Specialist, Transportation and Climate Division, 

Office of Transportation and Air Quality (OTAQ), U.S. Environmental Protection Agency (EPA) 

Nita Contreras, Staff Assistant, Rural Development, USDA

Marina Denicoff, Economist, AMS Transportation Services Division, USDA

Garvin Heath, Senior Scientist, Strategic Life Cycle Analysis, Energy Analysis Center, National Renewable 

Energy Laboratory 

Dr. Mike Ladisch, Director, Laboratory of Renewable Resources Engineering Professor, Agricultural and 

Biological Engineering, Mascoma Corporation, Purdue University

Sara Ohrel, Economist, Climate Change Division, Office of Atmospheric Programs, EPA

Dr. Gerard Ostheimer, Science Advisor, Office of Global Analysis, Foreign Agriculture Service, USDA

Dr. Michael Shelby, Chief Economist, Transportation and Climate Division, OTAQ, EPA

Participants in an initial Transportation Energy Futures scoping meeting in June 2010 – representing the 

U.S. Department of Energy and national laboratories – assisted by formulating innovative and timely 

ideas to consider for the project. Steering Committee members and observers offered their thoughtful 

perspective on transportation analytic research needs as well as insightful comments on an initial 

Transportation Energy Futures work plan in a December 2010 meeting and periodic teleconferences 

through the project. 

Many analysts and managers at the U.S. Department of Energy played important roles in sponsoring this 

work and providing valuable guidance. From the Office of Energy Efficiency and Renewable Energy, 

Sam Baldwin and Carla Frisch provided leadership in conceptualizing the project. A core team of 

analysts collaborated closely with the national lab team throughout implementation of the project. These 

included: 

Jacob Ward and Philip Patterson (now retired), Vehicle Technologies Office 

Tien Nguyen and Fred Joseck, Fuel Cell Technologies Office

Zia Haq, Kristen Johnson, and Alicia Lindauer-Thompson, Bioenergy Technologies Office

The national lab project management team consisted of Austin Brown, Project Lead, and Laura 

Vimmerstedt, Project Manager (from the National Renewable Energy Laboratory); and Tom Stephens, 

Argonne Lead (from Argonne National Laboratory). Data analysts, life cycle assessment analysts, 

managers, contract administrators, administrative staff, and editors at both labs offered their dedication 

and support to this effort.

ix

Table of Contents

List of Figures ............................................................................................................................................ xi

List of Tables ............................................................................................................................................ xiv

Acronyms.................................................................................................................................................. xvi

Executive Summary.................................................................................................................................... 1

1. Introduction ............................................................................................................................................. 5

2. Other Analyses of Biomass Utilization Potential and Competition .................................................. 7

3. Analysis Methodology and Default Data ............................................................................................ 11

3.1. Introduction to Analysis Methodology and the Biomass Allocation and Supply Equilibrium 

(BASE) Model ................................................................................................................................ 11

3.2. BASE Model Methodology and Structure...................................................................................... 11

3.3. Biomass Resource Supply Curves................................................................................................ 14

3.4. Competing Uses of Biomass ......................................................................................................... 16

3.5. Biomass Transport Costs .............................................................................................................. 18

3.6. Biofuel Conversion Yields and Costs ............................................................................................ 19

3.7. Delivery and Dispensing Costs for Conventional Fuels and Biofuels ........................................... 21

3.8. Conventional Fuel Price Projections ............................................................................................. 22

3.9. Fuel Market Sizes.......................................................................................................................... 23

3.10. Electricity Cost and Performance Data ....................................................................................... 24

3.11. Life Cycle GHG Emissions and Petroleum Consumption ........................................................... 26

4. Results From Model Runs Using Default Data................................................................................... 29

4.1 Levelized Cost of Energy Results................................................................................................... 29

4.2 Default Data Scenarios with Carbon Prices ................................................................................... 33

5. Sensitivity Results and Implications................................................................................................... 49

5.1 Improved Opportunities for Biopower ........................................................................................... 49

5.2 Failure of Conversion Technology Development........................................................................... 57

5.3 Feedstock Cost Sensitivities .......................................................................................................... 61

5.4 Different Cost Assumptions for Competing Resources: High Natural Gas Prices; Low Oil 

Prices ............................................................................................................................................. 66

6. Proposed Additional Biomass Analysis Work, Sensitivities, and Model Improvements .............. 73

7. Conclusions........................................................................................................................................... 76

Appendix A: Summary of Other Analyses.............................................................................................. 79

Appendix B: Description of the Biomass Allocation and Supply Equilibrium (BASE) Model .......... 86

Appendix C: Biomass Resource Supply Curves ................................................................................... 98

Appendix D: Competing Uses of Biomass........................................................................................... 107

Appendix E: Biomass Transport Costs ................................................................................................ 109

Appendix F: Biomass Conversion Costs and Efficiencies................................................................. 114

Appendix G: Delivery and Dispensing Costs for Conventional Fuels and Biofuels........................ 121

Appendix H: Conventional Fuel Price Projections .............................................................................. 125

Appendix I: Market Sizes........................................................................................................................ 126

Appendix J: Electricity Data................................................................................................................... 128

Appendix K: Life Cycle GHG Emissions and Petroleum Consumption ............................................ 132

Appendix L: Conventional Fuel Prices and Market Sizes Used for the Low Oil Price

Sensitivities........................................................................................................................ 140
x 

Appendix M: Conversion to 2005$ ........................................................................................................ 141

Appendix N: Gasoline Price Elasticity of Demand .............................................................................. 142

References............................................................................................................................................... 148
xi 

LIST OF FIGURES

Figure 3.1. Supply curves used for the 2020 BASE runs ........................................................................... 15

Figure 3.2. Supply curves used for the 2050 BASE runs ........................................................................... 16

Figure 3.3. Feedstock logistic and transport costs ..................................................................................... 18

Figure 3.4. Fuel distribution and marketing costs ....................................................................................... 22

Figure 3.5. WTW and WTT life cycle GHG emission estimates used in the BASE model for 2020........... 27

Figure 3.6. WTW and WTT life cycle GHG emission estimates used in the BASE model for 2050........... 27

Figure 3.7. WTW and WTT life cycle petroleum consumption estimates used in the BASE model for 

 2020........................................................................................................................................... 28

Figure 3.8. WTW and WTT life cycle petroleum consumption estimates used in the BASE model for

 2050........................................................................................................................................... 28

Figure 4.1. LCOE breakdown for gasoline-market fuels in 2020 with various feedstock prices................. 30

Figure 4.2. LCOE breakdown for gasoline-market fuels in 2050................................................................ 30

Figure 4.3. LCOE breakdown for diesel, jet, and bunker-market fuels in 2020 .......................................... 31

Figure 4.4. LCOE breakdown for diesel, jet, and bunker-market fuels in 2050 .......................................... 31

Figure 4.5. LCOE breakdown for electricity in 2020 ................................................................................... 32

Figure 4.6. LCOE breakdown for electricity in 2050 ................................................................................... 32

Figure 4.7. Biomass penetration in hypothetical mature 2020 markets with varied costs of carbon.......... 33

Figure 4.8. Biomass penetration in hypothetical mature 2050 markets with varied costs of carbon.......... 34

Figure 4.9. Biopower penetration in hypothetical mature 2020 markets with varied costs of carbon........ 35

Figure 4.10. Biopower penetration in hypothetical mature 2050 markets with varied costs of carbon....... 35

Figure 4.11. Effect of carbon cost on coal and natural gas prices and electric sector consumption in 

2020........................................................................................................................................ 36

Figure 4.12. Effect of carbon cost on coal and natural gas prices and electric sector consumption in 

2050........................................................................................................................................ 36

Figure 4.13. Biofuel utilization in each hypothetical mature 2020 fuel market with varied costs of 

carbon .................................................................................................................................... 37

Figure 4.14. Biofuel utilization in each hypothetical mature 2050 fuel market............................................ 38

Figure 4.15. Biomass utilization in each hypothetical mature 2020 fuel market with varied costs of 

carbon .................................................................................................................................... 39

Figure 4.16. Biomass utilization in each hypothetical mature 2050 fuel market with varied costs of 

carbon .................................................................................................................................... 39

Figure 4.17. Biomass utilization by fuel type in the hypothetical mature 2020 fuel markets with varied 

costs of carbon....................................................................................................................... 40

Figure 4.18. Biomass utilization by fuel type in the hypothetical mature 2050 fuel markets with varied 

costs of carbon....................................................................................................................... 41

Figure 4.19. Biomass utilization by feedstock type in the hypothetical mature 2020 fuel markets with 

varied costs of carbon ............................................................................................................ 42

Figure 4.20. Biomass utilization by feedstock type in the hypothetical mature 2050 fuel markets with 

varied costs of carbon ............................................................................................................ 42

Figure 4.21. Feedstock supply curves in 2020 with indicators showing quantity consumed and price...... 43

Figure 4.22. Total emissions by sector in hypothetical mature 2020 markets with varied costs of 

carbon .................................................................................................................................... 44

Figure 4.23. Annual electric sector emissions by sector in hypothetical mature 2020 markets with 

varied costs of carbon ............................................................................................................ 44
xii 

Figure 4.24. Total emissions by sector in hypothetical mature 2050 markets with varied costs of 

carbon .................................................................................................................................... 45

Figure 4.25. Annual electric sector emissions by sector in hypothetical mature 2050 markets with 

varied costs of carbon ............................................................................................................ 45

Figure 4.26. Annual WTW petroleum use by market in hypothetical mature 2020 markets with varied 

costs of carbon....................................................................................................................... 46

Figure 4.27. Annual WTW petroleum use by fuel genesis in hypothetical mature 2020 markets with 

varied costs of carbon ............................................................................................................ 47

Figure 4.28. Annual WTW petroleum use by market in hypothetical mature 2050 markets with varied 

costs of carbon....................................................................................................................... 47

Figure 4.29. Annual WTW petroleum use by fuel genesis in hypothetical mature 2050 markets with 

varied costs of carbon ............................................................................................................ 48

Figure 5.1. Effects of reduced biopower capital costs on biomass utilization in each hypothetical 

 mature 2020 market with varied costs of carbon ...................................................................... 50

Figure 5.2. Effects of reduced biopower capital costs on biopower penetration in hypothetical mature 

 2020 markets with varied costs of carbon................................................................................. 50

Figure 5.3. Effects of reduced heat rates on biomass utilization in each hypothetical mature 2050 fuel 

 market with varied costs of carbon............................................................................................ 51

Figure 5.4. Effects of reduced heat rates on biopower penetration in hypothetical mature 2050 

 markets with varied costs of carbon.......................................................................................... 52

Figure 5.5. Effects of CCS availability on biopower penetration in hypothetical mature 2050 markets 

 with varied costs of carbon........................................................................................................ 53

Figure 5.6. Effects of CCS availability on biomass utilization in each hypothetical mature 2050 fuel 

 market with varied costs of carbon............................................................................................ 54

Figure 5.7. Effects of CCS availability on biofuel production by fuel type in hypothetical mature 2050 

 markets with varied costs of carbon.......................................................................................... 55

Figure 5.8. Effects of CCS availability on carbon emissions in hypothetical mature 2050 markets with 

 varied costs of carbon ............................................................................................................... 56

Figure 5.9. Effects of CCS availability on WTW petroleum use in hypothetical mature 2050 markets 

 with varied costs of carbon........................................................................................................ 57

Figure 5.10. Effects of pyrolysis R&D failure on biomass utilization by feedstock type in hypothetical

mature 2050 markets with varied costs of carbon ................................................................. 58

Figure 5.11. Effects of pyrolysis R&D failure on biomass utilization in each hypothetical mature 2050 

fuel market by fuel type with varied costs of carbon .............................................................. 59

Figure 5.12. Effects of pyrolysis R&D failure on carbon emissions in hypothetical mature 2050 

markets with varied costs of carbon....................................................................................... 60

Figure 5.13. Effects of pyrolysis R&D failure on WTW petroleum use in hypothetical mature 2050 

markets with varied costs of carbon....................................................................................... 61

Figure 5.14. Effects of high prices for corn and soybeans on biomass utilization by feedstock type in 

hypothetical mature 2020 markets with varied costs of carbon ............................................. 62

Figure 5.15. Effects of high prices for corn and soybeans on biomass utilization in each hypothetical 

mature 2020 fuel market with varied costs of carbon by fuel type......................................... 62

Figure 5.16. Effects of high prices for corn and soybeans on carbon emissions in hypothetical mature 

2020 markets with varied costs of carbon.............................................................................. 63

Figure 5.17. Effects of high prices for corn and soybeans on WTW petroleum use in hypothetical 

mature 2020 markets with varied costs of carbon ................................................................. 63

Figure 5.18. Effects of high lignocellulosic biomass prices on biomass utilization by feedstock type in 

hypothetical mature 2020 markets with varied costs of carbon ............................................. 64

Figure 5.19. Effects of high lignocellulosic biomass prices on biomass utilization in each hypothetical 

mature 2020 fuel market by fuel type with varied costs of carbon......................................... 65
xiii

Figure 5.20. Effects of high prices for agricultural residue and switchgrass on biomass utilization in 

hypothetical mature 2020 markets with varied costs of carbon, by feedstock type............... 66

Figure 5.21. Effects of high NG prices on biopower penetration in hypothetical mature 2020 markets 

with varied costs of carbon..................................................................................................... 67

Figure 5.22. Effects of high NG prices on biomass utilization in each hypothetical mature 2020 fuel 

market with varied costs of carbon by fuel type ..................................................................... 68

Figure 5.23. Effects of high NG prices on GHG emissions in hypothetical mature 2020 markets with 

varied costs of carbon ............................................................................................................ 69

Figure 5.24. Effects of low oil prices on biomass utilization in each hypothetical mature 2020 fuel 

market with varied costs of carbon by fuel type ..................................................................... 70

Figure 5.25. Effects of low oil prices on biomass utilization in each hypothetical mature 2020 fuel 

market .................................................................................................................................... 71

Figure 5.26. Effects of low oil prices on biopower penetration in hypothetical mature 2020 markets 

with varied costs of carbon..................................................................................................... 71

Figure 5.27. Effects of low oil prices on carbon emissions in hypothetical mature 2020 markets with 

varied costs of carbon ............................................................................................................ 72

Figure 5.28. Effects of low oil prices on WTW petroleum use in hypothetical mature 2020 markets 

with varied costs of carbon..................................................................................................... 72

Figure A.1. CO2 emissions from BEAP and GET base case scenarios ..................................................... 80

Figure A.2. Time evolution of biomass usage and break out of transportation fuels predicted by the 

 two models ............................................................................................................................... 81

Figure B.1. BASE model structure .............................................................................................................. 87

Figure B.2. Nested logit structure for the gasoline market.......................................................................... 94

Figure B.3. Nested logit structure for the diesel, jet fuel, and bunker fuel markets .................................... 94

Figure B.4. Nested logit structure for the electricity market ........................................................................ 95

Figure B.5. Load slices in the electricity market.......................................................................................... 96

Figure B.6. Feedstock prices are iterated until convergence...................................................................... 97

Figure C.1. National SRWC supply curves (nominal costs) ..................................................................... 100

Figure C.2. National perennial grasses supply curves (nominal costs).................................................... 100

Figure C.3. National agricultural residues supply curves (nominal costs)................................................ 101

Figure C.4. National forest residues supply curves (nominal costs)......................................................... 101

Figure C.5. National SRWC supply curves (conversion data to 2005$)................................................... 102

Figure C.6. National forest residues supply curves (conversion data to 2005$) ...................................... 102

Figure C.7. National agricultural residues supply curves (conversion data to 2005$).............................. 103

Figure C.8. National grasses supply curves (conversion data to 2005$) ................................................. 103

Figure C.9. Supply curves used for the 2020 BASE runs......................................................................... 104

Figure C.10. Supply curves used for the 2050 BASE runs....................................................................... 105

Figure D.1. EIA projections for annual biomass resource consumption by competing uses.................... 108

Figure E.1. Schematic diagram showing three feedstock supply and logistics designs developed by 

 Idaho National Laboratory...................................................................................................... 109

Figure E.2. Feedstock logistic and transport costs ................................................................................... 113

Figure G.1. Fuel distribution and marketing costs .................................................................................... 124

Figure K.1. WTW and WTT life cycle GHG emissions and petroleum consumption estimates used in 

 the BASE model for 2020 and 2050....................................................................................... 133

Figure N.1. Summary of gasoline elasticity estimates .............................................................................. 145
xiv 

LIST OF TABLES

Table 3.1. Biomass Feedstocks, Fuels, and Markets Represented in the BASE Model............................ 12

Table 3.2. Categorization of BT2 Biomass Types for the BASE Model...................................................... 14

Table 3.3. Projections from the EIA for Annual Biomass Resource Consumption by Competing Uses ... 17

Table 3.4. Data Inputs................................................................................................................................. 19

Table 3.5. 2020 Conversion Data in 2005$ ................................................................................................ 20

Table 3.6. 2050 Conversion Data in 2005$ ................................................................................................ 20

Table 3.7. Pricing Data Used in the BASE Model....................................................................................... 22

Table 3.8. Market Size Data Used in the BASE Model............................................................................... 23

Table 3.9. 2020 Cost Data for Electricity Generation Technologies Used in the BASE Model (2005$) .... 25

Table 3.10. 2035 Cost Data for Electricity Generation Technologies Used in the BASE Model 

 (2005$)..................................................................................................................................... 25

Table 3.11. 2020 and 2050 Fossil-Fuel and Uranium Prices (2005$) ........................................................ 26

Table 5.1. 2050 Cost and Performance Data for CCS Generation Technologies (2005$) ........................ 53

Table B.1. The Biomass Feedstocks, Fuels, and Markets Represented in the BASE Model .................... 88

Table B.2. Definition of Terms Used in LCOE Formulas (Presented in Equations B.1 and B.2) ............... 91

Table C.1. Categories for BT2 and TEF ..................................................................................................... 99

Table C.2. Corn Data ................................................................................................................................ 106

Table C.3. Soybean Data.......................................................................................................................... 106

Table D.1. Projections from the EIA for Annual Biomass Resource Consumption by Competing Uses.. 108

Table E.1. Key Parameters for the Conventional Bale System ................................................................ 110

Table E.2. Costs Associated with Using a Conventional Feedstock Supply and Logistics System ......... 111

Table E.3. Conventional 2012 Feedstock Supply and Logistics Total Costs, Diesel Use and Cost, 

 Electricity Use and Cost, and Natural Gas Use and Cost....................................................... 111

Table E.4. Results with Harvest and Collection Costs.............................................................................. 112

Table E.5. Results without Harvest and Collection Costs......................................................................... 112

Table F.1. 2020 Conversion Data ............................................................................................................. 115

Table F.2. 2050 Conversion Data ............................................................................................................. 115

Table F.3. 2020 Conversion Data in 2005$ .............................................................................................. 116

Table F.4. 2050 Conversion Data in 2005$ .............................................................................................. 116

Table F.5. Heat Content by Fuel Type...................................................................................................... 120

Table G.1. Annual Energy Outlook 2011 Distribution and Marketing Cost Projections (2009$) .............. 121

Table G.2. Distribution and Marketing Costs Used in this Analysis (2009$) ............................................ 122

Table G.3. Distribution and Marketing Costs Used in the BASE Model (2005$)...................................... 123

Table H.1. Pricing Data Used in the BASE Model .................................................................................... 125

Table I.1. Market Size Data Used in the BASE Model.............................................................................. 127

Table J.1. 2020 Cost and Performance Data for Electricity Generation Technologies (2009$)............... 129

Table J.2. 2020 Cost Data for Electricity Generation Technologies Used in the BASE Model (2005$)... 129

Table J.3. 2035 Cost and Performance Data for Electricity Generation Technologies (2009$)............... 130

Table J.4. 2035 Cost Data for Electricity Generation Technologies Used in the BASE Model (2005$)... 130

Table J.5. 2020 and 2050 Fossil-Fuel and Uranium Prices (2009$) ........................................................ 131

Table J.6. 2020 and 2050 Fossil-Fuel and Uranium Prices (2005$) ........................................................ 131

Table K.1. Life Cycle GHG Emissions and Petroleum Consumption Estimates Used in the BASE 

 Model for 2020 and 2050 ........................................................................................................ 137
xv 

Table K.2. Vehicle Fuel Efficiencies Used to Calculate WTW Life Cycle GHG Emissions and 

 Petroleum Consumption Estimates......................................................................................... 139

Table L.1. Pricing Data Used in the BASE Model Low Oil Price Scenario ............................................... 140

Table L.2. Market Size Data Used in the BASE Model Low Oil Price Scenario....................................... 140

Table M.1. GDP Chain-Type Price Index Values...................................................................................... 141

Table N.1. Estimates from the Literature .................................................................................................. 145

Table N.2. Likely Gross Impacts of Selected Structural Factors on Gasoline Elasticity........................... 146
xvi

ACRONYMS

AEO Annual Energy Outlook 

BASE biomass allocation and supply equilibrium 

BD biodiesel 

BEAP Biomass Environmental Assessment Program 

BLM Biomass Logistics Model

BSM Biomass Scenario Model

BT2 Updated Billion Ton Study 

Btu British thermal unit

bu bushel 

CCS carbon capture and storage

CD conventional diesel 

CG conventional gasoline 

CNG compressed natural gas

CO2 carbon dioxide 

CO2e carbon dioxide equivalent 

CSP concentrating solar power

DME dimethyl ether

DOE U.S. Department of Energy 

dt dry ton 

E85 85% ethanol in gasoline 

EERE Energy Efficiency and Renewable Energy

EIA Energy Information Administration 

EWITS Eastern Wind Integration and Transmission

FAPRI Food and Agricultural Policy Research Institute 

FT Fischer-Tropsch

gal gallon

GCAM Global Climate Assessment Model

gde gallon diesel equivalent

GDP gross domestic product 

GET Global Energy Transition 

gge gallon gasoline equivalent

GHG greenhouse gases

GREET Greenhouse Gases, Regulated Emissions and Energy Use in Transportation

IGCC integrated gasification combined cycle

LCOE levelized cost of energy

LHV lower heating value

LNG liquefied natural gas

MARKAL Market Allocation Model 

MTG methane to gasoline

NASS National Agricultural Statistics Service

NG natural gas

NG[-]CC natural gas combined cycle

NG[-]CT natural gas combustion turbines 

NREL National Renewable Energy Laboratory

O&M operation and maintenance 

PHEV plug-in hybrid electric vehicle

PV photovoltaic 
xvii

quad quadrillion Btu 

R&D research and development

RBAEF Role of Biomass in America’s Energy Future

RD renewable diesel

RD&D research, development, and demonstration 

RE renewable energy

ReEDS Regional Energy Deployment System 

REF Renewable Electricity Futures

SEDS Stochastic Energy Deployment Systems (computer model)

SRWC short rotation woody crops 

TEF Transportation Energy Futures 

USDA U.S. Department of Agriculture 

WTT well-to-tank 

WTW well-to-wheel(s)
xviii
1 

EXECUTIVE SUMMARY

The U.S. biomass resource can be used several ways that provide domestic, renewable energy to users. 

Understanding the capacity of the biomass resource, its potential in energy markets, and the most 

economic utilization of biomass is important in policy development and project selection. This study 

analyzed the potential for biomass within markets and the competition between them. The study found 

that biomass has the potential to compete well in the jet fuel and gasoline markets, penetration of biomass 

in markets is likely to be limited by the size of the resource, and that biomass is most cost effectively used 

for fuels instead of power in mature markets unless carbon capture and sequestration is available and the 

cost of carbon is around $80/metric ton CO2e. 

Biomass Utilization Issues

Biomass is a limited resource with many competing uses. Its allocation for fuel, power, and products 

depends upon characteristics of each of these markets, their interactions, and policies affecting these 

markets. In order to better understand competition for biomass among markets and the potential for 

biofuel as a market-scale alternative to petroleum-based fuels, the Transportation Energy Futures (TEF) 

study created a unique modeling tool to analyze the impact of these multiple demand areas.

There are compelling reasons for use of biomass in each of these three markets:

• Fuel: Biomass is the primary renewable resource that can be used to generate liquid fuels for 

today’s vehicles and infrastructure.

• Power: Technology is currently available to enable co-firing with coal, reducing the carbon 

intensity of baseload electricity and providing one of the few renewable dispatchable options. 

• Products: Mixtures of chemicals with carbon-hydrogen-oxygen bonds such as those found in 

biomass are too valuable to burn.

Federal policy and activities have supported both biofuels and biopower. Relevant policies include the 

renewable fuels standard, the renewables portfolio standard, the clean energy standard, and many state 

and regional greenhouse gas (GHG) policies. Goals for biofuel policies include reduction in petroleum 

and, especially, petroleum imports to increase energy security. Other goals for biofuel policies focus on 

environmental and economic concerns, GHG emissions reduction, and diversification of agricultural 

products. Goals for biopower policies include displacement of coal for environmental concerns and GHG 

reduction. In the past two decades, the U.S. Department of Energy’s research and development (R&D) 

Key Findings

• Biofuels are likely to be able to compete successfully with petroleum-based fuels, particularly in 

the jet fuel and gasoline markets, if R&D is successful and petroleum product prices are as high as 

the Energy Information Administration projects.

• Penetration of biofuels is constrained by the size of the potential biomass resource. 

• Biomass is most cost effectively used for fuels instead of power in mature energy markets unless 

carbon capture and sequestration is available and the cost of carbon is around $80/metric ton CO2e. 

• Pyrolysis-based biofuels are more cost competitive than other biofuels and show the greatest 

potential for market penetration. 

• Markets with a cost of carbon drive up demand for biomass in the transportation sector, increasing 

the price of biomass and making biopower less competitive with other electricity generation 

alternatives.
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

2 

has addressed both biofuels and biopower. In addition, U.S. Environmental Protection Agency 

deployment activities have included biopower, especially where it can address environmental issues, as 

well as applications for niche biofuels.

Many models only consider biomass in either the power or fuels market, but not both. If one looks at the 

results of such models, the biomass availability and utilization could easily be double-counted because 

competition from the other sector is not considered. Such double-counting might lead to unwarranted 

conclusions and decisions; thus, studies that consider demand from multiple sectors are needed. 

Allocation of resource between biopower and biofuels, as well as across different fuels markets, is of keen 

interest in understanding how this energy resource might contribute to the national goals of reduced 

petroleum use and GHG emissions. While some existing literature explores this issue, and a few existing 

modeling tools have been developed to analyze it, a detailed market equilibrium analysis of the issues had 

not been performed as of 2012. As a result, researchers determined one would be useful in exploration of 

the implications of diverse scenarios where biomass can be used for power and multiple fuels. 

BASE – A Market Equilibrium Model Developed for this Project

A market at equilibrium is one where the quantity supplied and that demanded are equivalent and prices 

are set by the market such that the supply meets the demand. Market equilibrium analysis is useful, 

because it indicates how a mature commodity market is likely to perform. Thus, results of market 

expansion models can be compared to market equilibrium analysis to ensure that driving forces in the 

market expansion models are headed toward equilibrium. Market equilibrium models do not provide 

insights into interim technology development or the merits of policy options. 

The research team developed a simple market equilibrium modeling tool specifically for the TEF project. 

The Biomass Allocation and Supply Equilibrium (BASE) model is a market equilibrium model for 

biomass supplies and markets. The model includes domestic supply curves for the following four 

categories of lignocellulosic biomass resources: forest residues, short-rotation woody crops (SRWC), 

agricultural residues, and switchgrass (the general name used throughout this report for all grassy energy 

crops). The BASE model also includes corn for ethanol (non-cellulosic/conventional production) and 

butanol production, soybeans for biodiesel, and algae for diesel. 

In addition, five domestic markets for biomass-based energy are included: electricity, gasoline, diesel, jet 

fuel, and bunker fuel. Multiple fuel and feedstock options are supplied in the model for each fuel market. 

Well-to-wheel (WTW) GHG emissions and petroleum use are included in the model to determine carbon 

costs and report the effects of petroleum use. Market sizes are set and kept constant because market 

elasticity is poorly understood, resulting in the effects of substitutes (e.g., natural gas for natural gas 

vehicles) on fuel prices not being sufficiently understood to include in this model. Imports and exports are 

not included in the BASE model because of a lack of information.

Advanced biofuels pathways are projected to reduce GHG emissions and petroleum use well below 

conventional technology. The differences between the biofuels are small when compared to the 

differences between each biofuel and the conventional technology. To fully understand the effects on the 

biomass markets, the model was run with multiple parameter values including various carbon costs.

Input data for the BASE model were collected from publicly available sources and include projections of 

biomass supply cost curves, biomass harvesting and transport costs, biomass conversion costs, electricity 

costs from other sources, fuel transport and dispensing costs, and well-to-wheel greenhouse gas emissions 

and petroleum use. Levelized costs for each fuel and electricity are calculated based on the inputs and 

include a cost of carbon for some scenarios. The 2050 levelized cost projections of cellulosic biofuels 

indicate that they are cost-competitive with gasoline at feedstock costs of up to $160/dry ton. On the other 

hand, 2050 levelized cost projections of biopower indicate that it is not cost competitive with feedstock 

costs of over $40/dry ton. 
TRANSPORTATION ENERGY FUTURES SERIES Biomass

3 

Biofuels Can Attain Considerable Market Share but are Constrained by 

Resource Size

One key conclusion of this study is that biomass can attain market share in the transportation sector, 

particularly the diesel and jet fuel markets. That conclusion is based on mature market conditions with the 

default biomass feedstock, transport, and conversion assumptions and the business as usual projections 

for market sizes and conventional fuel prices. In a hypothetical 2020 market, biofuel penetration can 

achieve penetration levels 15% in the gasoline market and 25% in the jet fuel market. In a scenario where 

the cost of carbon is high ($80/metric ton CO2e), biofuels penetration in each market is about 5% higher 

than without a cost of carbon because biofuels are less carbon intensive than conventional fuels. 

Note that the market allocations in this study are estimates that are dependent upon mature, balanced 

markets where R&D has been as successful as projected. In addition, other drivers could affect the actual 

markets: regulations may affect the market structure, access to capital may not be possible, markets may 

evolve in ways that prevent them from reaching equilibrium, and many temporal reasons may prevent the 

markets from nearing equilibrium (e.g., retirement rates of and/or replacement of existing stock, 

conservative business decisions, uncertain and changing policies, lack of achievement of plant cost and 

performance projections due to lack of learning, and so on).

Biomass could attain an even larger market share in the hypothetical markets if it was not resource 

limited. In the default scenario, the feedstock supply curves were completely depleted for some 

lignocellulosic feedstocks (i.e., SRWC, agricultural residues, and switchgrass). Complete utilization of 

feedstocks indicates that wider deployment of biofuels is warranted by the market. 

Biomass Competitiveness is Limited in Power Markets

Biopower does not achieve much market share (<1%) even with a price of carbon of $80/metric ton CO2e, 

unless carbon capture and storage (CCS) is available. The primary reason biopower does not penetrate is 

that it is more expensive than other low-carbon options for electricity generation, which compete 

successfully, especially in scenarios with higher costs of carbon. More optimistic biopower cost and 

performance assumptions do not considerably increase its market share. On the other hand, availability of 

CCS increases biopower penetration from essentially nothing to 2%-13% of the power market with a $40-

$80/metric ton cost of carbon.

Pyrolysis-Based Fuels are Projected to be More Competitive

Among the different types of biofuels considered in this study, pyrolysis fuels (gasoline and diesel) are 

more cost competitive with conventional fuels than other biofuels. Thus they had the greatest market 

penetration when available. If R&D in pyrolysis does not succeed, biofuel penetration is much lower in 

the jet and diesel markets. In a scenario where the R&D on pyrolysis-based fuels failed and the fuels were 

not available in 2050, biofuel penetration dropped by 90% in the diesel market and by 65% in the jet fuel 

market. 

High Costs of Carbon Drives Up Demand for Biomass for Fuels

While costs of carbon have a greater decarbonizing effect on the electricity sector compared to the fuel 

sector, markets with a carbon cost drive up demand for biomass in the transportation sector. Therefore, 

the presence of carbon costs drives up the cost of biomass and makes biopower less competitive with 

other power-generation options. The result is different if CCS is available for the electric sector and an 

$80/metric ton CO2e cost of carbon is considered. In that case, biomass is utilized for power because of 

the negative carbon emissions.
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

4 

Biofuel Availability Reduces Petroleum Use

A hypothetical 2020 market with biofuels has a well-to-wheels petroleum use that is 88% of one without 

biofuels when there is no cost of carbon. Petroleum use is further reduced to 84% of a non-biofuel market 

when a cost of carbon of $80/metric ton CO2e is considered. Increased costs of carbon only have minor 

effects on reductions in petroleum use, because most of the biomass supply is utilized for fuel at no cost 

of carbon, making only small increases possible.

The bottom line is that biofuels are likely to compete successfully with petroleum-based fuels and use a 

large share of the potential resource—if R&D is successful and petroleum product prices are as high as 

the U.S. Energy Information Administration projects [Annual Energy Outlook 2011 reference case (U.S. 

EIA 2011)]. 
TRANSPORTATION ENERGY FUTURES SERIES Biomass

5 

1. INTRODUCTION

In the Transportation Energy Futures (TEF) project, biomass1 was identified early on as a key resource 

for analysis, because large quantities are potentially available and have the potential to be used for many 

purposes, including liquid fuels, electricity, hydrogen, and chemical products. Currently, large amounts of 

biomass are being utilized for energy, and much more biomass is or can be available as an energy 

feedstock. In 2010, 3.9 quadrillion British thermal units (Btu), or quads, of biomass were used, including 

lignocellulosic biomass, corn for ethanol, soybeans for biodiesel, and municipal solid waste, landfill gas, 

and sewage sludge, supplying 4% of the total energy consumption in the United States, and surpassing 

hydropower as the largest domestic source of renewable energy (DOE and EIA 2010a). In the future, 

approximately 16 quads of energy could be available from one billion dry short tons of lignocellulosic 

biomass—an estimate of the total, sustainable biomass potential in the United States (U.S. Billion Ton 

Update, DOE 2011). 

The potential to convert a limited biomass resource to valuable products, such as liquid fuels, electricity, 

hydrogen, and chemicals results in questions about the best use of that resource. From a transportation 

viewpoint, liquid biofuels are advantageous, because they are the primary renewable option for current 

vehicles and aircraft. In addition, liquid biofuels can use the same or similar infrastructure that is currently 

in place for gasoline, diesel, bunker fuel (fuel used onboard ships), and jet fuel. From an electricity 

viewpoint, biomass-generated electricity is one of few dispatchable and non-variable renewable options 

and thus can be used for base load electricity (i.e., power that meets the 24-hour minimum demand). 

Because of the number of options for utilizing biomass, the following key questions about its use were 

identified early in the project:

• What are the costs and implications of biomass use and allocation in transportation and other 

sectors? 

• Will market forces allow access to biomass fuels for those sectors or transport modes that have 

limited alternative options to reduce their greenhouse gas (GHG) emissions? What strategies or 

policies might address market failures in the use of biomass, while improving the probability of 

meeting economy-wide GHG and oil reduction goals? How might decisions early in the market 

evolution drive toward different end points that may or may not be the most desirable? 

• What are likely geographic distributions of bio-based fuels use under various deployment 

scenarios?

• How can alternative technology options (including supply chain options) enable wider use of 

bioenergy to reduce GHG emissions and oil use in the transportation sector?

This task addresses the first key question above by way of a micro-economic analysis of biomass markets 

that supply biomass to mature energy markets. The markets are assumed to approximate equilibrium—the 

quantity of biomass supplied and demanded are equivalent and the biomass prices are set such that the 

supply is sufficient to meet the demand. Mature commodity markets operate close to equilibrium, because 

the products are fungible and the markets are essentially “perfectly competitive.” Perfectly competitive 

markets, often called “free markets,” are markets in which there are many buyers and sellers (none of 

whom can influence prices) and barriers to market entry have been overcome. Free markets are not 

necessarily unregulated, but they are markets where regulation does not affect the competitiveness. Due to 

a higher level of risk, near-term markets for biomass are not expected to approach equilibrium, even 

 

1 In this paper, biomass refers to biological material from living or recently living organisms. Lignocellulosic biomass is from 

non-edible plant matter, including agricultural residues, forestry residues, woody energy crops, and herbaceous energy crops. 

Algae refer to the algae that are grown to generate fuels. Edible corn and soybeans are counted separately. Other analyses also 

include relatively small sources of biomass such as animal fats, municipal solid waste, landfill gas, and sewage sludge.
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

6 

though they are growing faster than the economy. Although greater resource availability reduces barriers 

to entry, the elevated risk can diminish the number of investors. 

By focusing on mature biomass markets, this study identifies how biomass is projected to be most 

economically used in the long term and the implications of that market on GHG emissions and petroleum 

use. That viewpoint provides value in understanding how biomass can be used in markets at equilibrium 

and quantifies the drivers that affect the amount of biomass used and its distribution between electricity 

and fuel markets. The results can be used to support research and development (R&D) target setting and 

project selection, by helping identify drivers that affect the potential penetration of specific technologies 

in a market at equilibrium. For example, if the market penetration of a given technology is supply limited, 

and a sensitivity on yield improvements is performed, the results of that sensitivity can indicate the yield 

necessary for market saturation. Therefore, efforts to improve the yield beyond that point are not 

necessary, because it will not increase market penetration. In addition, the model can assist in identifying 

policy options that drive the markets away from the desired outcome. For example, the effects on other 

markets of subsidies in one market can be studied.

The Biomass Allocation and Supply Equilibrium (BASE) model was developed specifically for this 

analysis. It includes supply curves for the following four categories of lignocellulosic biomass: forest 

residues, short-rotation woody crops (SRWC), agricultural residues, and switchgrass (the general name 

used throughout this report for all grassy energy crops). It also includes corn for ethanol and butanol 

production, soybeans for biodiesel, and algae for diesel. Five markets where biomass-based energy 

compete are also included: electricity, gasoline, diesel, jet fuel, and bunker fuel. Prices for each fuel 

within each market are calculated independently and model iterations solve for consistent biomass prices. 

Multiple fuel and feedstock options are included in the model for each fuel market with specific 

efficiencies defined for each feedstock-fuel combination. Sensitivity results are reported to identify how 

potential assumptions affect the projected market distributions. 

This study does not consider how the development of near-term markets might affect long-term markets 

by expending capital resources on technologies that detract from equilibrium. Additional studies of 

market development will be necessary to determine whether current activity is on the desired track.

Section 2 highlights existing analyses of biomass markets. Issues and opportunities for additional analysis 

are identified. Section 3 describes the analysis methodology, BASE model, and default data used for this 

analysis. Section 4 reports the results from runs performed using the default data. Section 5 reports results 

from sensitivity runs and implications of those results. Potential future work is discussed in Section 6, and 

conclusions of this analysis are reported in Section 7. Additional information is provided in the 

appendices.
TRANSPORTATION ENERGY FUTURES SERIES Biomass

7 

2. OTHER ANALYSES OF BIOMASS UTILIZATION

POTENTIAL AND COMPETITION

Analyses of biomass utilization options and the potential splits between fuels, power, and other uses have 

been performed by many other organizations. Reviewed studies are broken into three categories: (1) 

competition between biomass species and how their use could affect market evolution, (2) comparison of 

biomass products (including fuel and electricity) on non-economic bases, and (3) competition of biomass 

between markets (especially fuels and electricity). Because this study focuses on potential biomass 

markets, the following discussion will focus more on the third category of studies. 

In addition to these types of studies, many studies focus on biomass supply and its potential effects, the 

techno-economics of specific technologies, or effects of biomass utilization on GHG emissions. Those 

studies focus on capital costs, operating costs, yields, direct and indirect land use change, and many other 

factors. However, those studies are considered outside the scope of this paper.

The first category of studies reviewed here focuses on competition between biomass species and the 

potential evolution of biomass markets and land use effects. One example of that type of study (Khanna et 

al. 2010) defined specific value to biomass crops to estimate utilization of idle cropland and other studies 

performed similar feedstock cost analyses. Of the studies that focused on competition between species, 

some investigated competition between biomass feedstock sources in specific locales and the ability of 

those resources to meet specific demands. For example, one study (Sun, Li, and Hou 2011) investigated 

competition between biomass species for power generation and straw pulp industries in China. Its authors 

found that raw material competition could potentially prevent the development of multiple products. In 

this study, the biomass cost curves are from the BT2, which includes competition issues for the land and 

raw materials. The other studies were used only for comparing the biomass feedstock cost curves.

The second category of studies compares utilization options for biomass by means of non-economic 

criteria such as GHG emissions, efficiency, and potential miles driven per acre of biomass produced. 

Those that focus on GHG emissions (Wahlund, Yan, and Westermark 2004; Campbell and Block 2010; 

Campbell, Lobell, and Field 2009) generally find that utilization of biomass for power production has a 

larger effect on GHG emissions than use of lignocellulosic biomass for transportation fuel. This result is 

based on displacement of fossil-fuel power generation and displacement of gasoline, so it is not 

surprising. The studies that focus on efficiency (usually defined as mechanical work generated divided by 

chemical energy in the biomass) find that power production and utilization in electric vehicles is more 

efficient than second generation biofuel production (Ohlrogge et al. 2009). This is because more miles 

can be driven on biomass that is used to generate power for a battery electric vehicle than from liquid fuel 

generation (Humbird et al. 2011). The source of the efficiency difference is the increased efficiency of 

electric vehicles as compared to internal combustion engines.

Few publications report on studies in the third and most relevant category—competition for biomass 

between markets (especially electricity and fuel markets) on an economic basis. Instead, many of the 

studies are focused on developing biomass markets. Furthermore, a number of those studies and their 

corresponding models are not published in a way that provides insights into biomass markets and 

utilization. A National Renewable Energy Laboratory (NREL) study (Newes et al. 2012), however, 

focuses on developing a holistic understanding of the competition for biomass resources among the 

various end uses. The study reviewed a number of capacity expansion models, including: 

• Stochastic Energy Deployment System (SEDS). A stochastic, dynamic recursive capacity 

expansion model that treats the United States as a single region with three product options for 

biomass: cellulosic ethanol, electricity, and hydrogen. 
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

8 

• National Energy Modeling System (NEMS). A multi-sector, dynamic recursive capacity 

expansion model used for the Government Performance and Results Act (GPRA) (GPRA 

Modernization Act of 2010, 2011), which models the full energy sector. As a result, it is difficult 

to extract an understanding of biomass markets from the resulting publications.

• Global Change Assessment Model (GCAM). An integrated, partial-equilibrium, dynamic 

recursive capacity expansion assessment model of the global industrial and energy system. 

GCAM includes agriculture and land use. A description of the results from a recent analysis can 

be found later in this section. 

• Global Trade Analysis Project (GTAP) model. A global general equilibrium capacity 

expansion model that includes ethanol from sugarcane and cereals and biodiesel from vegetable 

oil.

• Targets-Image Energy Regional Model (TIMER). A capacity expansion model that is used as 

part of the Integrated Model to Assess the Global Environment (IMAGE). 

• SimBioSys. A capacity expansion model of the bioenergy sector that minimizes the total 

generation cost of biofuels and biomethane to compete against gasoline, diesel, and natural gas.

• Biomass Allocation Model. A dynamic recursive capacity expansion model that uses linear 

optimization to optimize the allocation of biomass between cellulosic ethanol and co-firing in 

coal power plants.

• RESolve Model. An integrated assessment model that minimizes the cost to meet the demand of 

biomass for heat, fuels, and electricity.

• Market Allocation Model (MARKAL). An intertemporal capacity expansion model that 

optimizes by selecting technologies to minimize the system-wide net present value (OpenEI). 

Like the NEMS, MARKAL is used for the GPRA (DOE EERE 2010), and few reports are 

published. 

In addition, the Biomass Scenario Model (BSM) (NREL 2011) has been developed by NREL and the 

Biomass Program of the DOE. The BSM is a system dynamics capacity expansion model that includes all 

aspects of the supply chain from the growth of feedstock through harvest, collection, transport, 

conversion, fuel distribution, availability of vehicles that consume the fuel, and fuel consumption. The 

BSM is being upgraded to include competition for biomass between fuels and electricity. A stand-alone 

system dynamics capacity expansion model that allows for competition between the sectors has been 

completed (Newes et al. 2012). The model uses maximized profit subject to a production function in order 

to relate products to feedstocks and allows the user to choose between a simple price elasticity function 

and exogenous forecasts to set the demand. Model development has been completed, but rigorous testing 

and calibration are necessary before results will be published. 

Newes et al. (2012) also linked the full BSM to a multi-regional power generation capacity expansion 

model—the Regional Energy Deployment System (ReEDS) (Short et al. 2011). The linkage is designed 

in such a way that, for each time period in ReEDS, the BSM supplies ReEDS with a total biomass supply 

curve and corresponding biofuels demand curve, and ReEDS estimates the amount of biomass sent to 

power generation. Initial results show that both the BSM and ReEDS overestimate the amount of biomass 

available to their respective sectors because the BSM does not include an estimate of biomass used for 

power and ReEDS does not include an estimate of biomass used for fuels. Combining the two models 

prevents either model from assuming that biomass is available for the market(s) represented by an 

individual model and hence the potential for double-counting biomass when looking at results from each 

individual model side-by-side is reduced.
TRANSPORTATION ENERGY FUTURES SERIES Biomass

9 

A report on GCAM results regarding biomass use under low atmospheric carbon dioxide (CO2) 

concentrations was published recently (Luckow et al. 2010). The investigators examined the potential role 

of biomass under climate policies designed to stabilize atmospheric CO2 at two different levels—400 

parts per million (ppm) and 450 ppm. They found that biopower with carbon capture and sequestration 

(CCS) is necessary to meet those targets, because biopower with CCS has net negative emissions. In that 

case, about 80% of the global biomass utilized is a feedstock for biopower with the remainder used for 

biofuels. If CCS technology is not successful, it is not deployed, resulting in all the biomass being used to 

create fuels. Therefore, nuclear power is necessary to cut emissions sufficiently to meet the targets. One 

issue with Luckow et al.’s analysis is that they estimated the necessary cost of carbon to achieve the 

targets as being extremely high. For example, to meet the 450-ppm target, they estimated that the cost of 

carbon needs to be over $1,000/ton of carbon in 2100 if the CCS technology is deployed and over 

$2,000/ton of carbon in 2100 if it is not. With prices that high, it is not surprising that biopower with 

sequestration is the economic winner.

Another interesting paper in this category (Grahn et al. 2007) compares two global energy models and 

their results. Both are linear programming-like models that solve for economic optimums over the 21st

century. In the initial study, one of the models demonstrated that heat production is the most economic 

utility of the worldwide biomass resource, and the other demonstrated that transportation is the most 

feasible economic use of biomass. Interestingly, that study demonstrated methanol to be the most costeffective biofuel. However, due to its low energy content and toxicity, it was not included in the TEF 

analysis. Upon harmonization of the two models, the analysis demonstrated that biomass is most cost

effectively used for heat production at low costs of carbon—up to $75/metric ton of carbon = $20/metric 

ton CO2e. At higher costs of carbon, the most cost-effective use of biomass is dependent upon the status 

of competing technologies. When the study authors assumed that renewable hydrogen is competitive for 

transportation, they found that the best use for biomass is heat; however, when the authors assumed high 

prices for renewable hydrogen, they found hydrogen production to be the best use of biomass.

Two more studies focused on competition for biomass, between electricity and fuel markets on an 

economic basis in developed nations. One study focused on Austria (Kalt, Kranzl, and Haas 2010) and 

used a scenario-development tool instead of an economic model. Scenarios with different mixes of 

biomass used for heat, power, and transportation fuels were developed and compared. The study 

concluded that, from an Austrian GHG reduction and economic efficiency standpoint, bioenergy policies 

should focus on promoting the use of biomass for heat and, to some extent, combined heat and power. It 

also found that a focus on liquid biofuels for transport has adverse effects on the development of the 

bioenergy sector due to increased competition for limited biomass resources. Note that small-scale 

biomass heating systems [< 15 kilowatts (kW)] are more common in Austria than in the United States,

and that the estimated capital and operating costs are much higher than expected within this study.2

 The 

second study highlighted the competition for biomass between electricity and fuel markets on an 

economic basis in a developed nation, with a specific focus on the United States (Morrow and Balash 

2008). Researchers used a linear program that is limited to one decade (2010–2020) and three 

technologies—co-firing with coal to produce electricity, corn ethanol, and cellulosic ethanol—but is rich 

in regional detail. Although the authors do not provide conclusions, they identify three primary variables 

that affect potential biomass utilization within the electricity and transportation sectors, including future 

oil prices, future CO2 constraints [i.e., the future value of CO2 mitigation ($/metric ton CO2)], and the date 

and degree at which cellulosic ethanol process improvements materialize.

No model currently exists that uses traditional micro-economic principles to estimate market equilibrium 

conditions for biomass. Commodity markets have been shown to act near equilibrium when they are 

 

2 The estimate of capital costs for a bioethanol facility from wood or straw is €2,100/kW fuel, which converts to $4.80/annual 

gallon (gal) at $1.40/€. The investigators’ estimate of operating costs for the same facility is €100/kW per year, which converts to 

$0.40/gal ethanol at $1.40/€. They have learning curves that reduce those prices by 40% by 2050, which is the end of the 

timeframe analyzed.
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

10 

mature, and market prices are established through competition (i.e., not be a monopoly). As shown above, 

a number of capacity expansion models are in use; however, all those models are more focused on the 

dynamics of market development than on the potential market maturity. Understanding development is 

important but identifying the potential equilibrium state can improve policy-makers’ understanding of the 

ultimate potential and drivers. With that knowledge, policy-makers can use capacity expansion models to 

test how to best approach mature markets.

Appendix A contains descriptions of many of the relevant studies.
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3. ANALYSIS METHODOLOGY AND DEFAULT DATA

3.1. Introduction to Analysis Methodology and the Biomass Allocation 

and Supply Equilibrium (BASE) Model

This analysis addresses key questions about the costs and implications of biomass use and allocation in 

the transportation sector and other sectors by way of a micro-economic analysis of mature biomass 

markets that approximate equilibrium in supplying feedstocks to energy markets. Mature commodity 

markets operate close to equilibrium, because the products are fungible and the markets are essentially 

perfectly competitive. Perfectly competitive markets are often called “free markets,” and consist of many 

buyers and sellers, with none of the buyers or sellers having the ability to influence prices, and where 

barriers to market entry have been overcome. 

Developed specifically for this analysis, the BASE model provides projections of equilibrium states under 

mature market conditions in the electricity and transportation sectors and estimates allocations in mature, 

free markets. By focusing on mature biomass markets, this study identifies how biomass is projected to be 

most economically used in the long term, and presents the implications of that market on GHG emissions 

and petroleum use. That viewpoint provides value in understanding how biomass would be utilized in free 

markets and quantifies the drivers that affect the amount of biomass used, along with its distribution

between electricity and fuel markets. The results can be used to support R&D target setting and project 

selection, as well as to identify policy options that drive markets away from equilibrium, and resulting in 

increased societal costs. 

The market allocations projected by BASE may not occur due to regulation, access to capital, market 

evolution, market equilibrium points not matching assumptions, and many temporal reasons (e.g., 

retirement rates of and/or replacement of existing stock, conservative business decisions, uncertain and 

changing policies, lack of achievement of nth plant projections3

 due to lack of learning, and so on). The 

model does not provide snapshots of future scenarios or the incremental changes to fuel and power 

markets. Likewise, it is not intended to simulate near-term markets, because they are far from equilibrium 

due to technological immaturity, growth rate, number of investors, and nearly unlimited resources. 

3.2. BASE Model Methodology and Structure

The BASE model finds an equilibrium state of the U.S. transportation and electricity sector, and based on 

this equilibrium state, finds the consumption and price of biomass feedstocks. The market equilibrium 

state is found iteratively, and relies on detailed input data of full life cycle costs. Market shares for 

biomass and the allocation between the different fuels and markets are determined based on levelized cost 

of energy (LCOE) (fuel or electricity), which accounts for many of the costs and losses that are incurred

from the farm or field to the end user. These costs include feedstock costs, biomass transport and logistics 

costs, conversion costs, fuel transport costs, and any assumed prices to GHG emissions.

A wide variety of biomass feedstocks, fuels, and markets are represented in the BASE model. The 

scenario results from BASE, therefore, inform detailed and specific deployment projections for each 

feedstock for each fuel in each market. Table 3.1 shows a matrix of feedstocks and their possible 

contributions to different fuels and markets. Note that only primary products are shown in the table. 

Byproducts, such as electricity generated and sold to the grid in the lignocellulosic biomass to ethanol 

process, are not shown but are included in the cost and emissions calculations as described in Section 3.6. 

 

3 Projections that inherently assume that the technology is mature and thus do not include additional contingency, capital costs, 

and yield loss necessary for of first-of-a-kind cost estimation
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

12 

Table 3.1. Biomass Feedstocks, Fuels, and Markets Represented in the BASE Model 

An “X” identifies the feedstocks that can be used for each fuel and market.

Market Electricity Gasoline Diesel / Jet Fuel / Bunker Fuel

Fuel Biopower Ethanol Butanol Pyr. 

Gasoline

Pyr. 

Diesel

FT 

Diesel Biodiesel Algal Diesel

Forest 

Residue X X X X X X 

SRWC X X X X X X 

Agricultural

Residues X X X X X X 

Switchgrass X X X X X X 

Corn X X 

Soybean X 

Algae X 

Note that bunker fuel is a general term for fuel used on-board ships. This study did not include gaseous 

fuels from biomass, such as dimethyl ether (DME), methane, or hydrogen or other potential fuels with 

little ongoing R&D such as methanol. Markets for those fuels are considered negligible in this analysis 

because all market sizes in this analysis are based on Annual Energy Outlook (AEO) (EIA 2011a) 

projections and the EIA does not project substantial markets for any of those fuels. 

The biomass feedstocks represented in the BASE model include forest residues, SRWC, agriculture 

residues, switchgrass,

4 corn, soybean, and algae. These feedstocks can be converted to biofuels or 

electricity. Separate end-use markets are treated in the BASE model, namely the electricity, gasoline, 

diesel, jet fuel, and bunker fuel markets. For biofuels, the BASE model distinguishes among a variety of 

feedstock/fuel combinations. Fuels include ethanol, butanol, and pyrolysis gasoline that compete in the 

gasoline market and pyrolysis diesel, Fischer-Tropsch (FT) diesel, and biodiesel that compete in the 

diesel, jet fuel, and bunker fuel markets. 

The authors recognize that both feedstocks and fuels are simplified for modeling purposes. Many 

feedstocks were aggregated into the categories provided. In addition smaller, niche opportunities were 

not included. For example, diesel replacements are currently made from many renewable sources 

including non-soybean seed crops and rendering materials. One of the unique features of BASE is its 

consideration and representation of detailed biomass data that nearly encompasses the full life cycle of the 

end-use fuel.

5 Where applicable and available, this data is distinct for each matrix element shown in Table 

3.1; through its data inputs, the BASE model distinguishes the differences between the different 

feedstocks and their conversion to end-use fuels at every step of this conversion pathway. 

The biomass-specific data required of the BASE model are discussed in subsequent sections and include: 

 

4 Switchgrass is used in the BASE model to represent all herbaceous energy crops. 5 “Fuel” in this sense refers to liquid biofuels as well as electricity from biopower generators.
TRANSPORTATION ENERGY FUTURES SERIES Biomass

13 

• Feedstock supply curves6 [dollars per dry ton (dt) vs. amount of dry tons] 

• Feedstock demand (dt) from other sectors outside of the power or fuel sectors 

• Biomass transport and logistics costs ($/dt) 

• Feedstock yield [gal/dt for biofuels or million British thermal units (106 Btu)/dt for biopower]

• Conversion costs [$/gal for biofuels or $/megawatt-hour (MWh) for biopower] 

• Heat content (Btu/gal) 

• Fuel transport costs ($/gal) 

• Well-to-wheel (WTW) CO2e emission factors [gCO2e/megajoule (MJ)] and petroleum use factors 

(MJinput/MJfuel).

Non-biomass competing technologies are not represented in the BASE model with the same level of 

detail.

The BASE model uses an iterative calculation and a set of market share algorithms (referred to as logit 

functions) to determine the quantities of biofuel and power that are generated, and thus how much 

biomass is used. The demand for each market (i.e., electricity, gasoline, diesel, jet fuel, and bunker fuel) 

is exogenously defined. Market share algorithms are used to estimate the share of each fuel in each 

market based on initial estimates of fuel price. Fuel prices are then calculated based on quantities of 

biomass used, harvesting, conversion, and fuel transport costs. Carbon costs can also be included if 

desired. If the calculated fuel prices do not match those estimated initially, initial estimates are adjusted 

and the process is repeated until they do. The quantity of each feedstock used for fuel price calculation 

represents the total feedstock demand across all fuels and markets. In this way, the separate markets are 

coupled. For example, increased demand for switchgrass for electricity generation may drive up the price 

of cellulosic ethanol and therefore drive down the demand for cellulosic ethanol in the gasoline market. 

This reduced demand for cellulosic ethanol may open the market for corn ethanol or for conventional 

gasoline. By sharing the same resource and supply curve across multiple fuels and markets, the BASE 

model is able to account for coupling dynamics of supply and demand that will likely be more important 

as biomass resources are utilized in multiple markets simultaneously.

These calculated market shares and the associated demands for the biomass feedstocks and other fuel are 

outcomes of the model. In addition, BASE finds the equilibrium price for the biomass feedstocks—forest 

residue, SRWC, agriculture residue, and switchgrass—and competing energy sources—natural gas and 

coal—represented with supply curves. The greenhouse gas emissions implications of each modeled 

equilibrium scenario are also reported by BASE. The resultant GHG emissions are then broken down by 

each category in BASE, including by competing technologies and by the separate biomass pathways, 

independently. Petroleum use in each market scenario is calculated in a post-processing step.

Appendix B contains a complete description of the BASE model’s methodology and structure. 

 

6 Corn and soybean feedstocks are not represented with supply curves due to the complicated interactions with the agriculture 

sector. Instead, corn and soybean costs are fixed and a range of sensitivity scenarios are evaluated. The “feedstock” costs for 

algal technologies are included in the conversion costs, therefore no explicit feedstock supply curves or biomass transport and 

logistics costs were included for algae.
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

14 

3.3. Biomass Resource Supply Curves

Biomass resource potential and costs are combined in supply curves that describe the supply as a function 

of price. National supply curves were obtained from the updated BT2, developed by Oak Ridge National 

Laboratory, as well as from the 2010 U.S. and World Agricultural Outlook (FAPRI, 2010), developed by 

the Food and Agricultural Policy Research Institute (FAPRI). Six different feedstock categories were 

considered in this study, including agricultural residues, forest residues, grasses, SRWC, corn, and 

soybean7

. The dataset for the first four categories were obtained from the BT2, while corn and soybean 

potential assessment was obtained from FAPRI. 

The BT2 makes use of POLYSIS, an agricultural policy model, and data from the U.S. Department of 

Agriculture’s (USDA’s) National Agricultural Statistics Service (NASS) to estimate the supply curves for 

energy crops and agricultural residues up to 2030. For this analysis, data from the BT2 baseline scenario 

was used. That scenario assumes a continuation of the USDA 10-year forecast for the major food and 

forage crops, as well as a continuation in trends toward no-till and reduced cultivation. Energy crop yields 

assume an annual increase of 1% due to experience in planting and additional R&D. Forest residues are 

estimated using resource cost analysis with data from the USDA’s Forest Service.8

Supply curves for a number of biomass types were reported in the BT2 and were aggregated into four 

categories of lignocellulosic biomass (shown in Table 3.2) 

Table 3.2. Categorization of BT2 Biomass Types for the BASE Model

BASE Categories BT2 Categories

Agricultural Residue

Corn stover, barley straw, rice straw, cotton residue, cotton gin trash, oat straw, orchard 

and vineyard prunings, rice hulls, sorghum stubble, sugarcane trash, wheat dust, wheat 

straw

Forest Residues

Conventional wood, treatment thinnings (other forest lands), mill residue (unused primary), 

mill residue (unused secondary), urban wood waste (construction and demolition), urban 

wood waste (municipal solid waste), integrated operations, other removal residue

Grasses Perennial grasses, sorghum (high yield)

SRWC Coppice and non-coppice woody crops

Unused in TEF Animal fats and waste oils, manure

Annual estimates of production and pricing for corn and soybean through 2019 were obtained from the 

FAPRI. Because FAPRI only reports single cost/quantity points, supply curves for corn and soybeans 

were constructed for use in the model. Furthermore, as FAPRI does not provide projections beyond 2019, 

potential and pricing for all years after 2019 was assumed to be equivalent to those in 2019 and both 2020 

and 2050 BASE supply curves were built using the FAPRI 2019 data converted to supply curves. 

 

7 Algae costs were fully included in the conversion costs (see Section 3.6); therefore, they were not included in this section. 8 2050 data were not available to meet many of the data needs for this analysis. Therefore, projections up until 2050 were made. 

For the four categories of lignocellulosic biomass, the 2030 projections were considered for mature technology and were not 

changed for use in 2050. For corn and soybeans, no projections beyond 2019 were found and the technology is mature so the 

2019 projections were used for the 2020 and 2050 cases. The biomass utilization for non-fuel or electricity uses was extrapolated 

up until 2050; assuming constant market growth. Biomass transport using conventional schemes is considered mature so today’s 

costs were used for both the 2020 and the 2050 cases. For biomass conversion to fuels, assumptions about the potential 

improvement by 2050 were made. Market sizes and prices of conventional fuels were extrapolated from 2035 based on constant 

changes. Electricity generation was considered mature in 2035 and the same values were used in 2050. 
TRANSPORTATION ENERGY FUTURES SERIES Biomass

15 

Figures 3.1 and 3.2 show the supply curves used in BASE for all six categories of feedstocks. Because the 

BT2 only projects supply curves up to 2030, the 2030 curves were used for the 2050 BASE runs. 

Likewise, since FAPRI only provides information through 2019, 2019 data were used for both the 2020 

and 2050 supply curves. The figures include a near-vertical line at the maximum biomass allowance level, 

because any additional biomass would increase the price dramatically. Harvesting costs are included in 

the supply curves, and the costs are at the edge of the field (i.e., the crops are consolidated at a location 

where they are ready for shipping). 

 

Figure 3.1. Supply curves used for the 2020 BASE runs

(Sources: DOE 2011, FAPRI 2010)
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

16 

 

Figure 3.2. Supply curves used for the 2050 BASE runs

[Sources: EIA, U.S. EIA (2011a) (2030 data), Food and Agricultural Policy Research Institute (2010)] 

Appendix C contains a complete description of the biomass resource supply curves.

3.4. Competing Uses of Biomass

Biomass can be used to produce many products beyond transportation fuels and power. In this analysis, 

those products are given priority thus their biomass demand is fulfilled before biomass can be used for 

fuels and power. In other words, other uses of biomass are likely to be able to retain profit margins while 

paying higher prices for biomass than fuel and electricity.

Biomass demand for food, feed, lumber, and pulp and paper were not explicitly accounted for, because 

those biomass demands were already excluded from the resource supply curves. Likewise, EIA’s 

Renewable Energy Trends in Consumption and Electricity 2008 (EIA 2010c) does not report resources 

necessary for pulp and paper. Competing uses considered by EIA include the following:

• Residential (including wood pellets for heat) 

• Commercial (uses agriculture byproducts/crops, sludge waste, and other biomass solids, liquids 

and gases; black liquor and wood/wood waste solids including wood pellets for heat and liquids; 

and corn) 

• Industrial, including: 

o Agriculture, forestry, and mining (consumes agricultural byproducts/crops)
TRANSPORTATION ENERGY FUTURES SERIES Biomass

17 

o Chemicals and allied products (consumes other biomass liquids, sludge waste, and 

wood/wood waste solids)

o Apparel (consumes wood and derived fuels) 

o Petroleum refining (consumes wood and derived fuels) 

o Rubber and miscellaneous plastic products (consumes wood and derived fuels) 

o Transportation equipment (consumes wood and derived fuels)

o Stone, clay, glass, and concrete products (consumes wood and derived fuels) 

o Furniture and fixtures (consumes wood and derived fuels) 

o Other non-specified, but related industries (consumes wood, including wood pellets for heat, 

and derived fuels and corn). 

EIA’s Annual Energy Outlook 2011 estimates biomass consumption up until 2035 by residential, 

commercial, and industrial classification. That information was used for the BASE model and is shown in 

Table 3.3 (EIA 2011a). 

Table 3.3. Projections from the EIA for Annual Biomass Resource Consumption by 

Competing Uses 

Data from Annual Energy Outlook 2011 (2050 values are extrapolations), 

and broken down by use and feedstock type

Million Short Tons Consumed per Year

2010 2020 2050

Cellulosic - Wood Residue 40.23 40.68 41.57

Residential 31.71 31.71 31.71

Commercial 7.58 7.58 7.58

Industrial 0.94 1.39 2.28

Cellulosic - Agricultural Residue 1.64 2.18 3.27

Residential - - - 

Commercial 0.49 0.49 0.49

Industrial 1.15 1.69 2.78

Corn Grain 2.47 3.41 5.3

Residential - - - 

Commercial 0.48 0.48 0.48

Industrial 1.99 2.93 4.82

Total 44.3 46.3 50.1

Appendix D contains a complete description of competing uses of biomass.
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

18 

3.5. Biomass Transport Costs

To estimate total biomass costs at the plant gate, transport expenses from the field to the biorefinery are 

added to expenses in the biomass supply curves. In BASE, feedstocks are assumed to be supplied to the 

biorefinery using the conventional bale-based feedstock supply and logistics system, although research, 

development, and demonstration (RD&D) on more advanced systems is underway. The conventional 

bale-based system is representative of the current logistics system employed by most forage and hay 

producers in the United States. Implicit in the conventional bale-based system cost estimates are various 

machine efficiency, biomass yield, and material loss assumptions during harvest, transport, and storage. 

The conventional system was chosen for this study, because it is aligned, in terms of costs and 

physical/chemical composition, with the conversion stage process design reports. All transport costs in 

this analysis are on delivered biomass and include costs due to material lost during handling. 

Costs were estimated for corn stover (as a proxy for all agricultural residues), switchgrass (as a proxy for 

all grasses), SRWC, forest residues, and algae using Idaho National Laboratory’s Biomass Logistics 

Model (BLM) version 6.45 (INL 2011). Results from the BLM were analyzed and disaggregated into 

base costs, diesel use, electricity use, and natural gas use. Diesel, electricity, and natural gas use are 

multiplied by the BASE values, for each expenditure, and summed with the base costs to estimate total 

costs. Published expenditures were used for corn grain (Benson and Bullen 2007) and soybeans (Reinbott 

2012). 

Figure 3.3 displays the approximate feedstock logistics and transport costs used for each of the biomass 

sources. The actual costs are dependent upon the diesel, natural gas, and electricity prices within each 

BASE run. Note that harvest and collection costs are shown in the figure but are not included in the 

BASE calculations, because they are included in the biomass supply curves. Logistics and transport 

expenses for algae are not included, because they are inherently part of the algae growth, collection, and 

conversion costs discussed in the section on conversion.

Figure 3.3. Feedstock logistic and transport costs [Sources: Benson and Bullen (2007), Reinbott (2012), Idaho National Laboratory (INL 2011)] 

Appendix E contains a complete description of biomass transport costs. 

$0

$10

$20

$30

$40

$50

$60

$70

2005$/dt

Harvest & Collection

Transportation

Pre-Processing

Storage

Handling & Queuing
TRANSPORTATION ENERGY FUTURES SERIES Biomass

19 

3.6. Biofuel Conversion Yields and Costs

Conversion costs and LCOE calculations were developed for the BASE model for two specific 

timeframes: 2020 and 2050. Eight liquid fuels and fuel pathways were examined. A summary of the fuels 

and feedstocks that were studied can be found in Table 3.1. In this analysis, bio-based diesel products 

were considered available for jet fuel and bunker fuel, without additional conversion costs. Data for each 

of these fuel pathways were supplied from publicly available sources when possible, and from non-public 

sources when otherwise not available. 

The data in Table 3.4 were used to calculate the conversions in Tables 3.5 and 3.6. 

Table 3.4. Data Inputs

Abbreviation Input Units

Feed Feedstock Costs $/dt

Log Biomass Logistics and Transport Costs $/dt

Cap Capital Costs $/gal

FCR Fixed Charge Rate -

OM Operating and Maintenance Costs (not 

including feedstock costs)

$/gal

Int Integration Costs n/a

Byp Byproduct Credit $/gal

CF Capacity Factor n/a

HR Heat Rate n/a

Yield Yield Gal/dt

FuelTrans Fuel Transport Costs $/gal

CPrice Carbon Price $/metric ton CO2e

CFactor Carbon Factor metric ton CO2e/gal

The value for “Cap” was computed by dividing the total project investment by the plant capacity. The 

conversion costs and yields were constant between biomass types, because of a lack of data for each 

feedstock/conversion combination. 

An LCOE equation was used to convert the values and a price of biomass at the plant gate to fuel prices at 

the plant gate. Within BASE, a single fixed charge rate of 0.132 was assumed for all fuel pathways—but 

not for electricity, which has a specific fixed charge rate for each conversion technology. The fixed 

charge rate was based upon the capital charge factor computed in NREL’s most recent design reports for 

cellulosic ethanol (Humbird et al. 2011). Within these reports, a discounted cash flow analysis was used 

over an assumed 30-year plant life with a 10% discount factor. That discount rate was chosen based on 

the recommendation of Short, Packey, and Holt (1995).

Equation 3.1. Levelized Cost of Energy for Biofuels

LCOEfuel = FCR • Cap + OM − Byp + Log + Feed

Yield + FuelTrans + CPrice • CFactor
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

20 

Table 3.5. 2020 Conversion Data in 2005$

(Data sources referenced in text.)

Cellulosic 

Ethanol

Cellulosic 

Butanol

Pyrolysis 

Gasoline

Pyrolysis 

Diesel

FT 

Distillate 

Diesel

Biodiesel 

from 

Soybeans

Corn 

Ethanol

Corn 

Butanol

Algal 

Diesel

Total Capital 

Cost (Million $) $398 $451 $285 $285 $469 $52.9 $89.3 $308 $367

Capacity 

(million gal/yr) 61 25 76 76 32.3 45 45 42 10

Operating 

Costs ($/gal)¥ $0.69 $1.92 $0.94 $0.94 $1.20 $0.44 $0.47 $1.93 $3.73

Byproduct 

Credits ($/gal) $0.10 $2.07 $0.00 $0.00 $0.19 $0.14 $0.30 $2.40 $0.00

Feedstock Yield 

(gal/dry short 

ton)

79.0 32.4 65.0 65.0 47.2 111† 118‡ 58.8 N/A

Fuel LCOE* 

($/gal) $1.96 $3.47 $2.05 $2.05 $3.78 $3.91 $1.86 $3.36 $8.58

Year$ 2005$ 2005$ 2005$ 2005$ 2005$ 2005$ 2005$ 2005$ 2005$

¥ Operating Costs only represent the costs to operate the facility and do not include the feedstock costs.

* LCOE is calculated within BASE using feedstock costs that vary. Results reported here are for example only and use a fixed charge 

rate of 0.132 and feedstock cost of $40/dry short ton for lignocellulosic biomass, $383/dry short ton for soybeans [$10/bushel, 13% 

moisture, 60 lb (wet) per bushel], or $168/dry short ton for corn ($4/bushel, 56 lb/bushel, 15% moisture). † Based on 2.9 gal/bushel

‡ Based on 2.8 gal/bushel

Table 3.6. 2050 Conversion Data in 2005$

(Data sources referenced in text.)

Cellulosic 

Ethanol

Cellulosic 

Butanol

Pyrolysis 

Gasoline

Pyrolysis 

Diesel

FT 

Distillate 

Diesel

Biodiesel 

from 

Soybeans

Corn 

Ethanol

Corn 

Butanol

Algal 

Diesel

Total Capital 

Cost (million $) $348 $383 $242 $242 $398 $52.9 $89.3 $262 $165

Capacity 

(million gal/yr) 172 37 212.8 212.8 90.44 45 45 62.16 10

Operating 

Costs ($/gal) ¥ $0.06 $1.31 $0.94 $0.94 $1.20 $0.44 $0.47 $1.93 $1.88

Byproduct 

Credits ($/gal) $0.06 $0.57 $0.00 $0.00 $0.19 $0.14 $0.30 $2.04 $0.00

Feedstock Yield 

(gal/dry short 

ton) 

98.0 47.9 100 100 59 111† 118‡ 87.02 N/A

Fuel LCOE* 

($/gal) $0.67 $2.94 $1.49 $1.49 $2.27 $3.91 $1.86 $2.38 $4.05

Year$ 2005$ 2005$ 2005$ 2005$ 2005$ 2005$ 2005$ 2005$ 2005$

¥ Operating Costs only represent the costs to operate the facility and do not include the feedstock costs.

* LCOE is calculated within BASE using feedstock costs that vary. Results reported here are for example only, and use a fixed charge 

rate of 0.132 and feedstock cost of $40/dry short ton for lignocellulosic biomass, $383/dry short ton for soybeans [$10/bushel, 13% 

moisture, 60 lb (wet) per bushel], or $168/dry short ton for corn ($4/bushel, 56 lb/bushel, 15% moisture). 

† Based on 2.9 gal/bushel

‡ Based on 2.8 gal/bushel
TRANSPORTATION ENERGY FUTURES SERIES Biomass

21 

While a large number of biofuels were included in this study, there are other potential biofuels that were 

not included. For example, there is a classification of biofuels that has recently become commercial—

“hydrogenated fuels”—where natural plant oils are reacted with hydrogen over a catalyst. This serves to 

saturate double bonds and remove oxygen from the oils, thus creating high cetane diesel and jet fuels. 

Dynamic Fuels, LLC and Neste-oil are two companies that are producing these fuels on a commercial 

scale from a variety of oil feedstocks. These fuels were not included in the TEF project, because good 

cost models or data were not currently available. Moreover, the economics are anticipated to largely 

mirror those of biodiesel (transesterification), where the majority of the cost is associated with the 

feedstock itself.

Appendix F provides a full description of the conversion costs and efficiencies as well as references and 

reasoning behind the selection of those references.

3.7. Delivery and Dispensing Costs for Conventional Fuels and Biofuels

Simple estimates of the costs to deliver and dispense biofuels were used in this study. The Annual Energy 

Outlook 2011, Table 131 (Components of Selected Petroleum Product Prices), breaks out the fuel 

wholesale price, distribution costs, and taxes (energy, federal, and state). The distribution cost segment 

represents “the part of the supply chain where wholesale gasoline is brought to a retail station and sold to 

the final consumer” (EIA, 2011a). Fuel distribution costs were obtained from the Annual Energy Outlook

for conventional fuels, and the TEF fuel infrastructure task for ethanol and biodiesel. Drop-in fuels were 

assumed to have the same distribution cost as their conventional counterparts. Since bunker fuel 

distribution costs were not estimated in the Annual Energy Outlook, they were set to the same cost as jet 

fuel ($0.00/gal) to be consistent with EIA. 

Ethanol distribution costs were estimated by the TEF Fuels Infrastructure Team at $0.13/gal (2009$), 

which is higher than gasoline costs that were based on a delivery cost calculator and references (Morrow, 

Griffin, and Matthews 2006; U.S. Government Accountability Office 2007). Since biodiesel has 

distribution issues similar to ethanol, the biodiesel distribution and marketing costs were set to equal 

ethanol’s costs. In addition, pyrolysis products, FT diesel, and algal diesel were considered drop-in fuels 

for this analysis and were assumed to use the same distribution systems as gasoline, diesel, jet fuel, and 

bunker fuel. As a result, their distribution costs are set equal to the conventional fuels in that market. 

Butanol was considered to have distribution issues similar to ethanol in 2020, but was considered a proxy 

for a fermentative drop-in gasoline replacement in 2050. Therefore, the 2050 distribution cost of butanol 

was set equal to the 2050 distribution cost of gasoline. 

Figure 3.4 shows the fuel distribution and marketing costs used in this analysis.
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

22 

Figure 3.4. Fuel distribution and marketing costs

(Sources: DOE 2011a, Morrow et al. 2006, U.S. Government Accountability Office 2007)

Appendix G provides a full description of delivery and dispensing costs. 

3.8. Conventional Fuel Price Projections

Projected fuel prices were either taken directly from EIA’s Annual Energy Outlook 2011 (EIA 2011a) in 

the case of the 2020 scenario, or extrapolated from Annual Energy Outlook data, in the case of the 2050 

scenario. Federal and state motor fuels taxes were subtracted from the prices based on EIA sources. Table 

3.7 shows the conventional fuel prices used in this analysis. 

Table 3.7. Pricing Data Used in the BASE Model

[Data from Annual Energy Outlook 2011 (EIA, 2011a) (2050 values are extrapolations)]

Fuel Year BASE 

Value BASE Units

Gasoline 2020 2.66 2005$/gallon

Gasoline 2050 3.15 2005$/gallon

Diesel 2020 2.75 2005$/gallon

Diesel 2050 3.25 2005$/gallon

Jet Fuel 2020 2.68 2005$/gallon diesel equivalent

Jet Fuel 2050 3.31 2005$/gallon diesel equivalent

Bunker Fuel 2020 1.74 2005$/gallon diesel equivalent

Bunker Fuel 2050 1.88 2005$/gallon diesel equivalent

$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

ethanol

butanol

pyrolysispyrolysis

FT diesel

biodiesel

algal diesel

gasoline diesel

2005$/gal

2020

2050
TRANSPORTATION ENERGY FUTURES SERIES Biomass

23 

Demand elasticities, the effect of increased/decreased demand on the price of conventional fuels, were 

considered for this analysis. See Appendix N for a review of price elasticities. Inelastic prices were 

chosen, because the level of elasticity is especially challenging to estimate for long-term trends. 

Additional review of potential elasticities should be considered in future analysis. 

Appendix H provides a full description of conventional fuel price projections. 

3.9. Fuel Market Sizes

Projected market sizes are either taken directly from EIA’s Annual Energy Outlook 2011 (EIA 2011a), in 

the case of the 2020 scenario, or extrapolated from AEO data, in the case of the 2050 scenario. The total 

volume of the gasoline market was estimated by summing the gasoline market size with the E85 market 

size [once the E85 market size was converted to a gallon gasoline equivalent (gge) basis]. The total 

volume of the diesel market was estimated by summing the diesel market size with the biodiesel and 

“other biomass-derived fuels” market sizes [once the latter two were converted to a gallon diesel 

equivalent (gde) basis]. Market sizes for liquefied petroleum gas and “distillate fuel (other than diesel)” 

were reported in the AEO, but they were not included in the default market sizes for BASE. All relative 

and absolute increases or decreases in market size for each of the fuels are based off of AEO assumptions. 

Table 3.8 shows the fuel market sizes used in this analysis. Due to a lack of information on market 

elasticity (i.e., how changes in prices affect market size) constant market sizes were used throughout this 

analysis.

Table 3.8. Market Size Data Used in the BASE Model

(Data sources referenced in text.)

Market Annual Energy

Outlook Market Year BASE Value BASE Units

Electricity Total 2020 3.99 billion Megawatt-hours (MWh)

Electricity 2020 3.98 billion MWh

PHEV - Electricity 2020 10.00 million MWh

Electricity Total 2050 5.02 billion MWh

Electricity 2050 4.99 billion MWh

PHEV - Electricity 2050 34.00 million MWh

Gasoline Total 2020 144.00 billion Gallons gasoline equivalent/year

Gasoline 2020 141.00 billion Gallons/year

E85 2020 2.65 billion Gallons gasoline equivalent/year

Gasoline Total 2050 170.00 billion Gallons gasoline equivalent/year

Gasoline 2050 158.00 billion Gallons/year

E85 2050 11.50 billion Gallons gasoline equivalent/year

Diesel Total 2020 62.00 billion Gallons diesel equivalent/year

Diesel 2020 59.90 billion Gallons/year

Biodiesel 2020 1.44 billion Gallons diesel equivalent/year

Other BiomassDerived Fuels 2020 683.00 million Gallons diesel equivalent/year

Diesel Total 2050 92.50 billion Gallons diesel equivalent/year

Diesel 2050 79.30 billion Gallons/year

Biodiesel 2050 1.88 billion Gallons diesel equivalent/year

Other BiomassDerived Fuels 2050 11.30 billion Gallons diesel equivalent/year

Jet Fuel 2020 24.30 billion Gallons diesel equivalent/year

Jet Fuel 2050 27.60 billion Gallons diesel equivalent/year

Bunker Fuel 2020 5.82 billion Gallons diesel equivalent/year

Bunker Fuel 2050 6.09 billion Gallons diesel equivalent/year

Appendix I provides a full description of market sizes used in this analysis.
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

24 

3.10. Electricity Cost and Performance Data

The data used to model electricity generation technologies and fuels were largely based on EIA’s Annual 

Energy Outlook 2011 reference scenario projections, however, in some cases, modifications to the Annual 

Energy Outlook 2011 data were made as discussed below and in Appendix J. In the Annual Energy 

Outlook 2011, EIA made projections of the commodity price index. To avoid uncertainties associated 

with these commodity index projections, the capital costs used in the BASE model calculations remove 

the effects of projected commodity index. In other words, the BASE model implicitly assumes a 

commodity index of 1.0 for all years. 

Table 3.9 shows the technologies considered in this analysis, their costs, and heat rates. The column 

labeled “capital net commodity index” reflects modifications to the capital cost that have been made for 

the BASE model to remove commodity index effects. The “maximum annual capacity factor” values for 

dispatchable technologies (all technologies except wind and solar) were based on data used in NREL’s 

ReEDS model (Short et al. 2011) and consider typical planned and forced outage rates for these plant 

categories. For the variable renewable generation technologies [wind, photovoltaics (PV), and 

concentrating solar power CSP)], the annual capacity factors shown are from Annual Energy Outlook

2011. Integration cost adders for wind and PV are set to $8/MWh (in 2005$) based loosely on estimates 

from the Eastern Wind Integration and Transmission (EWITS) study. Another category of electricity 

generation technology, referred to as “other RE” [other renewable energy] is included in BASE and 

represents dispatchable renewable (but non-biomass) resources, including geothermal, hydropower, and 

CSP with thermal storage. The BASE model does not include supply curves for the technologies under 

the “other RE” category. Instead, BASE uses single-point estimates of technology cost and performance 

projections for geothermal as the representative dispatchable non-biomass renewable technology. The 

“Transparent Cost Database” (http://en.openei.org/apps/TCDB/) was not available when this data was 

collected and thus was not used. The values used here are consistent with those in the database.

Heat rate is defined as the overall thermal performance (energy efficiency) of a power plant calculated as 

the heat supplied to the power plant divided by the electricity generated. 

Note that several types of biopower production are not included. Production of power from municipal 

solid waste and landfill gas sources was not included, because supply curves were not available for either 

resource. In addition, co-firing of biomass with coal was not included, because co-firing is assumed to 

have similar costs to biopower generation when capital costs are fully included and the plants have large 

capacities. In this analysis, capital costs are fully included, and the biopower costs are based on largescale facilities. 
TRANSPORTATION ENERGY FUTURES SERIES Biomass

25 

Table 3.9. 2020 Cost Data for Electricity Generation Technologies Used in the BASE Model (2005$)

(Data sources referenced in text.)

Technology

Capital Net 

Commodity 

Index

($/kW)

Fixed 

Charge 

Rate

Fixed Operation 

and Maintenance 

(O&M) 

($/kW-yr)

Variable 

O&M 

($/MWh)

Maximum 

Annual 

Capacity 

Factor

Heat Rate 

(106

Btu/MWh)

Nuclear $4,380 0.144 $80.01 $1.83 0.90 10.45

Coal $2,487 0.139 $26.75 $3.83 0.85 8.77

Natural Gas-(NG) 

Closed Cycle (CC) $867 0.133 $13.18 $2.80 0.90 6.37

NG-Combustion 

Turbine (CT) $571 0.119 $13.25 $6.29 0.92 9.01

Other RE $5,474 0.109 $97.87 $8.69 0.85 - 

Biopower $3,247 0.114 $90.60 $5.87 0.84 13.50

Wind $2,175 0.098 $25.30 $0.00 0.33 - 

PV $3,660 0.097 $23.47 $0.00 0.25 - 

CSP $3,075 0.104 $57.69 $0.00 0.26 - 

Table 3.10 is similar to Table 3.9; however, 2035 cost and performance data are shown instead of 2020. In 

the BASE model, 2050 scenarios were evaluated using the 2035 cost and performance data provided here. 

Table 3.10. 2035 Cost Data for Electricity Generation Technologies Used in the 

BASE Model (2005$)

(Data sources referenced in text.)

Technology

Capital Net 

Commodity 

Index ($/kW)

Fixed 

Charge 

Rate

Fixed 

O&M 

($/kW-yr)

Variable 

O&M 

($/MWh)

Maximum 

Annual 

Capacity 

Factor

Heat Rate 

(106

Btu/MWh)

Nuclear $3,814 0.143 $80.01 $1.83 0.90 10.45

Coal $2,360 0.139 $26.75 $3.83 0.85 8.74

Natural Gas-CC $793 0.131 $13.18 $2.80 0.90 6.33

Natural Gas-CT $508 0.118 $13.25 $6.29 0.92 8.55

Other RE $5,474 0.108 $113.25 $8.69 0.85 - 

Biopower $2,993 0.112 $90.60 $5.41 0.84 13.50

Wind $2,154 0.097 $25.30 $0.00 0.33 - 

PV $2,771 0.096 $23.47 $0.00 0.25 - 

CSP $2,230 0.103 $57.69 $0.00 0.26 - 

Fossil fuel and uranium price projections for 2020 and 2050 were also based on Annual Energy Outlook

2011 projections. Because of the greater degree of elasticity in fossil-fuel prices (especially natural gas) 

compared to uranium, linear supply curves were used for natural gas and coal. The methodology to develop 

the supply curves is described in (Short et al. 2011) and the supply curves presented here are the same as 

those used in the ReEDS model. In short, fossil-fuel elasticity parameters were derived using a linear 

regression of fossil-fuel consumption and price across three cases from Annual Energy Outlook 2011: the 

reference case, high economic growth, and low economic growth cases. The elasticity parameters represent 

the increase in per unit price of fossil fuel for each additional unit of electric sector fuel consumption. The 
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

26 

elasticity parameters were assumed to not vary over time. In addition to the elasticity parameters, a 

minimum fixed fossil-fuel price was used to fully define the linear supply curve; the y-intercept of a fossilfuel supply curve was defined by the fixed price and the slope was defined by the elasticity parameter. The 

fixed price changes over time and was calibrated to match the Annual Energy Outlook 2011 reference case 

consumption and price for all years. To obtain the 2050 supply curve, the fixed price was based on 

extrapolations from 2025 to 2035 in the Annual Energy Outlook 2011 reference case. Table 3.11 shows the 

uranium and fossil-fuel prices and elasticities for 2020 and 2050. 

Table 3.11. 2020 and 2050 Fossil-Fuel and Uranium Prices (2005$)

(Data sources referenced in text.)

Fuel Elasticity ($/106Btu per Quad) Price ($/106Btu)

2020 Natural Gas 0.322 $2.31

2020 Coal 0.044 $1.13

2020 Uranium n/a $0.75

2050 Natural Gas 0.322 $4.43

2050 Coal 0.044 $1.39

2050 Uranium n/a $1.19

Appendix J provides a full description of electricity cost and performance data used in this analysis.

3.11. Life Cycle GHG Emissions and Petroleum Consumption

Well-to-wheel (WTW) and well-to-tank (WTT) life cycle data for GHG emissions (Figures 3.5 and 3.6) 

and petroleum consumption (Figures 3.7 and 3.8) used in the BASE model are illustrated for the years 

2020 and 2050. The primary data source is the Greenhouse Gases, Regulated Emissions, and Energy Use 

in Transportation (GREET) model version 1.8d, created by the Argonne National Laboratory (GREET 

Model: The Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation, ANL 2011). 

Supplemental fuel pathways for microalgae-based fuels grown in an open pond were partially generated 

in the GHGenius model version 3.19a, created by (S&T)2

 (2004). Supplemental fuel pathways for 

pyrolysis-oil-based fuels were partially based on GREET and a SimaPro v.7.2 model of pyrolysis oil 

processing to gasoline and diesel (Hsu 2011). 

Fuel pathways for the 2020 and 2050 scenarios were both modeled based on default GREET assumptions 

for the year 2020, because 2050 default parameters were not available. The electricity grid for 2020 and 

2050 and associated life cycle GHG emission intensities were modeled based on the 2011 Renewable 

Energy Future’s (REF) study’s 80% renewables projections. Parameters for specific fuel pathways were 

modified to reflect conversion efficiencies assumed for 2020 and 2050 (as outlined in Section 3.6) (Mai et 

al. 2012) . Effects of indirect land use change on GHG emissions, though important to Federal policymaking, were not included because the magnitude of those effects vary dramatically and are controversial. 

In addition, doing so would have added more complexity than could be addressed within the scope of this 

analysis. 
TRANSPORTATION ENERGY FUTURES SERIES Biomass

27 

Figure 3.5. WTW and WTT life cycle GHG emission estimates used in the BASE model for 2020

The dotted line represents an 80% GHG emission reduction from gasoline.

[Sources: Argonne National Laboratory 2011, (S&T) Consultants 2011, Hsu 2011, Spath and Mann 2004, Mullins et al. 2010, Tao 

and Aden 2011, Mai et al. 2012] 

BD = biodiesel; CNG = compressed natural gas; CD = conventional diesel; CG = conventional gasoline; F-T = Fischer Tropsch; 

LNG – liquefied natural gas; PO = pyrolysis oil; RD = renewable diesel.

Figure 3.6. WTW and WTT life cycle GHG emission estimates used in the BASE model for 2050

The dotted line represents an 80% GHG emission reduction from gasoline

[Sources: Argonne National Laboratory 2011, (S&T) Consultants 2011, Hsu 2011, Spath and Mann 2004, Mullins et al. 2010, Tao 

and Aden 2011, Mai et al. 2012] 

BD = biodiesel; CNG = compressed natural gas; CD = conventional diesel; CG = conventional gasoline; F-T = Fischer Tropsch; 

LNG – liquefied natural gas; PO = pyrolysis oil; RD = renewable diesel.
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

28 

Figure 3.7. WTW and WTT life cycle petroleum consumption estimates used in the BASE model for 

2020

The dotted line represents an 80% petroleum consumption reduction from gasoline.

[Sources: Argonne National Laboratory 2011, (S&T) Consultants 2011, Hsu 2011, Spath and Mann 2004, Mullins et al. 2010, Tao 

and Aden 2011, Mai et al. 2012] 

CNG = compressed natural gas; CD = conventional diesel; CG = conventional gasoline; F-T = Fischer Tropsch; LNG – liquefied 

natural gas; PO = pyrolysis oil; RD = renewable diesel.

Figure 3.8. WTW and WTT life cycle petroleum consumption estimates used in the BASE model for 

2050

 The dotted line represents an 80% GHG emission or petroleum consumption reduction 

 from gasoline.

(Sources: Argonne National Laboratory 2011, (S&T) Consultants 2011, Hsu 2011, Spath and Mann 2004, Mullins et al. 2010, Tao 

and Aden 2011, Mai et al. 2012) 

CNG = compressed natural gas; CD = conventional diesel; CG = conventional gasoline; F-T = Fischer Tropsch; LNG – liquefied 

natural gas; PO = pyrolysis oil; RD = renewable diesel.
TRANSPORTATION ENERGY FUTURES SERIES Biomass

29 

4. RESULTS FROM MODEL RUNS USING DEFAULT DATA

This section reports the results that were generated by the BASE model using default data as described in 

Section 3 and the appendices. It includes a short presentation of levelized costs of fuels that were

purchased by consumers and based on the default data above. The presentation is followed by projections 

of equilibrium states under mature market conditions for 2020 and 2050 in the electricity and 

transportation sectors. As previously discussed, the estimates are optimized end-points that may not be 

achieved due to many temporal reasons (e.g., retirement rates of and/or replacement of existing stock, 

conservative business decisions, uncertain and changing policies, lack of achievement of nth plant 

projections due to lack of learning, and so on). The 2020 result is unlikely, because the timeframe is too 

soon for technologies to mature and markets to develop. Even with this probability, estimates are still 

useful in understanding how biomass might be utilized in mature markets, and whether market 

development faces larger hurdles. 

4.1 Levelized Cost of Energy Results

Fuels and electricity compete on an energy-equivalent levelized cost of energy (LCOE) basis. The BASE 

model presumes that the consumer pays for the product at a levelized cost due to competition in mature 

markets. The liquid biofuels competing against gasoline include corn ethanol, cellulosic ethanol, corn 

butanol, cellulosic butanol, and pyrolysis oil-based gasoline. LCOEs for those fuels are shown in Figure 

4.1 (2020), and Figure 4.2 (2050), on a gallon-gasoline-equivalent (gge) basis. Conventional fuel price 

projections are shown for comparison. 

Note that the cellulosic biofuels prices include multiple blue bars ranging from $40/dry short ton

delivered biomass to $200/dry short ton. In 2020, at $40/dry short ton, the price of cellulosic ethanol and 

butanol is higher than that for the gasoline it is competing against; however, the price of pyrolysis-oilbased gasoline is slightly lower than gasoline. At higher feedstock prices, the price of pyrolysis-oil-based 

gasoline is higher than the competing gasoline. Corn-based ethanol and butanol are higher than the 

gasoline competition at both low and high corn prices (note that co-product value is included in the LCOE 

calculation). 

The 2050 projections for gasoline price are higher than 2020, yet the biomass LCOE projections are 

lower, because projected technology improvements reduce feedstock and conversion costs. The result is 

that cellulosic and corn-based biofuels compete well with gasoline, when feedstock prices are

$3.79/bushel for corn and up to $160/dry short ton for cellulosic feedstocks. 
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

30 

Figure 4.1. LCOE breakdown for gasoline-market fuels in 2020 with various feedstock prices

(Sources: Humbird et al. 2011, Jones et al. 2009, Swanson et al. 2010, Tao and Aden 2009, Davis et al. 2011, Tao and Aden 2011, 

DOE 2011a, DOE 2011b)

Figure 4.2. LCOE breakdown for gasoline-market fuels in 2050

(Sources: Humbird et al. 2011, Jones et al. 2009, Swanson et al. 2010, Tao and Aden 2009, Davis et al. 2011, Tao and Aden 2011, 

DOE 2011a, DOE 2011b)

The liquid biofuels competing against diesel, bunker fuel, and jet fuel include PO-based diesel, algal 

diesel, FT diesel, and soy-based biodiesel. LCOEs for those fuels are shown in Figure 4.3 (2020), and 

Figure 4.4 (2050), on a gde basis. Similar to the gasoline market, the PO-based diesel is less expensive 

than diesel and jet fuel in 2020 at low feedstock prices, and slightly more expensive at higher feedstock 

prices. FT diesel is much more costly in 2020, but becomes competitive in 2050, because of assumed 

technology improvements. Algal fuels are projected to be more expensive in both 2020 and 2050, 

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

gasoline corn 

ethanol

cell. 

ethanol

corn 

butanol

cell. 

butanol

pyr. gas

LCOE (2005$/gge)

2020 Gasoline

$6.11/bushel corn

$3.79/bushel corn

$200/ton biomass

$160/ton biomass

$120/ton biomass

$80/ton biomass

$40/ton biomass

fuel transport

non-fuel

conventional

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

gasoline corn 

ethanol

cell. 

ethanol

corn 

butanol

cell. 

butanol

pyr. gas

LCOE (2005$/gge)

2050 Gasoline

$6.11/bushel corn

$3.79/bushel corn

$200/ton biomass

$160/ton biomass

$120/ton biomass

$80/ton biomass

$40/ton biomass

fuel transport

non-fuel

conventional

feedstock

feedstock
TRANSPORTATION ENERGY FUTURES SERIES Biomass

31 

although the difference between the LCOE for algal fuels and other biofuel options is much smaller in 

2050. 

Figure 4.3. LCOE breakdown for diesel, jet, and bunker-market fuels in 2020

(Sources: Humbird et al. 2011, Jones et al. 2009, Swanson et al. 2010, Tao and Aden 2009, Davis et al. 2011, Tao and Aden 2011, 

DOE 2011a, DOE 2011b)

Figure 4.4. LCOE breakdown for diesel, jet, and bunker-market fuels in 2050

(Sources: Humbird et al. 2011, Jones et al. 2009, Swanson et al. 2010, Tao and Aden 2009, Davis et al. 2011, Tao and Aden 2011, 

DOE 2011a, DOE 2011b)

LCOEs for electricity are shown in Figures 4.5 and 4.6. Biopower is reported at several feedstock levels.

Likewise, coal and natural-gas-based electricity are shown with multiple feedstock prices. Note that 

BASE has four load slices and provides different treatments for variable generation, as a result, the 

competition is not as straight forward as with liquid fuels. All technologies, except “other RE,” are 

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

LCOE (2005$/gde)

2020 Diesel

$12.05/bushel soybean

$9.01/bushel soybean

$200/ton biomass

$160/ton biomass

$120/ton biomass

$80/ton biomass

$40/ton biomass

fuel transport

non-fuel

conventional

$0

$1

$2

$3

$4

$5

$6

$7

$8

$9

$10

LCOE (2005$/gde)

2050 Diesel

$12.05/bushel soybean

$9.01/bushel soybean

$200/ton biomass

$160/ton biomass

$120/ton biomass

$80/ton biomass

$40/ton biomass

fuel transport

non-fuel

conventional

feedstock

feedstock
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

32 

projected to have lower LCOE between 2020 and 2050. Biopower is much more expensive than 

competing technologies unless the feedstock cost is less than $40/dry short ton. For simplicity, a heat 

content of 16 106

Btu/dt is used for all biomass feedstocks in these figures. In reality, heat content depends 

upon feedstock and ranges from 14-18 106

Btu/dt. 

Figure 4.5. LCOE breakdown for electricity in 2020

(Sources: DOE 2011a, Short et al. 2011, Augustine et al. 2010)

Figure 4.6. LCOE breakdown for electricity in 2050 

(Sources: DOE 2011a, Short et al. 2011, Augustine et al. 2010)

$0

$50

$100

$150

$200

$250

LCOE (2005$/MWh)

2020 fuel

non-fuel

$0.75/MMBtu

$1-3/MMBtu

$4-12/MMBtu

$4-12/MMBtu

~$40-200/ton

$0

$50

$100

$150

$200

$250

LCOE (2005$/MWh)

2050 fuel

non-fuel

$1.19/MMBtu

$1-3/MMBtu

$4-12/MMBtu

$4-12/MMBtu

~$40-200/ton
TRANSPORTATION ENERGY FUTURES SERIES Biomass

33 

4.2 Default Data Scenarios with Carbon Prices

The primary purpose of this analysis and the BASE model is to better understand if biomass might 

penetrate mature fuel and electricity markets, evaluate how much it could penetrate, and determine how it 

might be segregated between those markets. The effect of carbon cost on those issues is also considered, 

because setting carbon cost increases penetration of renewables in many markets and affects market 

performance. 

Results are reported for three scenarios: carbon prices of $0/metric ton CO2e, $40/metric ton CO2e, and 

$80/metric ton CO2e . The emissions used to calculate costs of carbon are based on full lifecycle (i.e., not 

just tailpipe) calculated as described in Section 3.11. Different emissions policies (e.g., tailpipe only) 

could result in different results.

Figure 4.7 shows the biomass-based fuel and electricity penetration in hypothetical mature 2020 markets. 

(See Table 3.8 for a review of the size of each of the markets.) Based on the LCOE data, biomass-based 

fuels permeate the fuel markets, especially the jet fuel and gasoline markets. The diesel market has less 

penetration, because there are fewer biomass options that are cost competitive with the conventional 

diesel fuel. Bunker fuel has a lower price than diesel, however, this analysis does not differentiate 

between the LCOE of the two fuel markets. As a result, biomass-based bunker fuel substitutes only reach 

low penetration in a hypothetical mature 2020 market. Because the LCOE for biopower is higher than 

most of the alternatives, it has minimal penetration. In all cases, biofuels become more pervasive when 

cost of carbon is evaluated, mainly because biofuels are less carbon intensive than conventional options. 

However, it is important to note that much of the biomass feedstock is utilized; if additional feedstock 

were available, the penetration in each of the markets could be much higher. 

Figure 4.7. Biomass penetration in hypothetical mature 2020 markets with varied costs of carbon

In a mature 2050 market, the penetration of biofuels is more pronounced. Figure 4.8 shows the same 

penetration curves as in Figure 4.7, but in the later market. Biofuel options in the gasoline market are 

limited, due to the maximum allowable quantities of corn and increased value for biofuels in other 

markets; therefore, increasing the cost of carbon has little effect beyond $40/short ton. Biofuels also 

penetrate the jet and diesel markets more than in 2020, because of expected improvements in biomass 

technologies and increased diesel costs. 

0%

5%

10%

15%

20%

25%

30%

35%

Carbon00 Carbon40 Carbon80

Biomass Market Share

Jet

Diesel

Gasoline

Bunker

Electricity
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

34 

 

Figure 4.8. Biomass penetration in hypothetical mature 2050 markets with varied costs of carbon

As shown above, biopower is more expensive than other power options. However, biopower produces 

fewer GHGs than most of the other power options—especially those that can supply baseload. Because of 

this, one would expect biopower to have greater penetration, especially at high carbon costs. However, 

because there are more low-carbon power options, biopower has almost no penetration in this area. Figure 

4.9 shows the electric sector market shares in the hypothetical mature 2020 market. Note that the market 

share for coal-based power goes down as the cost of carbon increases. It is replaced by variable renewable 

electricity options and other RE power.9

 Biopower does not penetrate, because it is too expensive. The 

2050 market shares are similar and are shown in Figure 4.10. 

 

9 The “other RE” category in BASE represents all non-biopower-dispatchable technologies, including geothermal, hydropower, 

and CSP with storage. 

0%

10%

20%

30%

40%

50%

60%

Carbon00 Carbon40 Carbon80

Biomass Market Share

Jet

Diesel

Gasoline

Bunker

Electricity
TRANSPORTATION ENERGY FUTURES SERIES Biomass

35 

Figure 4.9. Biopower penetration in hypothetical mature 2020 markets 

with varied costs of carbon

 

Figure 4.10. Biopower penetration in hypothetical mature 2050 markets

with varied costs of carbon

As shown in Figures 4.11 and 4.12, coal and natural gas prices drop with increased costs of carbon. This 

is due to the reduced consumption of coal and natural gas in the electric sector. Because the fossil-fuel 

supply curves are derived using a linear regression, the rebound effect or dynamics in buildings/industrial 

sectors are unlikely to be adequately represented; therefore, actual changes are unlikely to be as dramatic 

as projected.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Carbon00 Carbon40 Carbon80

Electric Sector Market Share

Biomass

Variable RE

Other RE

Natural gas

Coal

Nuclear

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Carbon00 Carbon40 Carbon80

Electric Sector Market Share

Biomass

Variable RE

Other RE

Natural gas

Coal

Nuclear
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

36 

Figure 4.11. Effect of carbon cost on coal and natural gas prices and electric sector consumption

in 2020

Figure 4.12. Effect of carbon cost on coal and natural gas prices and electric sector consumption

in 2050

As expected with the type of logit function estimation used in BASE, multiple biofuels enter into each of 

the fuels markets. Figure 4.13 shows the penetration of each fuel in gallon gasoline equivalent for the 

gasoline market and gallon diesel equivalent for the diesel, jet, and bunker markets in the hypothetical 

mature 2020 markets. Algal diesel is not shown, because its penetration is negligible. Figure 4.14 shows 

the same data for the hypothetical mature 2050 market. Compared to other biofuels, PO-based gasoline 

0

2

4

6

8

10

12

14

16

18

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

Carbon00Carbon40Carbon80Carbon00Carbon40Carbon80Carbon00Carbon40Carbon80Carbon00Carbon40Carbon80

Natural gas Coal Natural gas Coal

quads

$/MMBtu

Fuel Price Electric Sector Consumption

0

2

4

6

8

10

12

14

16

18

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

$9.00

$10.00

Carbon00Carbon40Carbon80Carbon00Carbon40Carbon80Carbon00Carbon40Carbon80Carbon00Carbon40Carbon80

Natural gas Coal Natural gas Coal

quads

$/MMBtu

Fuel Price Electric Sector Consumption
TRANSPORTATION ENERGY FUTURES SERIES Biomass

37 

shows the greatest penetration in the gasoline market and PO-based diesel shows the greatest penetration 

in the diesel and jet fuel markets. The figure also shows that, in 2050, pyrolysis gasoline and diesel are the 

largest consumers of lignocellulosic biomass, and algal fuels penetrate the diesel market at a noticeable 

level with high costs of carbon. 

 

Figure 4.13. Biofuel utilization in each hypothetical mature 2020 fuel market with varied 

FRVWVRIcarbon 

0

5

10

15

20

25

30

35

Carbon00

Carbon40Carbon80Carbon00

Carbon40Carbon80Carbon00Carbon40

Carbon80Carbon00Carbon40

Carbon80

Gasoline Diesel Jet Bunker

Production (billion gallons equivalent)

Biodiesel

FT diesel

Pyrolysis 

diesel

Pyrolysis 

gasoline

Butanol

Ethanol
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

38 

Figure 4.14. Biofuel utilization in each hypothetical mature 2050 fuel market

Another way to look at the same data is to calculate how many dry short tons of biomass (including corn 

grain and soybeans) are used to produce the biofuels that are consumed in the fuel markets. Figures 4.15 

and 4.16 exhibit data for 2020 and 2050, respectively. Note that by summing the bars in Figure 4.15, one 

can estimate the total biomass use in the hypothetical mature 2020 case with no cost of carbon. That sum 

is 560 million dry tons. The total biomass use in the hypothetical mature 2050 case with no cost of carbon 

is 1,090 million dry tons. 

0

10

20

30

40

50

60

70

Carbon00Carbon40Carbon80Carbon00Carbon40Carbon80Carbon00Carbon40Carbon80Carbon00Carbon40Carbon80

Gasoline Diesel Jet Bunker

Production (billion gallons equivalent)

Biodiesel

FT diesel

Algal diesel

Pyrolysis 

diesel

Pyrolysis 

gasoline

Butanol

Ethanol
TRANSPORTATION ENERGY FUTURES SERIES Biomass

39 

 

 Figure 4.15. Biomass utilization in each hypothetical mature 2020 fuel market with varied 

costs of carbon

 

 Figure 4.16. Biomass utilization in each hypothetical mature 2050 fuel market with varied 

 costs of carbon

The data in Figures 4.15 and 4.16 are segregated to the fuels provided in each market in Figures 4.17 and 

4.18. Ethanol, butanol, and PO-based gasoline compete in the gasoline market. PO-based diesel, FT 

diesel, and biodiesel compete in the diesel, jet fuel, and bunker fuel markets.

0

100

200

300

400

500

600

Electricity Gasoline Diesel Jet Bunker Other uses

Feedstock Consumption 

(million dry tons)

Carbon00

Carbon40

Carbon80

0

100

200

300

400

500

600

700

800

Electricity Gasoline Diesel Jet Bunker Other uses

Feedstock Consumption 

(million dry tons)

Carbon00

Carbon40

Carbon80
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

40 

 

Figure 4.17. Biomass utilization by fuel type in the hypothetical mature 2020 fuel markets with 

varied costs of carbon

0

50

100

150

200

250

300

Electricity Ethanol Butanol Pyrolysis 

gasoline

Pyrolysis 

diesel

FT diesel Biodiesel

Feedstock Consumption 

(million dry tons)

Carbon00

Carbon40

Carbon80
TRANSPORTATION ENERGY FUTURES SERIES Biomass

41 

 

Figure 4.18. Biomass utilization by fuel type in the hypothetical mature 2050 fuel markets with 

varied costs of carbon

Finally, the data are segregated into feedstocks in Figures 4.19 and 4.20. The total consumption of 

lignocellulosic biomass in the hypothetical mature 2020 fuel market with no cost of carbon is 470 million 

dry short tons per year; in 2050 it is 880 million dry short tons per year. Much of the additional fuel 

generation shown above is also due to increases in corn consumption for ethanol and butanol (used in the 

gasoline market). 

0

50

100

150

200

250

300

350

400

Electricity Ethanol Butanol Pyrolysis 

gasoline

Pyrolysis 

diesel

FT diesel Biodiesel

Feedstock Consumption

(million dry tons)

Carbon00

Carbon40

Carbon80
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

42 

 

Figure 4.19. Biomass utilization by feedstock type in the hypothetical mature 2020 fuel markets

with varied costs of carbon

 

Figure 4.20. Biomass utilization by feedstock type in the hypothetical mature 2050 fuel markets

with varied costs of carbon

The amount of SRWC, agricultural residues, and switchgrass utilized in the 2020 case does not increase 

when a cost of carbon is applied. Likewise, the quantities of all four classes of lignocellulosic feedstocks 

in the 2050 case are essentially constant. Utilization of those feedstocks does not increase because they 

cannot – the total supply is being used. Figure 4.21. shows the location on the supply curves for the four 

classes of lignocellulosic biomass, corn, and soybeans in 2020. The orange shapes indicate the point on 

0

20

40

60

80

100

120

140

160

180

200

Forest 

residue

Short-rotation 

woody crop

Agricultural 

residue

Switchgrass

Corn grain

Soybean

Feedstock Consumption 

(million dry tons)

Carbon00

Carbon40

Carbon80

0

50

100

150

200

250

300

350

Forest 

residue

Shortrotation 

woody crop

Agricultural 

residue

Switchgrass

Corn grain

Soybean

Feedstock Consumption

(million dry tons)

Carbon00

Carbon40

Carbon80
TRANSPORTATION ENERGY FUTURES SERIES Biomass

43 

the supply curve for each carbon cost case. The one on the lower left is for a cost of carbon of $0/metric 

ton CO2e, the middle is for $40/metric ton CO2e, and the one on the right is for $80/metric ton CO2e. 

Points on the dashed line are beyond the limits of the supply curve. In other words, consumers are 

projected to pay more than necessary to purchase that biomass because the market is likely to handle the 

higher prices. Ideally, the dashed lines are vertical; however, some slope is necessary for the BASE model 

to converge on a solution. 

Figure 4.21. Feedstock supply curves in 2020 with indicators showing quantity consumed and price (No cost of carbon, $40/metric ton CO2e cost of carbon, and $80/metric ton CO2e cost of carbon. Note that the quantity consumed 

for soybeans is the same for a $40/metric ton CO2e cost of carbon and an $80/metric ton CO2e cost of carbon.) 

GHG emissions are important considerations. Emissions from each pathway are reported in the discussion 

of input data above, with the hypothetical fuel and electricity markets shown in Figure 4.22. Emissions 

from the sum of the gasoline, diesel, jet, and bunker fuel markets are only reduced by 1% with a 

$40/metric ton CO2e cost of carbon and by 3% with an $80/metric ton CO2e cost of carbon. The minimal 

reduction is due to a high penetration of biofuels with low-carbon emissions, and the fact that oil-based 

fuels have relatively low emissions when compared to coal-based electricity. However, the comparison of 

fuels markets without a biofuels option and one with biofuels shows that emissions are reduced by 10% 

when biofuels are available.

GHG emissions in the electric sector are reduced by 41% in the $40/metric ton CO2e cost of carbon 

scenario and by 61% in the $80/metric ton CO2e cost of carbon scenario. Those reductions are due to 

increased market share for nuclear, other RE, and variable renewable energy as reported above. Figure 

4.23 shows the hypothetical mature 2020 market emissions due to each generation technology. Emissions 

from coal and natural gas drop due to decreased use of those technologies, and emissions from nuclear 

and non-biomass renewable sources increase due to higher utilization of those technologies. There are 
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

44 

measurable emissions from nuclear and non-biomass technologies that are generated during 

manufacturing, construction, and decommissioning, as well as from uranium mining and enrichment. 

 Figure 4.22. Total emissions by sector in hypothetical mature 2020 markets with varied 

 costs of carbon

 

Figure 4.23. Annual electric sector emissions by sector in hypothetical mature 2020 markets with 

varied costs of carbon

Figures 4.24 and 4.25 report the same information as Figures 4.22 and 4.23, except for the hypothetical 

mature 2050 market. Emissions in the fuel markets are reduced by 4% with a $40/metric ton CO2e cost of 

carbon and by 8% with an $80/metric ton CO2e cost of carbon. Emissions are reduced by 26% in a market 

where biofuels are available versus where only petroleum-based fuels are offered. The emissions 

0

1,000

2,000

3,000

4,000

5,000

6,000

No Biofuel Carbon00 Carbon40 Carbon80

Emissions (million metric ton CO2e)

Electricity

Bunker

Jet

Diesel

Gasoline

0

200

400

600

800

1,000

1,200

1,400

Coal Natural gas Nuclear Non-bio RE Bio

Emissions (million metric ton CO2e)

Carbon00

Carbon40

Carbon80
TRANSPORTATION ENERGY FUTURES SERIES Biomass

45 

reduction in the 2050 market is greater than that in the 2020 market primarily because of the increased 

penetration of biofuels in the diesel market. Emissions in the electric sector are reduced by 50% in the 

$40/metric ton CO2e cost of carbon scenario and by 70% in the $80/metric ton CO2e cost of carbon 

scenario. 

 

 Figure 4.24. Total emissions by sector in hypothetical mature 2050 markets with varied 

 costs of carbon

Figure 4.25. Annual electric sector emissions by sector in hypothetical mature 2050 markets with 

varied costs of carbon

Figures 4.26 and 4.27 display the WTW crude oil use in a hypothetical mature market in 2020. In Figure 

4.27, the WTW petroleum consumption for conventional fuels is shown in the lower, darker bar. 

Reduction of conventional fuel demand (due to replacement with biofuels) reduces the lower, darker bar 

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

No Biofuel Carbon00 Carbon40 Carbon80

Emissions (million metric ton CO2e)

Electricity

Bunker

Jet

Diesel

Gasoline

0

500

1,000

1,500

2,000

2,500

Coal Natural gas Nuclear Non-bio RE Bio

Emissions (million metric ton CO2e)

Carbon00

Carbon40

Carbon80
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

46 

accordingly. Some petroleum is needed to produce the biofuel (e.g., for planting and harvesting) and that

demand is shown by the smaller, lighter bar. As shown in Section 3.11, less petroleum is needed when 

biofuels provide the same services than when conventional fuel provides those services. Thus, markets 

with a higher penetration of biofuels use less petroleum. 

The availability of biofuels reduces crude oil use by 12%, from a market with conventional fuels only 

with no cost of carbon because, as shown in Figures 4.13 and 4.14, 33 and 102 gallons of fuel equivalent 

are replaced with biofuels in the 2020 and 2050 zero cost of carbon cases, respectively. The amount of 

biofuels in the market is limited by resources so they it increases to 45 and 120 with an $80/metric ton 

CO2e cost of carbon. Thus, the 2020 WTW petroleum use reduction with an $80/metric ton CO2e cost of 

carbon reduces petroleum use by 16% from the case with no biofuels. That result is only 4% greater than 

that with no cost of carbon. Compared to increasing the cost of carbon, biofuel availability has the 

greatest potential for reducing petroleum use. Increasing the cost of carbon has a much smaller effect.

 

Figure 4.26. Annual WTW petroleum use by market in hypothetical mature 2020 markets with 

varied costs of carbon

0

1

2

3

4

5

6

7

No Biofuel Carbon 00 Carbon 40 Carbon 80

Consumption (billion barrels/yr)

Bunker

Jet 

Diesel

Gasoline
TRANSPORTATION ENERGY FUTURES SERIES Biomass

47 

 

Figure 4.27. Annual WTW petroleum use by fuel genesis in hypothetical mature 2020 markets with 

varied costs of carbon

Figures 4.28 and 4.29 display the WTW crude oil use in a hypothetical mature market in 2050. The 

availability of biofuels reduces crude oil use by 30% from a market with conventional fuels only with no 

cost of carbon and by 35% with an $80/metric ton CO2e cost of carbon. If conventional fuels were 

replaced by fuels with no petroleum use on a WTW basis, the reduction would be 35% (zero cost of 

carbon). Because our life cycle calculations include petroleum fuels for biomass farming and transport, 

biofuels require some petroleum and the reduction is only 30% (zero cost of carbon). 

 

Figure 4.28. Annual WTW petroleum use by market in hypothetical mature 2050 markets with 

varied costs of carbon

-

1 

2 

3 

4 

5 

6 

7 

No Biofuel Carbon 00 Carbon 40 Carbon 80

Consumption (billion barrels/yr)

Biofuel

Conventional

0

1

2

3

4

5

6

7

8

No BioFuel Carbon 00 Carbon 40 Carbon 80

Consumption (billion barrels/yr)

Bunker

Jet 

Diesel

Gasoline
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

48 

 

Figure 4.29. Annual WTW petroleum use by fuel genesis in hypothetical mature 2050 markets with 

varied costs of carbon

-

1 

2 

3 

4 

5 

6 

7 

8 

No BioFuel Carbon 00 Carbon 40 Carbon 80

Consumption (billion barrels/yr)

Biofuel

Conventional
TRANSPORTATION ENERGY FUTURES SERIES Biomass

49 

5. SENSITIVITY RESULTS AND IMPLICATIONS

In this study, sensitivities were performed by adjusting parameters in the default cases to better 

understand drivers that affect biomass penetration and segmentation in the fuel and electricity markets. 

This section describes how the use of these sensitivities can help determine the market appeal of 

biopower, the effect of failed technology development on biofuels penetration, and the impacts of 

biomass feedstock and conventional resource pricing. 

5.1 Improved Opportunities for Biopower

The BASE model indicates that the most economical use of biomass is for transportation, not power. One 

potential reason for this is that the default assumptions for biopower are less optimistic than those of 

biofuels. To test that possibility, several sensitivities were performed. Capital costs could be lower in the 

near term because, in electricity generation facilities where biomass is co-fired with coal, much of the 

capital has already been paid off during the early, coal-combusting part of the plant’s lifetime. In the long 

term, co-firing does not reduce capital cost, because capital costs must be annuitized over the biomass 

portion of the plant as well as the coal portion. As a result, those costs must be included in analyses such 

as this one and the initial assumptions used for the 2050 case are valid. Thus, a sensitivity involving 

reducing the overnight capital cost for biopower by 30% was performed only for the hypothetical mature 

2020 market. 

Figure 5.1 displays the effect that reducing capital costs has on the amount of biomass utilized in each 

energy market (with $0, $40, and $80/metric ton CO2e costs of carbon), and Figure 5.2 shows the effect 

on the hypothetical power markets. Essentially, the same amount of biomass is used; however, there are 

small increases of use in the power sector with corresponding decreases in the fuels markets. The amount 

of biomass used for power doubles in the $0/metric ton CO2e cost of carbon scenario with smaller 

increases in the scenarios with carbon costs only. That increase boosts the biopower share of the 

electricity market from about 0.4%-0.9% in the zero carbon cost case; however, the total share is still 

negligible. In all scenarios, the amount of biomass used for transportation is reduced by 3% or less. 

This sensitivity indicates that either the capital costs for biopower must be more than 30% lower—or 

costs of competing low-carbon generation must be higher—or the conversion costs from biomass to fuels 

must be much higher to drive biomass to the power sector. The most likely reason for this is that there are 

other options available for low-cost and low-carbon electricity, but there are few other options for 

transportation. 
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

50 

Figure 5.1. Effects of reduced biopower capital costs on biomass utilization in each hypothetical 

mature 2020 market with varied costs of carbon

Figure 5.2. Effects of reduced biopower capital costs on biopower penetration in hypothetical 

mature 2020 markets with varied costs of carbon

Another possible biopower assumption that could be too pessimistic is that the heat rate is too high. In 

other words, R&D might be able to make the biopower process more efficient, with less biomass needed 

to generate a given amount of power. To test that possibility, researchers used a reduced biopower heat 

rate sensitivity. This improvement requires R&D and is most likely to apply in the long term, so, only the 

2050 case is reported. To perform the analysis, the biopower heat rate was reduced by 30%. 

0

100

200

300

400

500

600

Electricity Gasoline Diesel Jet Bunker Other uses

Consumption (million dry tons)

Carbon00 - Base Capital Cost

Carbon00 - Low Capital Cost

Carbon40 - Base Capital Cost

Carbon40 - Low Capital Cost

Carbon80 - Base Capital Cost

Carbon80 - Low Capital Cost

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Carbon00 -

Base 

Capital 

Cost

Carbon00 -

Low 

Capital 

Cost

Carbon40 -

Base 

Capital 

Cost

Carbon40 -

Low 

Capital 

Cost

Carbon80 -

Base 

Capital 

Cost

Carbon80 -

Low 

Capital 

Cost

Electric Sector Market Share

Biomass

Variable RE

Other RE

Natural gas

Coal

Nuclear
TRANSPORTATION ENERGY FUTURES SERIES Biomass

51 

Figures 5.3 and 5.4 show that, by reducing the heat rate, the use of biomass for power essentially tripled. 

Still, even with the decreased heat rate, biopower only has a negligible share of the projected electricity 

market. Note that a smaller fraction of the electricity market is biopower in 2050 than in 2020, due to 

assumed improvements to other technologies. The amount of biomass projected to be used for power is so 

small that the increases have a negligible effect on the fuel market. 

This sensitivity indicates that, without other drivers, dramatic improvements to the biomass-to-power 

conversion efficiency are insufficient to pull biomass into the power market. Those potential drivers could 

include difficulty in achieving projected improvements in the fuel conversion processes or other powergeneration technologies, or CCS availability. 

 

Figure 5.3. Effects of reduced heat rates on biomass utilization in each hypothetical mature 2050 

fuel market with varied costs of carbon

0

100

200

300

400

500

600

700

800

Electricity Gasoline Diesel Jet Bunker Other uses

Feedstock Consumption 

(million dry tons)

Carbon00 - Base Heat Rate

Carbon00 - Low Heat Rate

Carbon40 - Base Heat Rate

Carbon40 - Low Heat Rate

Carbon80 - Base Heat Rate

Carbon80 - Low Heat Rate
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

52 

 

Figure 5.4. Effects of reduced heat rates on biopower penetration in hypothetical mature 2050 

markets with varied costs of carbon

A third possible biopower assumption that could be too pessimistic is that CCS is not available. CCS 

parameters were added to all applicable power generation technologies to test their effects on biomass 

use. Note that this case only has power production options with CCS. The current version of the BASE 

model does not allow for competition between power-generation with CCS and power-generation without 

it, so the CCS sensitivity is included for the entire share of each applicable technology. Because the 

required technology is unlikely to be widely available by 2020, only the CCS sensitivity for 2050 was 

analyzed. In addition, it was not included as an option for transportation fuel technologies due to a lack of 

data. By excluding that option for transportation fuel, the probability of using biomass in the power sector 

goes up. As a result, this sensitivity can be considered an extreme (i.e., most favorable for biopower). 

The effects of CCS on power generation capital, operating costs, and heat rates are shown in Table 5.1. 

The technology cost and performance data for natural gas combined-cycle CCS (NG-CC-CCS) plants, 

coal-integrated gasification plants, and coal combined-cycle CCS (coal-IGCC-CCS) plants from Annual 

Energy Outlook 2011 were used. Since Annual Energy Outlook 2011 did not include biopower with CCS 

(bio-CCS) options, overnight capital costs for bio-CCS were assumed to be increases of the standard 

biopower capital costs (Table 3.9 by the difference between coal-IGCC-CCS (Table 5.1) and pulverized 

coal (“Coal” in Table 3.9). Operation and maintenance (O&M) costs and heat rates for bio-CCS were 

assumed to be the same as those shown in Table 3.9 for biopower. Table 5.1 summarizes the technology 

cost and performance assumptions for the CCS technologies used in these scenarios. 

Emissions data used in BASE are reported in Appendix G. Because GHG emissions from CCS 

technologies are speculative and have large ranges, values were selected based on best available data.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Carbon00 

- Base 

Heat Rate

Carbon00 

- Low Heat 

Rate

Carbon40 

- Base 

Heat Rate

Carbon40 

- Low Heat 

Rate

Carbon80 

- Base 

Heat Rate

Carbon80 

- Low Heat 

Rate

Electric Sector Market Share

Biomass

Variable RE

Other RE

Natural gas

Coal

Nuclear
TRANSPORTATION ENERGY FUTURES SERIES Biomass

53 

Table 5.1. 2050 Cost and Performance Data for CCS Generation Technologies (2005$)

(Data sources referenced in text.)

Technology

Capital net 

commodity 

index ($/kW)

Fixed O&M 

($/kW-yr)

Variable O&M 

($/MWh)

Heat Rate 

(106

Btu/MWh)

Coal-IGCC-CCS $3051 $62.47 $8.06 8.307

NG-IGCC-CCS $1134 $27.27 $5.81 7.493

Bio-CCS $4111 $90.60 $5.41 13.50

Figure 5.5 shows that biopower’s share of the electricity market stays below 1% in the $0/metric ton 

CO2e cost of carbon scenario but, due to the availability of CCS, increases to 2% of the electricity market 

with a $40/metric ton CO2e cost of carbon and over 13% of the market with an $80/metric ton CO2e cost 

of carbon. Figure 5.6 shows the corresponding use of biomass for power. It goes up to 90 short ton/yr of 

biomass for power in the $40/metric ton CO2e cost of carbon scenario and to 590 short ton/yr in the 

$80/metric ton CO2e cost of carbon scenario because the value proposition in that scenario leads to 

negative costs for biopower. The figure also shows that, due to resource limitations, using biomass for 

power generation reduces the amount of feedstock available for transportation fuels. When CCS is used 

and the cost of carbon is $80/metric ton CO2e, the amount of biomass available for transportation fuel is 

reduced to 570 short ton/yr. 

Figure 5.5. Effects of CCS availability on biopower penetration in hypothetical mature 2050 

markets with varied costs of carbon

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Carbon00 

- Default

Carbon00 

- CCS for 

Power

Carbon40 

- Default

Carbon40 

- CCS for 

Power

Carbon80 

- Default

Carbon80 

- CCS for 

Power

Market Share

Biomass

Variable RE

Other RE

Natural gas

Coal

Nuclear
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

54 

Figure 5.6. Effects of CCS availability on biomass utilization in each hypothetical mature 2050 fuel 

market with varied costs of carbon

Figure 5.7 shows that pyrolysis gasoline and diesel experience the greatest reductions in scenarios where 

biomass is used for power. A large fraction of the ethanol and butanol in the gasoline market is based on 

corn grain, so it is not reduced by other uses of lignocellulosic biomass. Pyrolysis gasoline and diesel 

have larger market shares than other fuels from the lignocellulosic biomass options so they take the 

largest hits. 

0

100

200

300

400

500

600

700

800

900

Electricity Gasoline Diesel Jet fuel Bunker 

fuel

Other 

uses

million dry tons

Carbon00 - Default

Carbon00 - CCS for Power

Carbon40 - Default

Carbon40 - CCS for Power

Carbon80 - Default

Carbon80 - CCS for Power
TRANSPORTATION ENERGY FUTURES SERIES Biomass

55 

Figure 5.7. Effects of CCS availability on biofuel production by fuel type in hypothetical mature 

2050 markets with varied costs of carbon

Figure 5.8 shows the effect on annual GHG emissions when using CCS for power. Converting the power 

sector from one without CCS to one with CCS (i.e., power production options without CCS were 

removed and replaced by those with CCS) reduces the electric sector’s emissions from over 3 billion 

metric tons CO2e annually to about 2 billion metric tons CO2e/yr even without a cost of carbon. As shown 

above, having a cost of carbon of $40/metric ton CO2e increases the use of biopower due to its negative 

overall GHG emissions when CCS is included. The resulting increase in biopower and its negative 

emissions result in reduced power sector emissions to less than 1.4 billion metric tons CO2e/yr. 

At $80/metric ton CO2e cost of carbon, biopower penetrates sufficiently for the power sector to have 

negative emissions. Overall, the carbon emissions are reduced from over 5.8 billion metric tons CO2e 

annually in the default scenario (without CCS and with no cost of carbon) to 2.9 billion metric tons CO2e 

emitted annually in the scenario with CCS and an $80/metric ton CO2e cost of carbon.

0

10

20

30

40

50

60

70

No Carbon - Default

No Carbon - CCS for Power

Carbon40 - Default

Carbon40 - CCS for Power

Carbon80 - Default

Carbon80 - CCS for Power

No Carbon - Default

No Carbon - CCS for Power

Carbon40 - Default

Carbon40 - CCS for Power

Carbon80 - Default

Carbon80 - CCS for Power

No Carbon - Default

No Carbon - CCS for Power

Carbon40 - Default

Carbon40 - CCS for Power

Carbon80 - Default

Carbon80 - CCS for Power

No Carbon - Default

No Carbon - CCS for Power

Carbon40 - Default

Carbon40 - CCS for Power

Carbon80 - Default

Carbon80 - CCS for Power

gasoline diesel jet bunker

billion gallons equivalent

Biofuel Production by Fuel-type

biodiesel

FT diesel

alg. diesel

pyr. diesel

pyr. gas

butanol

ethanol
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

56 

Figure 5.8. Effects of CCS availability on carbon emissions in hypothetical mature 2050 markets 

with varied costs of carbon

Figure 5.9 shows the effect on annual petroleum use when CCS is employed for power. As expected, 

using biomass for power increases the consumption of petroleum. If no biofuels are used for 

transportation, the 2050 projection of petroleum use is 7.5 billion barrels per year. The default scenario 

without a cost of carbon reduces that demand to 5.3 billion barrels annually with costs of carbon further 

reducing the use of oil. However, use of large quantities of biomass for power negates that reduction as is 

shown in the case where CCS is available and the cost of carbon is $80/metric ton CO2e. Although there 

is potential for biomass in the power sector, and the ability to reduce GHG emissions by combining it 

with CCS and high costs of carbon, biopower has limited ability to reduce petroleum use without 

adjusting the model to allow for additional vehicle electrification. Recall that the market sizes for each 

fuel and electricity are based on projections with limited vehicle electrification; increasing vehicle 

electrification will increase the size of the hydrogen and/or electricity markets and reduce petroleum use. 

Those changes to market size are outside the scope of this analysis.

-2,000

-1,000

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

No 

Carbon -

Default

No 

Carbon -

CCS for 

Power

Carbon40 

- Default

Carbon40 

- CCS for 

Power

Carbon80 

- Default

Carbon80 

- CCS for 

Power

million metric ton CO2e

Emissions by Sector

Electricity

Gasoline

Diesel

Jet

Bunker
TRANSPORTATION ENERGY FUTURES SERIES Biomass

57 

 

Figure 5.9. Effects of CCS availability on WTW petroleum use in hypothetical mature 2050 markets 

with varied costs of carbon

5.2 Failure of Conversion Technology Development

This analysis assumes technology improvements based on R&D. As with all R&D, results are not 

guaranteed. As a result, the default conversion parameters are not known absolutely, and variations will 

affect market share. Pyrolysis gasoline and diesel/jet fuel/bunker fuel require over 650 million short tons 

of lignocellulosic biomass to meet market equilibrium in 2050 with the default parameters. That is the 

majority of the lignocellulosic biomass, so failure of R&D for that technology (eliminating it as a 

possibility within the BASE model) is likely to have the greatest effect on biomass utilization. 

Figure 5.10 shows that, without pyrolysis as a technology option, the utilization of biomass in 2050 is 

only reduced slightly. With no cost of carbon, the amount of lignocellulosic biomass utilized goes down 

by 56 million dry short tons/yr from a total use of 880 million dry short tons/yr; therefore, the 655 million 

dry short tons of biomass that was projected to be used for pyrolysis is being used elsewhere. 

Instead of being used to produce pyrolysis gasoline and diesel, the lignocellulosic biomass is used to 

produce ethanol and butanol for the gasoline market (shown in Figure 5.11). It is not used for FischerTropsch diesel, because ethanol and butanol are more profitable. Due to the fuel selection, the biofuel 

penetration in the gasoline market increases by almost 12% in the zero cost of carbon scenario. Biofuel 

penetration drops dramatically in the diesel and jet markets—by 91% in the diesel market and by 61% in 

the jet fuel market. The loss is greater in the diesel market, because the market price is higher in the jet 

fuel market, so profits are higher. In addition, the amount of biomass used for electricity almost triples 

due to increased availability (not shown). 

0

1

2

3

4

5

6

7

8

No 

BioFuel

No 

Carbon -

Default

No 

Carbon -

CCS for 

Power

Carbon40 

- Default

Carbon40 

- CCS for 

Power

Carbon80 

- Default

Carbon80 

- CCS for 

Power

billions of barrels / year

Petroleum Use

Bunker

Jet 

Diesel

Gasoline
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

58 

Figure 5.10. Effects of pyrolysis R&D failure on biomass utilization by feedstock type in 

hypothetical mature 2050 markets with varied costs of carbon

0

50

100

150

200

250

300

350

Forest 

residue

Short-rotation 

woody crop

Agricultural 

residue

Switchgrass Corn grain Soybean

Feedstock Consumption 

(million dry tons)

Carbon00 - Default

Carbon00 - No Pyrolysis

Carbon40 - Default

Carbon40 - No Pyrolysis

Carbon80 - Default

Carbon80 - No Pyrolysis
TRANSPORTATION ENERGY FUTURES SERIES Biomass

59 

Figure 5.11. Effects of pyrolysis R&D failure on biomass utilization in each hypothetical mature 

2050 fuel market by fuel type with varied costs of carbon

0

10

20

30

40

50

60

70

Carbon00 - Default

Carbon00 - No Pyrolysis

Carbon40 - Default

Carbon40 - No Pyrolysis

Carbon80 - Default

Carbon80 - No Pyrolysis

Carbon00 - Default

Carbon00 - No Pyrolysis

Carbon40 - Default

Carbon40 - No Pyrolysis

Carbon80 - Default

Carbon80 - No Pyrolysis

Carbon00 - Default

Carbon00 - No Pyrolysis

Carbon40 - Default

Carbon40 - No Pyrolysis

Carbon80 - Default

Carbon80 - No Pyrolysis

Carbon00 - Default

Carbon00 - No Pyrolysis

Carbon40 - Default

Carbon40 - No Pyrolysis

Carbon80 - Default

Carbon80 - No Pyrolysis

Gasoline Diesel Jet Bunker

Biofuel Production (billion gallons equivalent)

Biodiesel

FT diesel

Algal diesel

Pyrolysis 

diesel

Pyrolysis 

gasoline

Butanol

Ethanol
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

60 

Figures 5.12 and 5.13 show how GHG emissions and petroleum use are affected without pyrolysis. In the 

scenarios with no cost of carbon, the lack of pyrolysis increases both GHG emissions and petroleum use 

by 12% over the scenario where pyrolysis is available.

Failure in one technology’s development redistributes biomass demand to other areas. 

 

Figure 5.12. Effects of pyrolysis R&D failure on carbon emissions in hypothetical mature 2050 

markets with varied costs of carbon

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

Carbon00 

- Default

Carbon00 

- No 

Pyrolysis 

Carbon40 

- Default

Carbon40 

- No 

Pyrolysis

Carbon80 

- Default

Carbon80 

- No 

Pyrolysis

Emissions (million metric ton CO2e)

Electricity

Gasoline

Diesel

Jet

Bunker
TRANSPORTATION ENERGY FUTURES SERIES Biomass

61 

 

Figure 5.13. Effects of pyrolysis R&D failure on WTW petroleum use in hypothetical mature 2050 

markets with varied costs of carbon

5.3 Feedstock Cost Sensitivities 

Like technology, market prices are also uncertain and variable. The default price projections used for corn 

and soybeans in 2020 were based on FAPRI’s 2019 price projections of $3.60/bushel (bu) for corn and 

$8.60/bu for soybeans. Specifically, in Iowa, August 2011 prices were $6.84/bu for corn and $13.50/bu 

for soybeans (Iowa State University and Iowa Agricultural Statistics 2011). In the sensitivity, the base 

price for the corn supply curve was increased from $143/dry short ton to $186/dry short ton (2005$), and 

the base price for the soybeans was increased from $300/dry short ton to $390/dry short ton (2005$). 

Figure 5.14 indicates that higher prices reduce the amount of corn and soy used for biofuels. With no cost 

of carbon, corn utilization is reduced by 45 million short tons per year, or 70%, and soy is reduced by 15 

million short tons/yr, or 60%. The amount of SRWC, agricultural residue, and switchgrass did not 

increase, because those resources were already fully utilized. The amount of forest residue utilized 

increased slightly, but experienced a greater effect when the cost of carbon was increased. Figure 5.15 

shows that biofuel penetration in gasoline, diesel, and jet fuel markets was reduced, because the markets 

were no longer able to afford as much corn and soybean at the higher prices. Biomass use for electricity 

was reduced by about 14% at no cost of carbon, because that biomass could be used more economically 

for liquid fuels. The resulting decrease in biopower market share was from 0.43% to 0.37%. Figures 5.16 

and 5.17 show that GHG emissions from liquid fuels increased by 1%, and petroleum use also increased 

by 1%, due to higher corn and soybean prices at no cost of carbon. 

As expected, high corn and soybean prices adversely affect the quantity of fuels from market competitive 

feedstocks. Because most of the lignocellulosic feedstocks are already fully utilized in the hypothetical 

mature markets, only small increases in their utilization are possible. This seems to indicate that other 

markets for corn and soybeans, including food, feed, and products, are likely to use corn and soybeans, 

and that the difference will need to come from conventional fuels. 

0

1

2

3

4

5

6

7

8

No 

BioFuel

Carbon00 

- Default

Carbon00 

- No 

Pyrolysis

Carbon40 

- Default

Carbon40 

- No 

Pyrolysis

Carbon80 

- Default

Carbon80 

- No 

Pyrolysis

Consumption (billion barrels/yr)

Bunker

Jet 

Diesel

Gasoline
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

62 

Figure 5.14. Effects of high prices for corn and soybeans on biomass utilization by feedstock type 

in hypothetical mature 2020 markets with varied costs of carbon

Figure 5.15. Effects of high prices for corn and soybeans on biomass utilization in each 

hypothetical mature 2020 fuel market with varied costs of carbon by fuel type

0

20

40

60

80

100

120

140

160

180

200

Forest 

residue

Short-rotation 

woody crop

Agricultural 

residue

Switchgrass Corn grain Soybean

Feedstock Consumption (million dry tons)

Carbon00 - Default

Carbon00 - High Corn/Soy

Carbon40 - Default

Carbon40 - High Corn/Soy

Carbon80 - Default

Carbon80 - High Corn/Soy

0

5

10

15

20

25

30

35

Carbon00 - Default

Carbon00 - High Corn/Soy

Carbon40 - Default

Carbon40 - High Corn/Soy

Carbon80 - Default

Carbon80 - High Corn/Soy

Carbon00 - Default

Carbon00 - High Corn/Soy

Carbon40 - Default

Carbon40 - High Corn/Soy

Carbon80 - Default

Carbon80 - High Corn/Soy

Carbon00 - Default

Carbon00 - High Corn/Soy

Carbon40 - Default

Carbon40 - High Corn/Soy

Carbon80 - Default

Carbon80 - High Corn/Soy

Carbon00 - Default

Carbon00 - High Corn/Soy

Carbon40 - Default

Carbon40 - High Corn/Soy

Carbon80 - Default

Carbon80 - High Corn/Soy

Gasoline Diesel Jet Bunker

Biofuel Production (billion gallons equivalent)

Biodiesel

FT diesel

Pyrolysis 

diesel

Pyrolysis 

gasoline

Butanol

Ethanol
TRANSPORTATION ENERGY FUTURES SERIES Biomass

63 

 

Figure 5.16. Effects of high prices for corn and soybeans on carbon emissions in hypothetical 

mature 2020 markets with varied costs of carbon

 

Figure 5.17. Effects of high prices for corn and soybeans on WTW petroleum use in hypothetical 

mature 2020 markets with varied costs of carbon

In addition to low default corn and soybean prices, projections for lignocellulosic biomass could be low, 

as well. Therefore, a sensitivity was run with higher prices for all the lignocellulosic feedstocks as well as 

the prices for corn and soybeans. The forest residue, SRWC, agricultural residue, and switchgrass prices 

for 2020 were all increased by 30% above the default across the whole of their supply curves. Corn and 

soybean prices were also increased, as described in the sensitivity above.

0

1,000

2,000

3,000

4,000

5,000

6,000

Carbon00 

- Default

Carbon00 

- High 

Corn/Soy 

Carbon40 

- Default

Carbon40 

- High 

Corn/Soy

Carbon80 

- Default

Carbon80 

- High 

Corn/Soy

Emissions (million metric ton CO2e)

Electricity

Gasoline

Diesel

Jet

Bunker

0

1

2

3

4

5

6

7

No 

Biofuel

Carbon00 

- Default

Carbon00 

- High 

Corn/Soy

Carbon40 

- Default

Carbon40 

- High 

Corn/Soy

Carbon80 

- Default

Carbon80 

- High 

Corn/Soy

Consumption (billion barrels/yr)

Bunker

Jet 

Diesel

Gasoline
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

64 

As shown in Figure 5.18, increasing the prices of lignocellulosic biomass reduces the biomass utilization

at no cost of carbon. SRWC has the lowest price and therefore the least reduction [180,000 short ton/yr 

(2%)]. Agricultural residues had a greater reduction, at 12 million short ton/yr (7%), and forest residue

still greater, at 14 million short tons/yr (11%). The greatest percent reduction was to switchgrass, at 28 

million short tons/yr (17%). Figure 5.19 shows the effects of higher biomass prices on the fuel markets. 

Reductions to ethanol and butanol prices are beyond those seen with high corn and soybean prices only. 

As seen in the scenario with high corn and soybean prices, GHG emissions and petroleum use increase 

slightly, as well.

As feedstock prices rise, feedstock utilization declines, requiring conventional fuels to make up the 

difference.

Figure 5.18. Effects of high lignocellulosic biomass prices on biomass utilization by feedstock 

type in hypothetical mature 2020 markets with varied costs of carbon

0

20

40

60

80

100

120

140

160

180

200

Forest 

residue

Short-rotation 

woody crop

Agricultural 

residue

Switchgrass Corn grain Soybean

Feedstock Consumption 

(million dry tons)

Carbon00 - Default

Carbon00 - High Biomass

Carbon40 - Default

Carbon40 - High Biomass

Carbon80 - Default

Carbon80 - High Biomass
TRANSPORTATION ENERGY FUTURES SERIES Biomass

65 

Figure 5.19. Effects of high lignocellulosic biomass prices on biomass utilization in each 

hypothetical mature 2020 fuel market by fuel type with varied costs of carbon

One might expect that by increasing the prices of only some biomass feedstocks, there will be an increase 

in the market penetration of other types of feedstocks. To test that hypothesis, the prices of switchgrass 

and agricultural residues were increased. These feedstocks were chosen because their maximum supply is 

utilized in the default parameter case with no cost of carbon. Like the sensitivity discussed above, 

agricultural residue and switchgrass prices were increased by 30% relative to the default supply curve. 

Figure 5.20 shows the resulting effect on consumption of all the feedstocks. The higher price reduced the 

use of agricultural residue and switchgrass in the zero cost of carbon case. It did not increase the 

utilization of forest residue or other feedstocks. The price of the fuel did not increase by enough for forest 

residue to penetrate more fully, due to a lack of elasticity of the conventional fuels’ prices (i.e., the share 

of conventional fuels increased but their price did not). 

0

5

10

15

20

25

30

35

Carbon00 - Default

Carbon00 - High Biomass

Carbon40 - Default

Carbon40 - High Biomass

Carbon80 - Default

Carbon80 - High Biomass

Carbon00 - Default

Carbon00 - High Biomass

Carbon40 - Default

Carbon40 - High Biomass

Carbon80 - Default

Carbon80 - High Biomass

Carbon00 - Default

Carbon00 - High Biomass

Carbon40 - Default

Carbon40 - High Biomass

Carbon80 - Default

Carbon80 - High Biomass

Carbon00 - Default

Carbon00 - High Biomass

Carbon40 - Default

Carbon40 - High Biomass

Carbon80 - Default

Carbon80 - High Biomass

Gasoline Diesel Jet Bunker

Biofuel Production (billion gallons equivalent)

Biodiesel

FT diesel

Pyrolysis 

diesel

Pyrolysis 

gasoline

Butanol

Ethanol
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

66 

Figure 5.20. Effects of high prices for agricultural residue and switchgrass on biomass utilization 

in hypothetical mature 2020 markets with varied costs of carbon, by feedstock type

5.4 Different Cost Assumptions for Competing Resources: 

High Natural Gas Prices; Low Oil Prices

Natural gas and petroleum prices are uncertain as well. Current projections of natural gas prices are lower 

than most of the projections made over the last decade, due to shale gas technology improvements that 

increased the available reserves. If environmental or other issues reduce the available reserves or increase 

the price of extraction, natural gas prices are likely to be higher than projected.

Natural gas prices for the power sector in 2020 were increased by 30% over the default prices to 

determine if that change would result in additional biopower production. Reduced natural gas prices were 

not considered because they would likely reduce the biopower penetration further. Since penetration is 

low already, further reductions are not considered interesting. Due to the simplicity of the BASE model, 

the effects of increased natural gas prices on conventional fuel prices (due to natural gas used for refining) 

and biofuel prices (due to natural gas used for fertilizer) could not be included. 

As shown in Figure 5.21, in hypothetical mature 2020 markets with no cost of carbon, the natural gas 

(NG) share in the 2020 power sector goes down from 56% to 52% and is replaced primarily by coal and 

variable RE. The biopower share only increases from 0.43% to 0.48%, and the total quantity of biomass 

used for power only increases from 15 million short tons to 17 million short tons annually. Because so 

little additional biomass is used by the power sector, the effects on the amount of biomass used for fuels 

is minimal, as shown in Figure 5.22. Figure 5.23 shows the effect on GHG emissions. Emissions in the 

electricity sector increase by 0.5% over the default case.

NG prices would have to be much higher than 30% over the default projections for the hypothetical 

mature markets to utilize large quantities of biomass for power. 

0

20

40

60

80

100

120

140

160

180

200

Forest 

residue

Short-rotation 

woody crop

Agricultural 

residue

Switchgrass Corn grain Soybean

Feedstock Consumption (million dry tons)

Carbon00 - Default

Carbon00 - High SG/AgRes

Carbon40 - Default

Carbon40 - High SG/AgRes

Carbon80 - Default

Carbon80 - High SG/AgRes
TRANSPORTATION ENERGY FUTURES SERIES Biomass

67 

Figure 5.21. Effects of high NG prices on biopower penetration in hypothetical mature 2020 

markets with varied costs of carbon

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Carbon00 

- Default

Carbon00 

- High NG

Carbon40 

- Default

Carbon40 

- High NG

Carbon80 

- Default

Carbon80 

- High NG

Electric Sector Market Share

Biomass

Variable RE

Other RE

Natural gas

Coal

Nuclear
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

68 

Figure 5.22. Effects of high NG prices on biomass utilization in each hypothetical mature 2020 fuel 

market with varied costs of carbon by fuel type

0

5

10

15

20

25

30

35

Carbon00 - Default

Carbon00 - High NG

Carbon40 - Default

Carbon40 - High NG

Carbon80 - Default

Carbon80 - High NG

Carbon00 - Default

Carbon00 - High NG

Carbon40 - Default

Carbon40 - High NG

Carbon80 - Default

Carbon80 - High NG

Carbon00 - Default

Carbon00 - High NG

Carbon40 - Default

Carbon40 - High NG

Carbon80 - Default

Carbon80 - High NG

Carbon00 - Default

Carbon00 - High NG

Carbon40 - Default

Carbon40 - High NG

Carbon80 - Default

Carbon80 - High NG

Gasoline Diesel Jet Bunker

Biofuel Production (billion gallons equivalent)

Biodiesel

FT diesel

Pyrolysis diesel

Pyrolysis gasoline

Butanol

Ethanol
TRANSPORTATION ENERGY FUTURES SERIES Biomass

69 

Figure 5.23. Effects of high NG prices on GHG emissions in hypothetical mature 2020 markets 

with varied costs of carbon

Volatile and potentially lower-than-projected oil prices could affect the market penetration of biofuels 

because lower oil prices would reduce the penetration of biofuels. Higher oil prices could increase 

penetration of biofuels if feedstock were available; however, most types of biomass feedstocks are fully 

utilized in the base case so additional fuel production is not possible. In general, reduced oil prices can 

affect the size of liquid fuel market (i.e., lower prices result in larger markets). Therefore, researchers 

used Annual Energy Outlook data on reduced pricing and increased market sizes to generate the default 

cases (see Appendix L).

Figure 5.24 shows the effects of low oil prices on biomass utilization in the hypothetical mature 2020 

market. The amount of biomass used for fuels dropped by 96% in the $0/metric ton CO2e cost of carbon 

scenario, by 81% in the $40/metric ton CO2e cost of carbon scenario, and by 56% in the $80/metric ton 

CO2e cost of carbon scenario. With less of a demand for biomass for fuel, the amount of biomass used for 

power increases; as shown in Figure 5.25. The resulting biomass market share is still small, but increases 

to over 1% at all costs of carbon (shown in Figure 5.26). In Figures 5.27 and 5.28, GHG emissions and 

petroleum use increased in the low oil price scenarios, although the emissions from the electricity sector 

are unchanged from the default oil price scenario to the low oil price scenario. 

Oil prices have a larger effect on biofuels penetration than almost any other driver, with the possible 

exception being the effect of R&D on biomass conversion. 

0

1,000

2,000

3,000

4,000

5,000

6,000

Carbon00 

- Default

Carbon00 

- High NG 

Carbon40 

- Default

Carbon40 

- High NG

Carbon80 

- Default

Carbon80 

- High NG

Emissions (million metric ton CO2e)

Electricity

Gasoline

Diesel

Jet

Bunker
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

70 

Figure 5.24. Effects of low oil prices on biomass utilization in each hypothetical mature 2020 fuel 

market with varied costs of carbon by fuel type

0

5

10

15

20

25

30

35

Carbon00 - Default

Carbon00 - Low Oil

Carbon40 - Default

Carbon40 - Low Oil

Carbon80 - Default

Carbon80 - Low Oil

Carbon00 - Default

Carbon00 - Low Oil

Carbon40 - Default

Carbon40 - Low Oil

Carbon80 - Default

Carbon80 - Low Oil

Carbon00 - Default

Carbon00 - Low Oil

Carbon40 - Default

Carbon40 - Low Oil

Carbon80 - Default

Carbon80 - Low Oil

Carbon00 - Default

Carbon00 - Low Oil

Carbon40 - Default

Carbon40 - Low Oil

Carbon80 - Default

Carbon80 - Low Oil

Gasoline Diesel Jet Bunker

Biofuel Production (billion gallons equivalent)

Biodiesel

FT diesel

Algal diesel

Pyrolysis diesel

Pyrolysis gasoline

Butanol

Ethanol
TRANSPORTATION ENERGY FUTURES SERIES Biomass

71 

 Figure 5.25. Effects of low oil prices on biomass utilization in each hypothetical mature 

 2020 fuel market

Figure 5.26. Effects of low oil prices on biopower penetration in hypothetical mature 2020 markets 

with varied costs of carbon

0

100

200

300

400

500

600

Electricity Gasoline Diesel Jet Bunker Other uses

Feedstock Consumption (million dry tons)

Carbon00 - Default

Carbon00 - Low Oil

Carbon40 - Default

Carbon40 - Low Oil

Carbon80 - Default

Carbon80 - Low Oil

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Carbon00 

- Default

Carbon00 

- Low Oil

Carbon40 

- Default

Carbon40 

- Low Oil

Carbon80 

- Default

Carbon80 

- Low Oil

Electric Sector Market Share

Biomass

Variable RE

Other RE

Natural gas

Coal

Nuclear
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

72 

Figure 5.27. Effects of low oil prices on carbon emissions in hypothetical mature 2020 markets 

with varied costs of carbon

Figure 5.28. Effects of low oil prices on WTW petroleum use in hypothetical mature 2020 markets 

with varied costs of carbon

0

1,000

2,000

3,000

4,000

5,000

6,000

Carbon00 

- Default

Carbon00 

- Low Oil 

Carbon40 

- Default

Carbon40 

- Low Oil

Carbon80 

- Default

Carbon80 

- Low Oil

Emissions (million metric ton CO2e)

Electricity

Gasoline

Diesel

Jet

Bunker

0

1

2

3

4

5

6

7

No 

BioFuel -

Low Oil

Carbon00 

- Default

Carbon00 

- Low Oil

Carbon40 

- Default

Carbon40 

- Low Oil

Carbon80 

- Default

Carbon80 

- Low Oil

Consumption (billions barrels/yr)

Bunker

Jet 

Diesel

Gasoline
TRANSPORTATION ENERGY FUTURES SERIES Biomass

73 

6. PROPOSED ADDITIONAL BIOMASS ANALYSIS WORK,

SENSITIVITIES, AND MODEL IMPROVEMENTS

Many issues that affect biomass and its utilization for energy were not included in this analysis effort due 

to resource limitations. Further analysis of those issues will affect not only this model and project but 

other efforts to model the bioenergy system. Some high priority issues that should be considered follow 

(in no particular order): 

• Import and exports. Biomass pellets are a growing export market to Europe and Brazilian 

ethanol is a growing import market. Characterizing supply and demand curves for imports and 

exports is necessary to improve most biomass market models.

• Additional utilization of biomass for non-energy products. Many consider biomass an ideal 

feedstock for materials and chemicals. For example, Natureworkssells a polylactide polymer that 

is fermented from sugars today but could be produced from lignocellulosic biomass in the future 

(Vink et al. 2004). Others are pursuing butanol, ethyl acetate, and other commodity chemicals. 

The assumptions used in this study for other products from biomass are described in Section 3.4 

and may be conservative.

• Develop elasticities of conventional fuel prices on varying demands. These values should be 

developed and added to models such as BASE, so that the potential negative rebound effects on 

biofuel penetration (i.e., reduced prices of conventional fuels in scenarios where the market 

volumes of those fuels are lower) can be included. Elasticities are already factored into the power 

market in BASE, because supply curves for natural gas and coal are included.

• Develop elasticities for market sizes. Elasticities for market sizes (e.g., the amount market size 

grows due to reductions in fuel prices) should be developed and included in models such as 

BASE. These types of elasticities will help characterize the markets where biofuels penetrate, 

because they reduce the overall cost of fuel.

• Transition studies. Other models have been developed to improve understanding of how 

biomass markets may evolve. Results of those studies are necessary to identify barriers and 

issues.

• Regional Data Sets. National averages for resources and demands, as used, are unlikely to be 

realistic across multiple regions. Improving characterization of individual regions (e.g., the 

Southeast, which has a large biomass resource, but limited other renewable resources) could lead 

to specific solutions in those regions. Development of a multi-region model with transport across 

regional boundaries should be considered. However, both collection of the data necessary for 

such development and model improvements are likely to require a large amount of work. Since 

the results are unlikely to provide many insights beyond those gained by running region-specific 

sensitivities, developing a multi-region model is considered a low priority. 

Additional sensitivities could be explored with BASE but were not due to space and resource limitations. 

One example is effects of uncertainty of key variables on the results. Each of the input parameters should 

be reviewed to identify the uncertainty of the value selected. Different values should then be entered into 

the BASE model to determine the impact on the calculated market equilibrium. Values that have 

significant effects on the calculated market equilibrium require additional investigation to determine if an 

alternate value should be used in the primary data set. Examples of values that need to be revisited 

include (in no specific order): 

• Costs of biomass-based jet fuel upgrading from diesel fuels. The primary data set has no cost 

increase for biomass-based jet fuels over diesel.
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

74 

• Conversion costs and efficiencies between feedstock classes. Each feedstock class has its own 

energy content and carbohydrate fraction, which result in specific yields. Therefore, the values 

used for each feedstock class should reflect this. Likewise, processing conditions for each class

are likely to vary, which can also affect costs. 

• The level of optimism between biofuels and biopower. The potential effects of making the 

assumptions consistent between these values should be investigated. In addition, other sources of 

conversion costs and efficiencies are available and should be considered. For example, the 

System Advisor Model provides biopower options, and the parameters it reports could be used for 

a sensitivity in BASE.

• CCS costs for biopower. The primary data set uses costs that are proportional to those used for 

coal, which are likely to be inaccurate due to the differences in coal and biopower processes and 

exhaust streams. However, reducing costs by 30% was shown to have little effect on biopower 

penetration, so improved values may not affect the equilibrium. 

• Cost estimates of biofuel delivery and dispensing costs for drop-in and non-drop-in fuels. 

These values were estimated without extensive study so an initial set of results could be generated 

and the necessity of improving the values could be tested. Improving the cost estimates will 

require better analysis of delivery and dispensing costs as well as spatial analysis to determine 

distances traveled. While drop-in fuels can use the petroleum distribution system, biorefineries 

may not be located in the same places as current petro-refineries. 

• Feedstock supply curves. In the BT2 study case, these values are cut off at the maximum 

projected cost. In reality, additional feedstock may be available at higher costs. Studies of the 

effects of modified supply curves could help identify the potential of additional biofuels. In 

addition, potential changes to agricultural practices (such as double-cropping) could reduce the 

supply costs. Finally, post-processing analysis could be used to estimate the effects of additional 

land use for biomass production on food production. 

Other sensitivities could be performed not to understand how to improve the BASE model (as proposed 

above) but rather to compare results from this model to other models and better understand the potential 

use for biomass. A list of other sensitivities follows (in no specific order): 

• The parameters used in the GCAM. These parameters, including efficiencies, costs, and costs 

of carbon, could be entered in the BASE model to compare results from the two models. The 

carbon costs used in the BASE analysis were lower than the costs calculated in the GCAM 

analysis.

• Market sizes of power, gasoline, diesel, jet fuel, and bunker fuel. These values, as estimated 

by TEF fuel infrastructure research, can be used in the BASE model to provide market fractions 

of each fuel type. 

• The current state of technology for converting biomass to fuels and power. Entering these 

values could provide a baseline of where the technology currently stands if it is commercialized.

Understanding that state and performing additional sensitivities to determine conversion 

parameters that lead to high levels of penetration will help identify the necessary targets for 

conversion R&D. 

• Logit share parameters. These values could be compared to those used in other studies.

Sensitivities of those parameters will help identify the uncertainty of market shares at 

equilibrium. 

• Other feedstock supply curves. For example, the aggressive feedstock development case in the 

BT2 will allow for higher penetration of biomass. 
TRANSPORTATION ENERGY FUTURES SERIES Biomass

75 

• Algal diesel costs. Reduced values should be tested to determine the costs necessary to achieve 

high levels of market penetration.

• Renewable production tax credit. These incentives could change results for the allocation of 

biomass between power and fuels.

• Levels of biomass for non-energy products (e.g., plastics). Consideration of greater use of

biomass for non-energy products could dramatically impact fuel and power market equilibrium. 

• Other policy options, such as a renewable portfolio standard for fuels and/or power. These 

values should be studied to understand their effects and costs for hypothetical markets at 

equilibrium. Many policies are put into place recognizing the near-term costs. Having estimates 

of long-term equilibrium costs and effects of those policies could improve decisions.

• Parameters for uniform format biomass. Feedstock supply is likely to be more expensive in 

this scenario, but conversion costs could be lower due to economies of scale. As a result, the 

penetration of biofuels may change. 

The model structure can be improved in many ways as well. Enhancements to the model’s structure are, 

for the most part, a lower priority than improving sensitivities and data within the model. Possible model 

improvements include the following (in order of priority): 

• Limit ratios of pyrolysis gasoline to diesel. These values should be limited to realistic fuel 

production ranges to be consistent with design. At this time, the ratios are not fixed within the 

BASE model and each product is optimized to best meet market demands. Most current process 

designs for pyrolysis-based fuels have limited ability to distinguish between the gasoline and 

diesel markets. 

• Add Monte Carlo analysis capability to the BASE model. A relatively easy process, a Monte 

Carlo analysis can assist in understanding how the logit function’s values perform, and possibly 

improve the selection of those values by increasing the logit value and varying input parameters. 

In addition, Monte Carlo analysis allows for estimation of ranges of results, instead of single 

parameters without confidence intervals.

• Use POLYSIS inputs in BASE instead of results. Biomass supply data for this project is 

derived from the BT2’s POLYSIS results study. Instead of results, original POLYSIS inputs 

could be used to populate the BASE model. However, it is important to understand that using 

inputs could lead to supply curves that are not truncated. 

• Add CCS to fuel production processes. In this analysis, CCS was considered for power 

production, but not for fuels. For some of the fuel options (e.g., ethanol), a resulting carbon 

dioxide stream could be sequestered at a lower cost than for many of the power options. 

Therefore, CCS should be added to fuel production processes to better understand if CCS and a 

cost of carbon still drive the biomass resource to power production. 

• Compete CCS and non-CCS options. In this analysis, CCS is either not allowed (in the default 

case), or included only as an option for biopower. No studies of the economic competitiveness of 

CCS versus non-CCS options were considered. Results may differ if CCS and non-CCS options 

compete, but this would require a substantial modification to the BASE model. 

• Consider additional fuel options. Methanol, di-methyl ether, hydrogenated biodiesel, and 

gasoline produced from biomass via the methanol-to-gasoline process could be examined as 

possible fuel options. Hydrogen for fuel cell electric vehicles should also be considered. Many 

other viable biofuel options are being explored by the industry and should be added to the BASE 

model. 
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

76 

7. CONCLUSIONS

Biomass is a limited resource with many competing uses. Its allocation for fuel, power, and products 

depends upon characteristics of each of these markets, their interactions, and policies affecting these 

markets. Federal policy and activities have supported both biofuels and biopower with the sometimes 

contradictory goals of reducing petroleum use and reducing emissions of GHGs. Allocation of resource 

between biopower and biofuels, as well as across different fuels markets, is of keen interest in 

understanding how this energy resource might contribute to the national goals of reduced petroleum use 

and GHG emissions. 

Most models only consider biomass in either the power or fuels market. If one looks at the results of such 

models, the biomass availability and utilization could easily be double-counted because competition from 

the other sector is not considered. Double-counting could lead to unwarranted conclusions and decisions; 

thus studies that include multiple sectors are needed.

Conclusions Contingent upon Model Structure, Assumptions, and 

Limitations

This study was performed and the BASE model developed to improve understanding of how biomass 

might be most economically allocated across sectors in hypothetical mature markets. The BASE model is 

a market equilibrium model so it is does not consider market evolution issues. It is also currently a 

national model and thus is not capable of differentiating either potential within or issues specific to 

regions. Input data for the BASE model were collected from publicly available sources and includes 

projections of biomass supply cost curves, biomass harvesting and transport costs, biomass conversion 

costs, electricity costs from other sources, fuel transport and dispensing costs, and well-to-wheel 

greenhouse gas emissions and petroleum use. Levelized costs for each fuel and electricity are calculated 

based on the inputs and include a cost of carbon for some scenarios. 

The 2050 levelized cost projections of cellulosic biofuels indicate that they are cost-competitive with 

gasoline at feedstock costs of up to $160/dry ton. On the other hand, 2050 levelized cost projections of 

biopower indicate that it is not cost competitive with feedstock costs of over $40/dry ton. 

Biofuels Can Attain Considerable Market Share 

Under mature market conditions with default biomass feedstock, transport, and conversion assumptions 

and business-as-usual projections for market sizes and conventional fuel prices, biomass is capable of 

gaining transportation sector market share (particularly in the diesel and jet fuel markets). At no cost of 

carbon in a hypothetical 2020 market, biofuels can exceed 25% of the jet fuel market, 15% of the gasoline 

market, and 8% of the diesel market. In a scenario where the cost of carbon is high ($80/metric ton CO2e), 

biofuels penetration is higher because biofuels are less carbon intensive than conventional fuels. Biofuel 

penetration is about 30% of the jet fuel market, 20% of the gasoline market, and 10% of the diesel market 

in a hypothetical, mature 2020 market. 

Biofuel Penetration Constrained by Biomass Resource Size

Biomass could attain an even larger market share in the hypothetical markets if it was not resource 

limited. In the default scenario, the feedstock supply curves were completely depleted for some 

lignocellulosic feedstocks (i.e., SRWC, agricultural residues, and switchgrass) even in the zero cost of 

carbon scenario. Complete depletion of feedstocks indicates that wider deployment of biofuels is 

warranted by the market and suggests that both feedstock and conversion cost projections are optimistic. 

Consequently, there are other non-economic constraints or non-equilibrium factors that are slowing

deployment. 
TRANSPORTATION ENERGY FUTURES SERIES Biomass

77 

Biopower Requires Both CCS and High Cost of Carbon to Compete

Biopower does not achieve much market share (<1%) even with a price of carbon of $80/metric ton CO2e, 

unless CCS is available. The primary reason biopower does not penetrate is that it is more expensive than 

other low-carbon electricity options, which compete successfully with conventional generation, 

especially in scenarios with higher costs of carbon. Optimistic assumptions of biopower capital costs and 

efficiency do not considerably increase its market share. Decreasing capital cost by 30% only increases 

biopower market share in a hypothetical mature 2020 market from 0.2%-0.5% to 0.4%-0.9%. Likewise, 

decreasing the heat rate by 30% or increasing the cost of natural gas by 30% only has a minor effect on 

biopower market share. On the other hand, availability of CCS increases biopower penetration from 

essentially nothing to 2% of the power market with a $40/metric ton cost of carbon and 13% of the market 

with an $80/metric ton cost of carbon in a hypothetical mature 2050 market. 

Pyrolysis-Based Fuels are Projected to be More Competitive

Among the different types of biofuels considered in this study, pyrolysis fuels (gasoline and diesel) are 

more competitive with conventional fuels than other biofuels and have the greatest potential for market 

penetration. In a scenario where the R&D on pyrolysis-based fuels failed and the fuels were not available

in 2050, biofuel penetration dropped dramatically in the diesel and jet markets—by 90% in the diesel 

market and by 65% in the jet fuel market. The share of biofuels in the gasoline market increased slightly, 

and most of the biomass was still utilized to make fuels that compete in the gasoline market (e.g., ethanol 

and butanol). 

High Costs of Carbon Drive Up Demand for Biomass for Fuels

While costs of carbon have a greater decarbonizing effect on the electricity sector compared to the fuel 

sector, markets with a carbon cost drive up demand for biomass in the transportation sector. Therefore, 

the presence of carbon costs drives up the cost of biomass and makes biopower less competitive with 

other power-generation options. The result is different if CCS is available for the electric sector and an 

$80/metric ton CO2e cost of carbon is considered. Under those conditions, biopower with CCS yields 

negative emissions (net sequestration of GHG), making biopower competitive. A hypothetically mature 

2050 market with CCS available and an $80/metric ton CO2e cost of carbon results in a 50% reduction in 

biomass utilization for fuel. 

Biofuel Availability Reduces Petroleum Use

A hypothetical 2020 market with biofuels has a well-to-wheels petroleum use that is 88% of one without 

biofuels when there is no cost of carbon. Petroleum use is further reduced to 84% of a non-biofuel market 

when a cost of carbon of $80/metric ton CO2e is considered. Increased costs of carbon only have minor 

effects on reductions in petroleum use, because most of the biomass supply is utilized for fuel at no cost 

of carbon, making only small increases possible. 

Sensitivity to Supply Prices

Corn ethanol, corn butanol, and biodiesel from soybean deployment are highly sensitive to the prices of 

those commodities. Increasing corn and soybean prices by 30% decreases of corn and soy utilization for 

fuels. Corn utilization drops from 66 million short tons to 21 million short tons and soy drops from 23 

million short tons to 9 million short tons in a hypothetical mature 2020 market with no cost of carbon. 

Lignocellulosic biomass utilization does not increase at high corn and soybean prices; instead the market 

need is met primarily with conventional fuels.
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

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Effects of Pricing from Other Sectors

If petroleum product prices are low, biomass penetration in hypothetical mature markets drops 

considerably. For example, in the hypothetical mature 2020 market using the Annual Energy Outlook low 

oil price case projections for conventional fuels, the amount of biomass utilized for fuels drops by 95% in 

the $0/metric ton CO2e cost of carbon scenario, by 82% in the $40/metric ton CO2e cost of carbon 

scenario, and by 57% in the $80/metric ton CO2e cost of carbon scenario. The use of petroleum and GHG 

emissions are both projected to increase when using low oil price projections. 

Increased natural gas prices had a minor effect on utilization of biomass for power; however, the increase 

in biopower penetration was minimal because the electricity market shifted slightly from natural gas to 

coal and other renewables. Because the change of biomass use for the power sector was small, there was 

no effect on the fuels sector.

Algal diesel with its default parameters has a small penetration of the market in 2050. Its market share 

increases with a cost of carbon but is still below 14% of the diesel market and 17% of the jet fuel market 

(at $80/metric ton CO2e).

Bottom Line

We found that biofuels are likely to be able to compete successfully with petroleum-based fuels and use a 

large share of the potential resource if R&D is successful and petroleum product prices are as high as the 

EIA projects. Policies and market evolution may affect how biofuel and biopower markets develop and 

their ultimate equilibrium state; however, biofuels have a large potential and can reduce petroleum use 

within the United States.
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APPENDIX A: SUMMARY OF OTHER ANALYSES

1. Cowie, A.L.; Gardner, W.D. (2007). “Competition for the Biomass Resource: Greenhouse Impacts 

and Implications for Renewable Energy Incentive Schemes.” Biomass and BioEnergy, 31, 601 

(Cowie and David Gardner 2007). 

This study compares greenhouse gas (GHG) mitigation impacts in Australia for using sawmill 

residues for (a) particle board manufacturing, (b) generation of electricity, or (c) no use—power 

produced via coal and particle board produced using fresh plantation biomass. All cases are analyzed 

assuming 400 hectares of mature radiate pine plantation (100 kilotons dry matter per year of mill 

residue). GHG reduction emissions are determined for the bioenergy projects relative to the reference 

fossil-fuel case. If the residues are used for bioenergy, the net emissions reduction is 167 kt carbon 

dioxide equivalent (CO2e), whereas if the residues are used for particle board manufacturing, the net 

emissions reduction is 201 CO2e.

2. Ignaciuk , A.; Vohringer, F.; Ruijs, A.; van Ireland, E.C. (2006). “Competition Between Biomass and 

Food Production in the Presence of Energy Policies: A Partial Equilibrium Analysis.” Energy Policy, 

34, 1127 (Ignaciuk et al. 2006). 

This study uses a partial equilibrium model to investigate the effect of taxing conventional electricity 

production in combination with subsidizing biomass or bioelectricity production on the production of 

biomass and agricultural commodities and on the share of biopower in total electricity generation in 

Poland. The model includes land, capital/labor, and oil/coal/gas factors, and agriculture, biomass, 

bioelectricity, and conventional electricity sectors. The model allows for limited international trade. 

The main aim of the work is to investigate the effect of energy policies on GHG emissions, land use, 

and production, and the prices of biomass and agricultural commodities. The study concentrates on 

two energy policies: (1) tax on conventional electricity consumption, and (2) carbon tax on fossil fuel. 

“Results show that combining a conventional electricity tax of 10% with a 25% subsidy on 

bioelectricity production increases the share of bioelectricity to 7.5%. Under this policy regime, 

biomass as well as agricultural production increase. A carbon tax that gives equal net tax yields, has 

better environmental results, however, at higher welfare costs and resulting in 1% to 4% reduction of 

agricultural production.” 

3. Sun J.C.; Li, P.X.; Hou, L.N. (2011). “Game Equilibrium of Agricultural Biomass Material 

Competition –Its Assumptions, Conditions and Probability.” Energy Procedia, 5, 1163 (Sun, Li, and 

Hou 2011). 

 The purpose of this study was to investigate the mechanism of agricultural biomass material 

competition between the power generation and straw pulp industries in China. A two-stage game 

model (based on biomass distribution and structure of collection costs) was used to analyze the 

parameters of equilibrium (i.e., unit transportation cost, and profit space). “The results show that raw 

material competition will hardly bring about the sustainable development of the two industries based 

on agricultural residues in the assumed circular collection area.” 

4. Berndes, G.; Hoogwijk, M.; van den Broek, R. (2003). “The Contribution of Biomass in the Future 

Global Energy Supply: A Review of 17 Studies.” Biomass and Bioenergy, 25, 1 (Berndes, Hoogwijk, 

and van den Broek 2003). 

This report is a review article that is based on 17 earlier studies on biomass in the future global energy 

supply. The studies in the review reached very different conclusions about the possible contribution 

of biomass in the future global energy supply, ranging from <100 Exajoule (EJ)/year (yr) to >400 

EJ/yr predicted for 2050. The major reasons for differences are associated with different assumptions 

for land availability and yield levels in energy crop production. 
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80 

5. Grahn, M.; Azar, C.; Lindgren, K.; Berndes, G.; Gielen, D. (2007). “Biomass for Heat or as 

Transportation Fuel? A Comparison between Two Model-Based Studies.” Biomass and Bioenergy, 

31, 747 (Grahn et al. 2007). 

This study compared the results obtained with the Biomass Environmental Assessment Program 

(BEAP) model by (Gielen et al. 2003; Gielen et al. 2002) to those obtained using the Global Energy 

Transition (GET 1.0) model (Azar, Lindgren, and Andersson 2003). Both models are energy 

economy models of the global energy system. 

 “The BEAP model is a mixed integer programming model, and simulates an ideal market based on an 

algorithm that maximizes the sum of the consumers’ and producers’ surplus. The GET model is a 

linear programming model that is set up to meet exogenously given energy demand levels at the 

lowest energy system cost. Both models exhibit so-called ‘perfect foresight,’ which means that all 

features of the model (future costs of technologies, future emission constraints, availability of fuels, 

etc.) about the future are known at all times.” 

 The BEAP model includes gasoline/diesel (including from biomass via Hydrothermal Upgrading oil), 

methanol, ethanol, FT diesel, and hydrogen (fossil-fuels based) transportation fuels, whereas the GET 

model includes gasoline/diesel, methanol, hydrogen, and natural gas transportation fuels. Both models 

consider transportation fuel competition with power and heat, oil, coal, natural gas, nuclear, biomass, 

solar, hydro, and wind energy sources. 

The CO2 emission trajectories predicted by each model and the “WRE” trajectory (average of the 350 

and 450 ppm trajectories) are displayed in Figure A.1. Figure A.2 shows the time evolution of 

biomass usage and the break out of transportation fuels predicted by the two models. 

Figure A.1. CO2 emissions from BEAP and GET base case scenarios
TRANSPORTATION ENERGY FUTURES SERIES Biomass

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Figure A.2. Time evolution of biomass usage and break out of transportation fuels predicted by 

the two models

6. Khanna, M.; Chen, X.; Huang, H.; Onal, H. (2010). “Supply of Cellulosic Biofuel Feedstocks and 

Regional Production Patterns.” Agricultural & Applied Economics Association’s 2010 AAEA, CAES 

& WAEA Joint Annual Meeting, Denver, CO, July 25-27, 2010 (Khanna et al. 2010). 

 This study uses a dynamic, multi-market, nonlinear model Biofuel and Environmental Policy 

Analysis Model to examine the economically viable supply of agricultural biomass at various biomass 

prices, and the mix of feedstocks that will be produced at these prices. The model also examines the 

regional pattern of production of various cellulosic feedstocks and the spatial mix of the feedstock 

production. The study concludes that 617-923 million metric tons per year (million T/yr) of biomass 

can be produced at a price of $140/MT in 2030. The results depend on residue collection technology, 

cost of producing bioenergy crops and their yields, and land availability. At this feedstock price, the 

model predicts that it would lead to the use of ~18 million ha of idle cropland/cropland pasture for 

perennial grasses. Additionally, the study considers the following scenarios: (1) low cost of 

production, (2) 50% higher switchgrass yield, (3) high rates of residue collection, (4) exclusion of 

conservation reserve program land, (5) high cost of production, and (6) high cost of Miscanthus and 

low cost of other feedstocks. 

7. Kalt, G. (May 2011). “An Assessment of the Implications, Costs and Benefits of Bioenergy Use 

Based on Techno-economic Approaches.” Dissertation, Institut fur Energiesysteme Elektrische 

Antriebe (E370) (Kalt 2011). 

Part III of the thesis uses the simulation model SimBioSys to investigate how future developments 

(up until 2030) of the bioenergy sector might occur for Austria, based on techno-economic 

approaches. The model is based on profitability analysis of different biomass utilization pathways, 
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

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including influencing parameters such as subsidies, fossil-fuel prices, and biomass supply curves. The 

following scenarios were investigated and reported on:

• No policy scenarios: no subsidies or tax incentives for bioenergy

• Current policy scenarios: current subsidies and tax incentives 

• Specific support scenarios: increasing levels of financial incentives for certain utilization 

paths. 

 The model includes bioenergy technologies for heat, electricity, and transportation fuels (i.e., 

cellulose bioethanol, gasification/FT synthesis, cane ethanol, starch ethanol, centralized biodiesel, and 

decentralized biodiesel).

 “The main characteristics and features of the model are:

• It is a myopic bottom-up simulation model for the bioenergy sector. 

• Based on continuous supply curves for biomass resources, the deployment of bioenergy 

plants is simulated by determining the biomass demand where the energy production costs of 

bioenergy technologies and the respective reference technologies are in equilibrium.

• The model allows for the simulation of four different support schemes for bioenergy: 

investment subsidies, quotas, premia, and feed-in tariffs.

• The simulation results are evaluated by numerous criteria, providing insight into the costs and 

benefits of bioenergy in the resulting scenario.

• The model is implemented in the numerical computing environment MATLAB.” 

8. Morrow, W.R.; Balash, P. (2008). “Comparing Alternative Uses of Scarce Biomass Energy 

Resources through Estimations of Future Biomass Use for Liquid Fuels and Electricity.” 

DOE/NETL-2008/1302, November 1, 2008 (Morrow and Balash 2008). 

The model in this study considers two technology pathways for biomass energy: cellulosic ethanol 

production and biopower (co-firing), and calculated CO2 emission reduction. Linear programs 

forecast demands for biomass resources in the transportation and electricity sectors through 2020. The 

model investigates different market conditions and policy choices in which biomass will be demanded 

by each sector. The study concludes that biomass allocation depends on future oil prices, future 

progress in cellulosic ethanol production technology, and society’s desire to mitigate CO2 emissions 

from existing coal-fired power plants.

9. Davis, R.; Tan, E.; Kinchin, C.; Kelly, C. (2011). “Comparison of Biomass Pathways for Vehicle 

Use.” NREL Milestone Report, June 30, 2011 (Davis and Tan 2011). 

This analysis considers the following biomass usage pathways: traditional boilers (biopower), 

integrated gasification and combined cycle (IGCC) biopower, ethanol via biochemical and 

thermochemical-gasification pathways, diesel via gasification/FT synthesis, and gasoline via 

gasification, methanol synthesis, and methane-to-gasoline (MTG). The analysis also considers wood 

(farmed trees), corn stover, and switchgrass feedstocks. A comparison of feedstocks and conversion 

technologies is included in terms of miles driven/dry short ton in plug-in electrical vehicles powered 

by biomass-derived electricity and internal combustion vehicles powered by biofuels. The study 

estimates technology improvements using process targets with operation in 2015 as well as reports 

WTW GHG emissions, water use, energy return on investment, and estimated cost to consumer 

(cents/mile). The ranking of the conversion technologies for the miles/dry short ton of biomass metric 

are: IGCC power > boiler power > MTG gasoline, thermochemical conversion ethanol, FT diesel. 

The ranking of technologies for the total WTW GHG emissions per mile driven metric are: IGCC 
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power < boiler power << FT diesel < biochemical conversion ethanol < thermochemical conversion 

ethanol. For this metric, generally wood << switchgrass < corn stover. 

10. Ohlrogge, J.; Allen, D.; Berguson, B.; DellaPenna, D.; Shachar-Hill, Y.; Stymne, S. (2009). “Driving 

on Biomass.” Science, 324, 1019 (Ohlrogge et al. 2009). 

 This study focuses on the chemical energy efficiency of using biomass for power compared to 

biomass for ethanol. In the ethanol case, an internal combustion engine is assumed, whereas in the 

power case, an electric car is assumed. The authors conclude that, for transportation, biomass-toethanol is 10% efficient, whereas biomass-to-power is 20%-23% efficient (energy used to move the 

vehicle divided by energy available in the biomass).

11. Wahlund, B.; Yan, J.; Westermark, M. (2004). “Increasing Biomass Utilisation in Energy Systems: A 

Comparative Study of CO2 Reduction and Cost for Different Bioenergy Processing Options.” 

Biomass and Bioenergy, 26, 531 (Wahlund, Yan, and Westermark 2004). 

 This study focuses on investigating CO2-reduction technologies for application in Sweden, 

quantifying the CO2-reduction rate and calculating the specific cost of reduction. The study includes 

the following biomass uses/pathways: drying/pelletization (for heat), combined heat and power, 

methanol and DME for transportation fuel, ethanol via dilute acid hydrolysis for transportation fuel, 

and ethanol via enzymatic hydrolysis for transportation fuel. The study concludes that: (1) the largest 

and most long-term sustainable CO2 reduction would be achieved by converting the woody biomass 

into pellets for coal substitution, and (2) conversion to transportation fuels provides only half of the 

CO2 reduction at a higher cost. 

12. Campbell, J.E.; Lobell, D.B.; Field, C.B. (2009). “Greater Transportation Energy and GHG Offsets 

from Bioelectricity than Ethanol.” Science, 324, 1055 (Campbell, Lobell, and Field 2009). 

 This study considers the use of biomass for: (1) conversion into ethanol for use in an internal 

combustion engine, and (2) conversion to power for use in an electric vehicle. The study concludes 

that bioelectricity outperforms ethanol across a range of feedstocks, conversion technologies, and 

vehicle classes. In addition, bioelectricity produces an average of 81% more transportation kilometers 

and 108% more emission offsets per unit area of cropland than cellulosic ethanol. 

13. Institute for Energy and Environmental Research and Verband der Chemischen Industrie. (October 

2007). “Biomass as a Resource for the Chemical Industry”, Frankfurt Germany (Institute for Energy 

and Environmental Research (IFEU) 2007). 

 This study focuses on: (1) investigating the effect of using biomass in the chemical industry on GHG 

reduction, (2) comparing biomass use for energy generation, generation of transportation fuels, and 

use as raw material in the chemical industry, and (3) identifying advisable biomass use strategies for 

the chemical industry. The study concludes that the direct combustion of dry biomass to generate 

power shows the biggest potential GHG savings, and biopower is commercially ready, whereas 

biomass use in the fuel sector or chemical industry with high potential GHG savings is still in the 

development stage.

14. Black & Veatch. (2008). “Renewable Energy Options” report. April 16, 2008 (Black & Veatch 2008). 

 This study compares the LCOE for biopower (dedicated and co-fired) to the LCOE for electricity 

generated via land fill gas, solar thermal, solar photovoltaic, hydroelectric, wind, geothermal, marine 

current, and wave technologies.

15. Walker, T.; Cardellichio, P.; Colnes, A.; Gunn, J.; Kittler, B.; Perschel, B.; Recchia, C.; Saah, D. 

(June 2010). “Chapter 2: Biomass Sustainability and Carbon Policy Study.” Manomet Center for 

Conservation Sciences, NCI-2010-03 (Walker et al. 2010). 
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84 

 This study looks at power generation with a variety of different technology options, including 

biopower and co-firing options. The study reports CO2 emissions inputs and outputs and maximum 

affordable cost of biomass for biomass options for present-day power production in Massachusetts. 

The study includes some analyses for biochemical ethanol production, pyrolysis, and other emerging 

technologies in transportation fuel; however, there is insufficient information provided to discern any 

reliable conclusions.

16. Alfonso, D.; Perpina, C.; Perez-Navarro, A.; Penalvo, E.; Vargas, C.; Cardenas, R. (2009). 

“Methodology for Optimization of Distributed Biomass Resources Evaluation, Management, and 

Final Energy Use.” Biomass and Bioenergy, 33, 1070 (Alfonso et al. 2009). 

 This study considers different technology options for biopower and quantifies the efficiencies. The 

study also investigates biomass logistics in some detail.

17. Kalt, G.; Kranzl, L.; Haas, R. (2010). “Long-term Strategies for an Efficient Use of Domestic 

Biomass Resources in Austria.” Biomass and Bioenergy, 34, 449 (Kalt, Kranzl, and Haas 2010). 

 This study looks at the long-term possibility of converting biomass to heat, power, and transport fuel 

in Australia under different scenarios. GHG mitigation estimates and the costs associated with GHG 

reduction are also provided. The study used the simulation model Green-XBA to simulate future 

developments of the Australian bioenergy sector up until 2050. The model uses dynamic supply 

curves; technology data for different biomass heating systems, biomass combined heat and power, 

and heating/biofuels production plants; cost data of reference systems (fossil-fuelled); and the 

Australian energy demand structure/development. “Based on the input data, the model simulates 

future investments in bioenergy systems.” Biodiesel, bioethanol (biochemical and thermochemical), 

and gasification-FTS transportation-fuel conversion technologies are represented in the “biofuels” 

portion of the model, including factors for technological learning over time. A transport scenario, 

balanced scenario, heat-and-power scenario, and no-policy scenario are included. The study 

concludes that, from a GHG reduction and economic efficiency standpoint, bioenergy policies should 

focus on the promotion of biomass to heat, and to some extent biomass combined heat and power. 

Additionally, the study concludes that focusing on liquid transportation fuels has adverse effects on 

the bioenergy sector development due to increased competition for limited biomass resources. 

18. Campbell, J.E.; Block, E. (2010). “Land-Use and alternative Bioenergy Pathways for Waste 

Biomass.” Environ. Sci. Technol., 44, 8665 (Campbell and Block 2010). 

 This study considers the effects of converting sugar cane production lignocellulose waste into 

ethanol. Cellulosic ethanol production for export from developing countries to developed nations is 

compared to local heat and power production. For the same amount of waste biomass, the authors 

concluded that biopower offsetting natural gas achieves 58% greater GHG reduction than cellulosic 

ethanol offsetting gasoline. Similar offsets are anticipated if cellulosic ethanol is used to offset 

additional sugar cane ethanol production. 

19. Trink, T; Schmid, C.; Schinko, T.; Steininger, K.W.; Loibnegger, T.; Kettner, C.; Pack, A.; 

Toglhofer, C. (2010). “Regional Economic Impacts of Biomass Based Energy Service Use: A 

Comparison Across Crops and Technologies for East Styria, Austria.” Energy Policy, 38, 5912 (Trink 

et al. 2010). 

 This study uses a “...two-plus-ten-region energy-focused computable general equilibrium model that 

acknowledges land competition in analyzing the sub-state local-regional (East Styria and rest of 

Styria) economic implications of such a strategy, embedded within a global context.” The model is 

based on a full cost analysis of selected biomass conversion technologies (biodiesel) for a range of 

agricultural and forestry crops, as well as for insulation. The study focuses on short-term and longterm impacts on welfare, regional gross domestic product (GDP), and employment by technology and 
TRANSPORTATION ENERGY FUTURES SERIES Biomass

85 

region as well as examines a couple of different compulsory blending levels of biodiesel in the diesel 

pool. 

20. Brookhaven National Laboratory (BNL). (Multiple personal communications 2004-2010). 

MARKAL. Chip Friley (2010). 

 The MARKAL model identifies the least-cost pattern of resource use and technology deployment 

over time. It quantifies the sources of emissions from the associated energy system and calculates the 

system-wide effects of changes in resource supply, technology availability, and energy and 

environmental policies. MARKAL provides a framework for exploring and evaluating alternative 

futures and for understanding the role of various technology and policy options. It is a bottom-up, 

energy technology environmental systems model that finds a least-cost set of technologies to satisfy 

end-use energy service demands and user-specified constraints. MARKAL also calculates resulting 

environmental emissions and allows for integration across various energy supply-and-demand sectors, 

but it is not flexible enough to account for the wide variety of deployment activities that are currently 

undertaken by the DOE EERE (OpenEI). 

21. Newes, E.; Inman, D.; Bush, B. (2011). “Chapter 19 – Understanding the Developing Cellulosic 

Biofuels Industry through Dynamic Modeling.” In progress (Newes, Inman, and Bush 2011). 

The Biomass Scenario Model (NREL 2011) is a systems dynamic model used to study the influence 

of policies on the development of the renewable fuels energy sector. In BSM 2.0, starch ethanol and 

cellulosic ethanol via biochemical and thermochemical conversion technologies are considered. 

Additionally, the BSM includes dynamic feedstock supply curves (POLYSYS estimates), feedstock 

supply logistics, and downstream distribution and use modules. In BSM 3.0, fungible fuels (algae to 

diesel/jet via hydrodeoxygenation, sugar fermentation to butanol and to gasoline/diesel/jet, 

pyrolysis/upgrading to gasoline/diesel/jet, natural oil hydrotreating, gasification/FT synthesis to 

diesel/jet, and gasification/methanol synthesis/MTG to gasoline) will be added to the conversion 

module. 
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APPENDIX B: DESCRIPTION OF THE BIOMASS ALLOCATION AND 

SUPPLY EQUILIBRIUM (BASE) MODEL

B.1. Introduction to the BASE Model

To understand the role that biomass may play in a wide range of future scenarios, numerous models have 

been developed to project future biomass utilization, with each model having its own system boundary 

and scope. Energy-economic models with large geographic and sectoral scope are used to provide an 

overall perspective across many sectors of the world or national economy, however, they typically do not 

have a great deal of technological, resource, and regional detail. Models with rich technological and 

regional detail have been developed, but they are normally devoted to a single sector and are often not 

designed to address the issue of biomass allocation between sectors. Examples include the Biomass 

Scenario Model (BSM), which simulates biomass resource production and biofuel demand and 

consumption in the United States and the Regional Energy Deployment System (ReEDS) model, which is 

a U.S. electric sector capacity expansion model. In these models, the entire biomass resource is typically 

available for the sector of focus (e.g., for biofuels or biopower), or the biomass supply is statically 

reduced to represent biomass demand from other sectors. Models that directly address biomass allocation 

across sectors do exist but often do not address the multiple pathways that are being considered to convert 

biomass to biofuels, or they often do not explicitly represent different types of biomass feedstock. It is 

important to note that all of the classes of models described above were designed and tuned to answer 

particular questions, and, as such, the omissions described above are appropriate given the scope of those 

questions.

This section describes the purpose, methodology, and necessary inputs for the equilibrium model for 

biomass allocation and utilization developed for this analysis. The model is referred to as the BASE 

model and is intended to estimate biomass market equilibrium scenarios to test the effects of potential 

technology and policy changes. The market allocations projected by BASE may not occur due to 

regulation, access to capital, market evolution, and many other temporal reasons (e.g., retirement rates of 

and/or replacement of existing stock, conservative business decisions, uncertain and changing policies, 

and lack of achievement of nth plant projections due to lack of learning). It also does not provide 

snapshots of future scenarios or the incremental changes to fuel and power markets. As such, the BASE 

model is not intended to be a replacement or improvement of the aforementioned classes of models, 

which start from today’s system and project new additions to and retirements of existing stock. Instead, it 

is designed to help the analysis community identify whether the proposed goals are possible in a mature 

market scenario. The BASE model will also give an estimate as to whether liquid fuels can compete with 

other potential uses of biomass on a price basis and estimate the price of feedstock paid under these 

circumstances (which has implications for the viability of feedstock production by farmers).

The BASE model finds an equilibrium state of the U.S. transportation and electricity sector, and based on 

this equilibrium state, finds the consumption and price of biomass feedstocks. The market equilibrium 

state is found iteratively and relies on detailed input data of full life-cycle costs. The market shares for 

biomass and the allocation between the different fuels and markets are determined based on levelized 

costs of energy (fuel or electricity), which account for many of the costs and losses that incur from the 

farm or field to the end user. These costs include feedstock costs, biomass transport and logistics costs, 

conversion costs, fuel transport costs, and any assumed prices to GHG emissions. The following sections 

describe the BASE model methodology, structure, and data inputs.

B.2. General Description

As described previously, the BASE model estimates market equilibrium scenarios under assumed mature 

market conditions and input data provided to the model. The equilibrium scenarios are found through an 
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iterative process, which is represented by the flow diagram in Figure B.1. The BASE model is a MatLab 

scripting program with data input and output from Microsoft Excel. In addition, the BASE model was 

designed for short runtimes to enable users to evaluate many scenarios and explore large regions in 

parameter space, given the large uncertainty with the input parameters and future market conditions. 

Multiple technologies in the electricity and transportation sectors are represented in the BASE model, 

which includes detailed representation of biomass technologies and resources. 

Figure B.1. BASE model structure

Figure B.1 summarizes the BASE model structure and iterative flow, which begins with the upper left 

box, where initial “guess” prices of biomass (Po

Bio) and competing energy sources (PoComp) are established. 

Next, market shares for biomass (MSBio) and the competing energy sources (MSComp) are determined 

based on the initial “guess” prices. For biomass, the prices (Po

Bio) represent the feedstock prices only, and 

costs associated with biomass logistics and transport, fuel conversion, and fuel transport are added before 

the market share algorithm. Carbon prices can also be factored in the market share algorithm for both 

biomass and competing sources. It is important to note that the BASE finds equilibrium solutions between 

supply and demand for biomass markets, but not for the electricity and fuel markets. In the electricity and 

fuel markets, market sizes are exogenously defined and used in the model. In other words, the total 

quantity of energy sources [sum of biomass (QBio) and competing energy sources (QComp)] are 

exogenously defined. The market shares, and therefore the amount of biomass consumed, are determined 

through the results from the market share algorithm based on the exogenously defined fuel and electricity 

market sizes. Based on these quantities established by the previously determined market shares and the 

supply curves used for biomass and other energy sources, final prices (Pf

Bio and PfComp) are found and 

compared with the initial “guess” prices (Po

Bio and PoComp). The equilibrium solution is found when all 

convergence criteria are met for all biomass feedstocks and competing energy sources simultaneously. If 

convergence is not achieved, the iterative process is repeated with new “guess” prices based on the 

previously determined final prices. 

{Po

Bio, PoComp} {MSBio, MSComp}

{QBio, QComp {P } f

Bio, PfComp}

Stop Converge? Y

N

Logistics

Conversion

Carbon Price

+

Supply 

Curves

Market 

Size x
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

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B.3. Issues Outside of the Scope of BASE

The BASE model is a simple representation of mature markets and, as such, does not incorporate many 

issues that affect real markets. Those issues include:

• The competitive advantage of existing stock and infrastructure. One example is co-firing biomass 

in coal electricity-generation plants. Because the capital costs have already been paid, biomassgenerated electricity has a cost advantage in those situations. That advantage is not included in 

this analysis.

• Regional effects. National averages are used throughout this analysis, so regional opportunities 

(e.g., where biomass is plentiful) are not included. 

• Demand quantities are set for electricity and the fuel markets; as a result, response to price effects 

and rebound effects are not included in the BASE model. In addition, other technologies that 

could affect the market size such as plug-in hybrid electric vehicles (PHEVs), liquefied natural 

gas (LNG) vehicles, compressed natural gas (CNG) vehicles, and hydrogen fuel cell electric 

vehicles (FCEVs) are not included in the model. 

• Other non-price drivers (e.g., marketing as a green fuel, oxygen content requirements, availability 

of capital for the investment, and the effect of uncertainty on investment).

B.4. Biomass Resources, Fuels, and Markets

A wide variety of biomass feedstocks, fuels, and markets are represented in the BASE model. As a result, 

the scenario results from BASE provide detailed and specific deployment projections for each feedstock, 

fuel, and market.10 Table B.1 shows a matrix of feedstocks and their possible contributions to different 

fuels and markets.

Table B.1. The Biomass Feedstocks, Fuels, and Markets Represented in the BASE Model 

Note: An “X” identifies the feedstocks that can be used for each fuel and market.

Market Electricity Gasoline Diesel/Jet Fuel/Bunker Fuel

Fuel Biopower Ethanol Butanol Pyrolysis

Gasoline

Pyrolysis

Diesel

FT 

Diesel Biodiesel Algal Diesel

Forest 

Residue X X X X X X 

Shortrotation 

woody crop 

(SRWC) 

X X X X X X 

Agricultural

Residue X X X X X X 

Switchgrass X X X X X X 

Corn X X 

Soybean X 

Algae X 

 

10 All deployment scenarios represent assumed equilibrium or mature market conditions.
TRANSPORTATION ENERGY FUTURES SERIES Biomass

89 

The biomass feedstocks represented in the BASE model include forest residues, short-rotation woody 

crops (SRWC), agricultural residues11, switchgrass12, corn, soybean, and algae. These feedstocks can be 

converted to biofuels or electricity. Separate end-use markets are treated in the BASE model, namely the 

electricity, gasoline, diesel, jet fuel, and bunker fuel markets. For biofuels, the BASE model distinguishes 

between a variety of feedstock/fuel combinations. Fuels include ethanol, butanol, and pyrolysis gasoline 

that are competed in the gasoline market and pyrolysis diesel, FT diesel, and biodiesel that are competed 

in the diesel, jet fuel, and bunker fuel markets. Table B.1 shows feedstocks that can be used in each 

conversion pathway, where an “X” in a matrix element denotes the conversion possibility represented in 

the model. 

B.5. BASE Model Inputs

As in any model used for scenario analysis, the input data plays an important role in determining the 

outcome scenarios from the BASE model. One of the unique features of BASE is its consideration and 

representation of detailed biomass data that nearly encompasses the full life cycle of the end-use fuel.

13

Where applicable and available, this data is distinct for each matrix element shown in Table B.1; through 

its data inputs, the BASE model distinguishes the differences between the different feedstocks and their 

conversion to end-use fuels at every step of this conversion pathway. The biomass specific data required 

of the BASE model (and the units) include: 

• Feedstock supply curves14 ($/dry ton (dt) vs. dt) 

• Feedstock demand (dt) from other sectors outside of the power or fuel sectors 

• Biomass transport and logistics costs ($/dt) 

• Feedstock yield [gallon (gal)/dt for biofuels or million British thermal units (106

Btu)/dt for 

biopower] 

• Conversion costs [$/gal for biofuels or $/megawatt-hour (MWh) for biopower] 

• Heat content (Btu/gal) 

• Fuel transport costs ($/gal) 

• WTW CO2e emission factors [gCO2e/Megajoule (MJ)] and petroleum use factors (MJinput/MJfuel).

It is important to note that many of these data inputs are feedstock- and fuel-specific to enable detailed 

comparison of costs across the different feedstocks and pathways. 

The non-biomass competing technologies are not represented in the BASE model with the same level of 

detail. In general, the levelized costs of the competing fuels are input into the model and used in the 

market share allocation of BASE. For the transportation sector, the costs of biofuels are compared with 

the costs of “default” conventional petroleum-based fuels. In particular, the levelized costs of 

conventional petroleum-based gasoline, diesel, jet fuel, and bunker fuel are input to the model. The BASE 

model currently does not adjust the prices of these conventional fuels based on variations in demand due 

 

11 Agriculture residues are composed predominantly of corn stover, therefore, the data used in the BASE model for agriculture 

residue are commonly based on corn stover data. 12 Switchgrass is used in the BASE model to represent all herbaceous energy crops. 13 “Fuel” in this sense refers to liquid biofuels as well as electricity from biopower generators. 14 Corn and soybean feedstocks are not represented with supply curves due to the complicated interactions with the agriculture 

sector. Instead, corn and soybean costs are fixed and a range of sensitivity scenarios are evaluated. The “feedstock” costs for 

algal technologies are included in the conversion costs, therefore no explicit feedstock supply curves or biomass transport and 

logistics costs were included for algae.
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

90 

to the lack of available data and complicated global markets for oil.

15 However, the short runtime of the 

BASE models allows for multiple sensitivities to be evaluated and encompass a range of possible fuel 

prices. The heat content for the conventional fuels is also input to the BASE model to enable comparison 

of costs on equivalent gallon bases between the biofuels and conventional fuels. Lastly, the WTW CO2e 

emission factors for conventional fuels are input to the BASE model for evaluations of different carbon 

scenarios.

A greater number of non-biomass competing energy sources are represented in the electricity sector than 

is represented for the transportation sector. Electricity-generation technologies represented in the BASE 

model include nuclear, coal, natural gas combined cycle (NGCC), natural gas combustion turbines 

(NGCT), other renewable energy (RE),16 and variable renewable technologies, which include wind, 

photovoltaics (PV), and concentrating solar power (CSP). The electricity sector representation in BASE 

was largely based on the representation from the NREL’s SEDS model (Stochastic Energy Deployment 

Systems (SEDS), NREL). Appendix J describes the BASE/SEDS electricity sector representation in detail, 

including the separate load slices and treatment of variable generation. In general, the input data for 

electricity-generating technologies include costs and performance, which are used to calculate separate 

fixed and operating costs, including fuel and levelized costs for each of the load slices. Full life-cycle 

GHG emission factors are also included and used when carbon policies are considered.

Although no price response to demand was included for competing conventional fuels in the 

transportation sector, the price of natural gas and coal for electricity generation is endogenously adjusted 

in the BASE model to account for supply and demand pressures. In other words, the BASE model finds 

equilibrium electric sector consumption and prices for natural gas and coal in a similar manner as for 

biomass feedstocks. The effective natural gas and coal “supply curves” was based on a linear regression 

of the reference, high-economic, and low-economic scenarios from EIA’s Annual Energy Outlook 

2011(EIA, 2011a). The methodology used to develop these supply curves were developed and used in 

NREL’s ReEDS model and described in the documentation (Short et al. 2011). The methodology 

accounts for natural gas demand in the non-electricity (e.g., buildings) sectors. 

It is important to note that the BASE model finds the equilibrium state between resource allocation and 

supply and not between supply and demand. In other words, for the different markets represented in 

BASE, the overall demand for electricity (in megawatt-hours) is exogenously defined a priori, as is the 

demand in gallons for gasoline, jet fuel, and bunker fuel markets. Demand sensitivities are performed by 

adjusting the market sizes. 

B.6. BASE Model Outputs

Although the overall demand for each market (electricity, gasoline, diesel, jet fuel, and bunker fuel) is 

defined exogenously, the equilibrium market share across energy sources is found in the BASE model. 

These market shares and the associated demands for the biomass feedstocks and other fuels are outcomes 

of the model. In addition, BASE finds the equilibrium price for the biomass feedstocks (forest residue, 

SRWC, agriculture residue, and switchgrass) and competing energy sources (natural gas and coal) 

represented with supply curves. 

The GHG emissions implications of each modeled equilibrium scenario are also reported by BASE. The 

resultant GHG emissions are then broken down by each category, including by competing technologies 

and by the separate biomass pathways, independently. 

 

15 The global and monopolistic nature of petroleum make it difficult to project the degree to which changes in U.S. demand for 

conventional fuels would influence the prices of the fuels. As such, we decided not to estimate and include price responses to 

U.S. consumption for the conventional fuels in the BASE model.

16 The “other RE” category in BASE is representative of all non-biopower dispatchable technologies, including geothermal, 

hydropower, and concentrating solar power with storage. 
TRANSPORTATION ENERGY FUTURES SERIES Biomass

91 

B.7. Allocation: Nested Logit Sharing Based on Levelized Costs 

The equilibrium market share decision making in the BASE model is determined based on levelized costs 

only; non-economic barriers and non-equilibrium challenges to deployment are not considered in the 

model. Market shares for all energy sources, including biomass allocation between fuels and markets, are 

established strictly by nested logit-sharing based on LCOE of all technologies. The present section 

defines the LCOE formula, the nested logit structures for the different markets, and the logit share 

parameters used in the BASE model.

B.8. Levelized Cost of Energy 

Equations B.1 and B.2 define the levelized costs of fuel and electricity, respectively, as used in the BASE 

model. Table B.2 defines the terms in Equations B.1 and B.2 and provides the units of each term used in 

these two equations.

Equation B.1. Levelized Cost of Energy for Biofuels

LCOEfuel = FCR ∙ Cap + OM − Byp + Log + Feed

Yield + FuelTrans + CPrice ∙ CFactor

Equation B.2. Levelized Cost of Energy for Electricity Generating Technologies

LCOEpower = FCR ∙ Cap + FOM

8760 ∙ CF + VOM + Int +

HR ∙ (Log + Feed)

Yield + CPrice ∙ CFactor

Table B.2. Definition of Terms Used in LCOE Formulas 

(presented in Equations B.1 and B.2) 

Abbr. Electricity Transportation

Cap Capital Costs $/megawatt (MW) $/gal

FCR Fixed Charge Rate - - 

OM Operating & Maintenance Costs - $/gal

FOM Fixed Operating & Maintenance Costs $/MW-yr - 

VOM Variable Operating & Maintenance 

Costs $/MWh - 

Int Integration Costs $/MWh n/a

Byp Byproduct Credit n/a $/gal

CF Capacity Factor - n/a

HR Heat Rate 106

Btu/MWh n/a

Log Biomass Logistics & Transport Costs $/dt $/dt

Feed Feedstock Costs $/dt $/dt

Yield Yield 106

Btu/dt Gal/dt

FuelTrans Fuel Transport Costs n/a $/gal

CPrice Carbon Price $/metric ton CO2e $/metric ton CO2e 

CFactor Carbon Factor metric ton CO2e/MWh metric ton CO2e/gal
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

92 

The units of LCOEfuel and LCOEpower are dollars per gallon ($/gal) and dollars per megawatt-hour, 

respectively. LCOEs do not include sales taxes or the gas tax. Unless otherwise noted, dollars in the 

BASE model are 2005 U.S. dollars (see Appendix M). For biofuels, it is important to note that 

competition with conventional fuels is based on equivalent gallons, therefore, conversions that use the 

ratios of heat content of the biofuels with the heat content of the conventional fuels is required. As 

described previously, the electricity market is represented with multiple load slices. The effect of the 

different load slices is to change the capacity factor, or CF, in the first term of Equation B.2, thereby 

altering the relative costs between more capital-intensive technologies and fuel-intensive technologies. In 

addition, while the prices of competing conventional fuels are taken from other sources and input to the 

model, the LCOE of competing electricity-generating technologies is calculated within BASE using the 

relevant portions of Equation B.2. More detail on the representation in the electricity section is provided 

below. 

B.9. The Logit Equation 

The fundamental equation that determines market shares in the BASE model is the logit equation, 

Equation B.3. In energy-economic models, logit equations are often used to determine future market 

shares based on a model-defined utility function. This is unlike pure optimization programs, where 

winner-takes-all competition is assumed (i.e., lowest cost or highest utility technology takes the entire 

market share). Instead, logit-sharing spreads the market share between all competitors so that each 

competitor is given a finite share.

17 Logit-sharing often represents uncertainties with respect to the utility 

function or the inherent distributions within categories that are represented in the model. Importantly for 

the BASE model, logit-sharing represents regional aspects with respect to energy suppliers and consumers 

as well as other variabilities. In particular, although the data used in the BASE model represent aggregate 

or average U.S. data, regional effects can tilt the competition from one technology to another. Some 

examples of models where logit equations are used include the Global Change Assessment Model 

(GCAM)(Clarke et al. 2008) and SEDS. 

Equation B.3. Logit Equation that Defines the Market Share of Technology i, MSi

MSi = 

LCOEi

−α

∑ LCOEj

−α j

Equation B.3 shows the logit equation used in the BASE model. The market share of each competing 

technology, MSi, is a function of the levelized cost of all competing technologies, LCOEi, and the share 

parameter, α. Other forms of the logit equation are commonly used. For example, whereas the utility 

function is simply the levelized cost in BASE, other utility functions that account for non-cost factors

may be used. Since BASE seeks to represent market equilibrium conditions, these other non-cost factors 

are not included in the analysis. They need to be overcome for the market to match the model. 

The mathematical form of the logit equation can differ from that of Equation B.3. In particular, an 

exponential form may replace the power-law form of Equation B.3. The primary difference between these 

two forms is whether or not the overall magnitude of the levelized costs determines if market shares or 

only the relative costs are important.18 The power-law function used in BASE only considers relative 

 

17 Although all competitors will have some market share, the shares can be insignificant depending on relative utility functions 

(e.g., cost) or timing of share parameter use. 18 One rationale for using the exponential form of the logit function, where relative and absolute magnitudes of the utility 

functions play a role in determining market share, is that cost differences may be more important for more costly items compared 

with less costly items. For example, in real estate, differences in tens of thousands of dollars may be important, although the 
TRANSPORTATION ENERGY FUTURES SERIES Biomass

93 

costs. Further work is needed to identify the effects that other logit equation forms would have on the 

BASE model results. 

Regardless of the form of the logit equation, the choice of share parameter, α, strongly influences the 

market share results between the competing technologies. In the limit of large α, the logit sharing 

approaches the winner-takes-all approach, where the technology with the lowest LCOE takes the entire 

market. In the other limit of zero α, the market share is independent of LCOE and all competing 

technologies have equal market share. In other words, α represents the degree to which the utility function 

represents investor decision making. For example, regional variations in technology costs and resource 

quality across the United States would create a distribution of LCOEs for each given technology instead 

of a single point estimate. As a result, lower share parameters would be warranted. 

For the BASE model, the researchers have chosen to use a share parameter α=6 as the default value for all 

but two of the competition layers.19 In the competitions between conventional gasoline and biofuels and 

between conventional diesel and biofuels, α=12 was used. The reason for the differences in share 

parameters is associated with the fungibility of the end-use fuel. More specifically, the heavy 

infrastructure requirements for light- and heavy-duty vehicles would likely tilt adoption more strongly 

toward the lesser cost fuel whereas the jet fuel market would switch between fuel types more easily. It is 

noted that a share parameter of α=6 is used in the electric sector and hydrogen sector competition in the 

GCAM model and α=10 is used in the SEDS model electric sector by default. Due to the challenges in 

quantifying the “right” α, sensitivities are needed to understand the effect that different share parameters 

may have on the overall scenario results. 

B.10. Nested Logit Structure

The challenges associated with selecting an appropriate share parameter are compounded by the fact that 

the nesting structure of logit sharing also affects the resultant market shares. For example, increasing the 

number of categories or competitors likely reduces the market share for each individual competitor.20 The 

following subsections show the nesting structures and categorizations used in the BASE model for each 

of the different markets. Further work is needed to identify how different reasonable nesting structures 

would alter the results from BASE.

B.11. Biofuels Market Logit Competition Structure

 For the transportation sector, two distinct nested logit structures are used, one for the gasoline market 

(Figure B.2), and the other for the diesel, jet fuel, and bunker fuel markets (Figure B.3). At the lowest 

competition layer (shown in red in Figures B.2 and B.3), the underlying biomass feedstocks that may 

contribute to each fuel are first competed based on the logit equation described above for each fuel type 

(shown in orange), independently. Weighted average LCOEs are then associated with each fuel type 

where the weighting is determined based on the market share from the just-completed logit-sharing at the 

lowest competition layer. Next, market shares between the different biomass-based fuel types are 

determined to evaluate a weighted average LCOE of biofuels. Finally, this weighted average biofuel 

LCOE is then competed with the LCOE of the conventional fuel to find the overall market share of 

biofuels. Within each logit competition, the LCOE is calculated based on dollars per equivalent gallon. 

 fractional difference between investments may be small (on the order of a few percentage points). In contrast, purchasing 

decisions for small items, such as a cup of coffee, are unlikely to depend as strongly on relative costs of one item compared to 

another even if fractional differences are large (on the order of tens or hundreds of percentages). 19 Competition layers and nested logit structures are described in the next section. 20 This is most easily seen in the limit of α=0, where all competitors have equal market share independent of utility function 

values. In this example, if there are two competitors, each would simply realize a market share of 50%. Simply by adding another 

competitor, the market share would reduce to 33%. 
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

94 

 

Figure B.2. Nested logit structure for the gasoline market

 

Figure B.3. Nested logit structure for the diesel, jet fuel, and bunker fuel markets

Conventional 

Gasoline Bio

Ethanol Butanol Pyrolysis Gas

SRWC Forest 

Residue

Ag 

Residue

Switchgrass

Corn

SRWC Forest 

Residue

Ag 

Residue

Switchgrass

Corn

SRWC Forest 

Residue

Ag 

Residue

Switchgrass

Gasoline

Conventional 

Diesel, Jet, 

Bunker

Bio

Pyrolysis 

Diesel FT Diesel Biodiesel

SRWC Forest 

Residue

Ag 

Residue

Switchgrass

SRWC Forest 

Residue

Ag 

Residue

SwitchgrassSoybean Algae

Diesel, Jet, Bunker

Algal Diesel
TRANSPORTATION ENERGY FUTURES SERIES Biomass

95 

B.12. Electricity Market Logit Competition Structure

Figure B.4 shows the nested logit structure for the electricity market. Conceptually, the electricity market 

structure is similar to that of the fuels markets, however, there are two important nuances with the 

electricity market that are not present in the transportation markets: the presence of distinct load slices and 

the different treatment between dispatchable versus variable generation technologies (e.g., wind, PV, and 

CSP). The representation of the electricity market in the BASE model is largely based on the treatment in 

the SEDS model.

Figure B.4. Nested logit structure for the electricity market

Four separate load slices are used in the electricity market: Baseload, Intermediate, Peak/Intermediate, 

and Peak. These load slices were designed to capture, at a high level, the economic dispatch decisions in 

the U.S. electricity markets. Figure B.5 shows how the four load slices are defined using the load duration 

curve21 and the amount of annual energy that each load slice covers. The electricity market shares 

between technologies are found using separate load slice-specific logit sharing between dispatchable 

technologies. The relative LCOE of the dispatchable technologies differs between load slices due to the 

different capacity factors assumed within each load slice. Load slices having greater capacity factors tend 

to favor more capital-intensive technologies (e.g., coal and nuclear), compared with more fuel-intensive 

technologies (e.g., NGCT).22 Figure B.5 shows how, in the Baseload load slice, the capacity factors 

considered for the LCOEs are based on the maximum capacity factor of each plant-type,23 whereas in the 

peak load slice, LCOEs are calculated based on a capacity factor of only 4%. As a result, less capitalintensive technologies are favored for peak load technologies. 

Biopower is a dispatchable technology and therefore is competed in a similar manner as the other 

dispatchable technologies. However, before market shares between dispatchable technologies are 

allocated, the biopower LCOE is determined by first calculating the market shares of the four different 

feedstocks that are useable for biopower. 

 

21 A load duration curve is a curve that is derived from ranking the hourly (or other time increment) demand throughout the year. 22 Due to operational constraints (e.g., ramp rates), nuclear is disallowed from having any market share in the peak load slice. 

Similarly, natural gas combustion turbines are not given market share in the Baseload load slice.

23 Due to forced and planned outage rates, capacity factors are less than one.

Wood Forest 

Residue Corn Stover

Electricity Market

Nuclear Coal Natural Gas -

CC

Geothermal 

(dispatchable 

RE)

Biopower Natural Gas -

CT Variable RE

Wind PV CSP 

(no storage)

Switchgrass
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

96 

Figure B.5. Load slices in the electricity market

Wind and solar technologies are treated separately from the dispatchables as their power output is 

determined almost entirely by meteorological conditions and not by system operators. As such, the market 

shares of these variable generation sources are found by applying Equation B.3 and using the annual

LCOE of these technologies with the weighted average LCOE of the dispatchable technologies from the 

Baseload load slice. These calculated market shares are then spread out between the different load slices 

based on the following distributions: for wind, Baseload = 75%, Intermediate = 16%, Peak/Intermediate = 

8%, Peak = 1%; and for solar (PV and CSP), Baseload = 0%, Intermediate = 17%, Peak/Intermediate = 

67%, Peak = 16%. These distributions imperfectly represent the greater peak coincidence of solar 

technologies (compared to wind). 

The market shares of the variable generation technologies are subtracted from that of the dispatchable 

technologies to have normalized market shares in each load slice. Finally, the annual market shares are 

determined based on the percentage of annual energy shown in Figure B.5 and the market shares by 

technology within each load slice. 

B.13. Self-consistency Between Allocation and Supply Curves

The previous sections describe the equations and logit structure to determine market shares within 

markets, and allocations of biomass resources to the separate markets. These allocation steps are 

calculated during each iteration of the BASE model. It is important to remember that what varies between 

iterations is the assumed price of the underlying biomass feedstock (and the price of some of the 

competing technologies). In other words, the allocation is a function of the initial “guess” prices at the 

beginning of each iteration. Before convergence, the amount of feedstock necessary to achieve the 

calculated market shares corresponds with feedstock prices that do not match the initial guess price. 

Convergence is achieved when the prices for all energy sources do match. Figure B.6 shows a schematic 

of this process.

0

2,000

4,000

6,000

8,000

10,000

12,000

Baseload – 75% annual energy, CF limited by outage rates

Intermediate – 16% annual energy, 73% max CF

Peak/Intermediate – 8% annual energy, 33% max CF

Peak – 1% annual energy, 4% max CF
TRANSPORTATION ENERGY FUTURES SERIES Biomass

97 

Figure B.6. Feedstock prices are iterated until convergence

The quantity of each feedstock, Q, during convergence verification represents the total feedstock demand 

across all fuels and markets. In this way, the separate markets are coupled. For example, increased 

demand for switchgrass for electricity generation may drive up the price of cellulosic ethanol and 

therefore drive down the demand for cellulosic ethanol in the gasoline market. This reduced demand for 

cellulosic ethanol may open the market for corn ethanol or for conventional gasoline. By sharing the same 

resource and supply curve across multiple fuels and markets, the BASE model is able to account for 

coupling dynamics of supply and demand that will likely be more important as biomass resources are 

utilized in multiple markets simultaneously. 

Finally, although the BASE model only explicitly represents the electricity and transportation sectors, it 

also accounts for the use of biomass feedstocks in other sectors, including bioplastics. Projections of 

biomass demand in these other, generally higher-value uses are exogenously defined in BASE and are 

automatically included in the overall feedstock demand; feedstock supply curves are adjusted to account 

for the demand for biomass for higher-value uses. Price

Quantity

Po

Pf

Q

R
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

98 

APPENDIX C: BIOMASS RESOURCE SUPPLY CURVES 

The national assessment of biomass resource potential was obtained from the U.S. Billion Ton Study 

Update (BT2) (DOE, 2011), developed by Oak Ridge National Laboratory, as well as from the 2010 U.S. 

and World Agricultural Outlook, developed by the Food and Agricultural Policy Research Institute 

(FAPRI) (FAPRI, 2010). 

Six different feedstock categories were considered in this study, including agricultural residues, forest 

residues, grasses, short-rotation woody crops, corn, and soybeans.24 The dataset for the first four 

categories was obtained from the BT2, while the corn and soybean potential assessment was obtained 

from FAPRI. The BT2 and FAPRI datasets were chosen, because they are the most recent and complete 

data in the literature and they have projections through 2030 and 2019, respectively.

The BT2 data assumes two main scenarios: a baseline and a high yield. The data used in this study was 

from the baseline scenario, which assumes a continuation of the U.S. Department of Agriculture (USDA) 

10-year forecast for the major food and forage crops as well as a continuation in trends toward no-till and 

reduced cultivation. Energy crop yields assume an annual increase of 1% due to experience in planting 

and additional R&D. 

The BT2 makes use of POLYSIS, an agricultural policy model, and data from the USDA’s National 

Agricultural Statistics Service (NASS) to estimate the supply curves for energy crops and agricultural 

residues. Forest residues are estimated using resource cost analysis with data from the USDA’s Forest 

Service. The supply curves obtained show the quantity of feedstock that is potentially available for energy 

use in the United States at different prices. Supply curves are given for each biomass feedstock for each 

year through 2030. For the year 2050, it was assumed that the supply curve is the same as the year 2030. 

Agricultural residues consist of field residues, or materials that are left on the field after the crop has been 

harvested, such as straws and stovers, and process residues, or materials that remain after processing the 

crop into products, such as husks and bagasse. Data for nine crop residues were added together to create 

the agricultural residues supply curve, including corn, soybeans, oats, barley, sorghum, wheat, cotton, 

rice, and sugarcane. Residues from the cultivation and harvest of orchards and vineyards are also 

considered. Animal fats, waste oils, and manure data available in the BT2 were not included in this study. 

The agricultural residue supply curve illustrates the cost of the resources at the farm gate. Costs for 

agricultural resources include the grower payments for crop residue and production costs for energy 

crops, collection and harvest costs, and cost for transporting the feedstock to the farm gate. Only a limited 

amount of residues can be collected as biomass; the remaining material conditions the soil and prevents 

erosion. The data accounts for the amount of residue that is left on the field.

The grasses category includes perennial grasses such as switchgrass, Miscanthus, and sugarcane, and an 

annual energy crop (high yield sorghum), while the short-rotation woody crops (SRWC) category 

includes coppice and non-coppice woody crops such as poplar, willow, eucalyptus, and Southern pine. 

The production cost of these crops includes fertilizer and pesticide usage, equipment fuel, land rent, and 

labor. Opportunity cost for the use of the land for pasture or other purposes (including pulp and paper) are 

also taken into consideration. As with the forest residue estimates, resources and land necessary for pulp 

and paper have been excluded.

Forest residues data was obtained from the USDA Forest Service’s Forest Inventory and Analysis 

Program, Timber Products Output database and calculations based on population numbers. Forest 

residues include logging residues and thinning materials from integrated operations and forest lands, other 

removal residues, conventionally sourced wood, unused primary and secondary mill residues, and urban 

wood wastes. The data used includes federal and non-federal land. Costs for forest residues include 

 

24 Algae costs were fully included in the conversion costs (see Section 3.6) and, therefore, were not included in this section. 
TRANSPORTATION ENERGY FUTURES SERIES Biomass

99 

stumpage costs (no stumpage cost is assumed for federal land), harvest costs, chipping costs, and the cost 

of transporting the residues to the forest roadside (Perlack et al. 2011). Resources necessary for the pulp

and paper industry have been excluded from the supply curves (i.e., the supply curves are for resources 

above and beyond those expected to be used for pulp and paper). The percentage of residues that need to 

be left on the ground for sustainability is calculated based on slope. For logging residues, it was 

determined that 30% must be left on-site. For thinning materials, sites with a slope of less than 40% have 

a retention rate of 40%, sites with a slope greater than 40% and lower than 80% have a retention rate of 

30%, and sites with a slope greater than 80% have no residues removed. 

Table C.1 shows the BT2 categories and how they were aggregated into the Transportation Energy 

Future’s (TEF’s) categories.

Table C.1. Categories for BT2 and TEF

BT2 Categories TEF Categories

Other Removal Residue Forest Residues

Conventional Wood Forest Residues

Integrated Operations Forest Residues

Treatment Thinnings, Other Forest Lands Forest Residues

Mill Residue, Unused Secondary Forest Residues

Mill Residue, Unused Primary Forest Residues

Urban Wood Waste, Construction, and 

Demolition Forest Residues

Urban Wood Waste, Municipal Solid Waste Forest Residues

Cotton Gin Trash Agricultural Residues 

Cotton Residue Agricultural Residues 

Animal Fats and Waste Oils N/A

Manure N/A

Orchard and Vineyard Prunings Agricultural Residues 

Rice Hulls Agricultural Residues 

Rice Straw Agricultural Residues 

Sugarcane Trash Agricultural Residues 

Wheat Dust Agricultural Residues 

Barley Straw Agricultural Residues

Corn Stover Agricultural Residues

Oat Straw Agricultural Residues

Perennial Grasses Grasses

Sorghum, High Yield Grasses

Sorghum Stubble Agricultural Residues

Wheat Straw Agricultural Residues

Coppice and Non-coppice Woody Crops SRWC
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

100 

Figures C.1 – C.4 show the supply curves expressed in terms of total dry short tons available at the field 

or forest edge at a given cost of production at a national level for 2009, 2020, and 2030. These curves are 

given in nominal dollars through 2020 and constant 2020 dollars from 2020 through 2050. Figures C.5 – 

C.8 show the same data in 2005 dollars, converted using the GDP chain-type price index, as described in 

Appendix M. 

Figure C.1. National SRWC supply curves (nominal costs)

(Source: DOE 2011)

Figure C.2. National perennial grasses supply curves (nominal costs)

(Source: DOE 2011) 

0

20

40

60

80

100

120

140

 $40 $45 $50 $55 $60

Million dry tons

$/dry ton

SRWC

2009

2020

2030

0

50

100

150

200

250

300

 $40 $45 $50 $55 $60

Million dry tons

$/dry ton

Grasses

2009

2020

2030
TRANSPORTATION ENERGY FUTURES SERIES Biomass

101 

Figure C.3. National agricultural residues supply curves (nominal costs)

(Source: DOE 2011) 

Figure C.4. National forest residues supply curves (nominal costs)

(Source: DOE 2011) 

0

50

100

150

200

250

 $20 $30 $40 $45 $50 $55 $60 $70 $80 $90

$100

Million dry tons

$/dry ton

Agricultural Residues

2009

2020

2030

0

50

100

150

200

250

300

350

$10 $60 $110 $160 

Million dry tons

nominal$/dry ton

Forest Residues

2009

2020

2030
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

102 

Figure C.5. National SRWC supply curves (conversion data to 2005$)

(Source: DOE 2011) 

Figure C.6. National forest residues supply curves (conversion data to 2005$)

(Source: DOE 2011)

0

20

40

60

80

100

120

140

 $30.00 $35.00 $40.00 $45.00 $50.00 $55.00 $60.00

Million dry tons

2005$/dry ton

SRWC

2009

2020

2030

0

50

100

150

200

250

300

350

$10 $60 $110 $160 

Million dry tons

2005$/dry ton

Forest Residues

2009

2020

2030
TRANSPORTATION ENERGY FUTURES SERIES Biomass

103 

Figure C.7. National agricultural residues supply curves (conversion data to 2005$)

(Source: DOE 2011) 

Figure C.8. National grasses supply curves (conversion data to 2005$)

(Source: DOE 2011)

0

50

100

150

200

250

 $20.00 $40.00 $60.00 $80.00 $100.00

Million dry tons

2005$/dry ton

Agricultural Residues

2009

2020

2030

0

50

100

150

200

250

300

 $30.00 $35.00 $40.00 $45.00 $50.00 $55.00 $60.00

Million dry tons

$/dry ton

Grasses

2009

2020

2030
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

104 

Figures C.9 and C.10 show the same information as in other figures, however, the information is 

displayed as the data used for the 2020 and 2050 analyses using the BASE model. Because the BT2 only 

projects supply curves up until 2030, the 2030 curves were used for the 2050 BASE runs. The figures 

include a near-vertical line at the maximum biomass allowance level, because any additional biomass 

would increase the price dramatically. Vertical lines are not used, because they would prevent BASE 

from converging. 

Figure C.9. Supply curves used for the 2020 BASE runs

(Sources: DOE 2011, FAPRI 2010)

$0

$50

$100

$150

$200

$250

$300

$350

$400

0 50 100 150 200 250 300

2005$/dt

million dry ton

2020 Supply Curves

forest residue SRWC ag residue

switchgrass corn soybean
TRANSPORTATION ENERGY FUTURES SERIES Biomass

105 

Figure C.10. Supply curves used for the 2050 BASE runs

(Sources: DOE 2011, FAPRI 2010)

Annual estimates of production and prices for corn and soybeans through 2019 were obtained from 

FAPRI. The study considers yellow corn, grade 2, and assumes a moisture content of 14.5%, while 

soybean was assumed to have a moisture content of 13%. Tables C.2 and C.3 show the quantity in million 

metric tons and the price in nominal dollars and 2005$ (converted as explained in Appendix M) for corn 

and soybeans, respectively, through 2019. Potential and price for all years after 2019 was assumed to be 

equivalent to those in 2019, because information on later years is not available. FAPRI reports the 

soybean oil quantity used for biodiesel production. In order to obtain the soybean production (U.S. 

Soybean Export Council) associated with the production of biodiesel, researchers used a conversion rate 

of 0.178.25

Supply curves for corn and soybeans were constructed for use in the model. In both cases, slope was 

assumed to be relatively flat ($0.01/dt/Mton) up to the FAPRI annual estimated quantity (for 2019). From 

the FAPRI quantity to 133% of the FAPRI quantity, supply was assumed to increase by $1/dt/Mton. 

Above 133% of the FAPRI quantity, the supply curve was modeled with a near-infinite slope, indicating 

that there was virtually no supply above this point. The same supply curves were used for both 2020 and 

2050. 

 

25 Soybeans = 79.2% soybean meal, 17.8% soybean oil, and 3.0% waste..

$0

$50

$100

$150

$200

$250

$300

$350

$400

0 50 100 150 200 250 300 350

2005$/dt

million dry ton

2030 (2050) Supply Curves 

forest residue SRWC ag residue

switchgrass corn soybean
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

106 

Table C.2. Corn Data

 

Table C.3. Soybean Data

 

C.1. Issues with Supply Curve Projections

The estimation provided by BT2 and FAPRI are dependent on assumptions about variables that can 

change over time. For instance, conventionally sourced wood potential has high levels of uncertainty at 

high prices. Elasticity parameters are also based on assumptions that may or may not be correct. Other 

underlying assumptions include: 

• The exclusion of energy crops on land that would require irrigation. 

• The exclusion of transportation costs to the biorefinery, feedstock storage costs, and preprocess 

and handling costs. 

• The unpredictability of variables. Because biomass production is a function of soil, climate 

(precipitation levels and temperature), and available local resources, related variables can change 

over time—especially with the potential effects of climate change on precipitation patterns (Dai 

2011). In addition, the development of diseases could affect crop yields. 

• The amount of money a farmer will accept for the sale of crop residues. The amount is uncertain 

and will depend on market dynamics. 

• There is uncertainty regarding the amount of residue that needs to be left on the ground to 

maintain soil quality. If predictions are wrong, this can affect the soil productivity and therefore 

reduce the amount of biomass produced. 

• Recycling and composting levels can vary over time. In addition, these levels depend on 

economic and social aspects and have the potential to affect the amount of municipal solid waste 

available.

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Quantity(million metric tons) 98 112 120 122 124 128 133 136 138 140 142

Price (nominal $/metric tons) 163 168 170 171 173 175 177 177 178 178 176

2005$ 149 152 152 151 151 149 148 145 143 140 135

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Quantity(million metric tons) 5 6 8 9 10 10 11 12 13 13 14

Price (nominal $/metric tons) 362 338 357 359 365 371 375 379 384 388 390

2005$ 330 306 319 317 316 316 314 311 308 305 300
TRANSPORTATION ENERGY FUTURES SERIES Biomass

107 

APPENDIX D: COMPETING USES OF BIOMASS

Biomass can be used to produce many products beyond transportation fuels and power. In this analysis, 

those products are given priority. In other words, other uses of biomass are likely to be able to retain 

profit margins while paying higher prices for biomass than fuel and electricity.

Biomass demand for food, feed, lumber, and pulp and paper were not explicitly accounted for, because 

those biomass demands were already excluded from the resource supply curves. Likewise, the Energy 

Information Administration’s (EIA’s) Renewable Energy Trends in Consumption and Electricity 2008

(EIA, 2010c) does not report resources necessary for pulp and paper.

Other demands for biomass are not excluded from the resource supply curves. They are identified 

explicitly and reduce the biomass supply available for fuels and electricity. Those demands include: 

• Residential. Consumes wood and wood pellet fuels. 

• Commercial. Uses agriculture byproducts/crops, sludge waste, and other biomass solids, liquids 

and gases, black liquor, wood/wood waste solids and liquids, and corn. 

• Industrial, such as:

o Agriculture, forestry, and mining. Consumes agricultural byproducts/crops. 

o Chemicals and allied products. Consumes other biomass liquids, sludge waste, and 

wood/wood waste solids. 

o Apparel. Consumes wood and derived fuels. 

o Petroleum refining. Consumes wood and derived fuels. 

o Rubber and miscellaneous plastic products. Consumes wood and derived fuels. 

o Transportation equipment. Consumes wood and derived fuels. 

o Stone, clay, glass, and concrete products. Consumes wood and derived fuels. 

o Furniture and fixtures. Consumes wood and derived fuels. 

o Other non-specified, but related industries. Consumes wood and derived fuels and corn. 

EIA’s Annual Energy Outlook (EIA, 2011a) estimates biomass consumption up until 2035 by residential, 

commercial, and industrial classification. That information was used for the BASE model and is shown in 

Table D.1 (U.S. EIA). 

For the residential sector, only wood products are consumed under the assumptions (EIA, 2010b). The 

commercial sector is disaggregated according to EIA’s Renewable Energy Consumption and Electricity 

Preliminary Statistics. This sector draws from the BASE model’s wood residue, agricultural residue, and 

corn resource pools (Figure D.1. The industrial sector includes the greatest variety of products and 

feedstock requirements. These were parsed out according to EIA’s Renewable Energy Trends in 

Consumption and Electricity 2008 (U.S. EIA 2010c, 2004), which breaks the sector into specific 

industries and their affiliated feedstock requirements. In addition, this report does not include resources 

necessary for pulp and paper; therefore, they are not reported in the table. The industrial sector draws 

from the wood residue, agricultural residue, and corn resource pools in the BASE model.
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

108 

Table D.1. Projections from the EIA for Annual Biomass Resource Consumption by Competing 

Uses

(Extrapolated up until 2050 from Annual Energy Outlook 2011) and broken down by use and feedstock type for 2010, 2020, and 

2050

Million Short Tons Consumed per Year

2010 2020 2050

Residential 31.7 31.7 31.7

Wood Residue 31.71 31.71 31.71

Agricultural Residue - - - 

Corn - - - 

Commercial 8.5 8.5 8.5

Wood Residue 7.58 7.58 7.58

Agricultural Residue 0.49 0.49 0.49

Corn 0.48 0.48 0.48

Industrial 4.1 6.0 9.9

Wood Residue 0.94 1.39 2.28

Agricultural Residue 1.15 1.69 2.78

Corn 1.99 2.93 4.82

Total 44.3 46.3 50.1

Figure D.1. EIA projections for annual biomass resource consumption by competing uses

(extrapolated up until 2050 from Annual Energy Outlook 2011) and broken down by feedstock type

(Source: DOE 2011a)
TRANSPORTATION ENERGY FUTURES SERIES Biomass

109 

APPENDIX E: BIOMASS TRANSPORT COSTS

For this study, feedstocks are assumed to be supplied to the biorefinery using the conventional bale-based 

feedstock supply and logistics system (Figure E.1). The conventional bale-based system represents the 

current logistics system employed by most forage and hay producers in the United States. Within the 

conventional bale-based system, cost estimates include various machine efficiency, biomass yield, and 

material loss assumptions during harvest, transport, and storage. The conventional system was chosen for 

this study, because it is aligned, in terms of costs and physical/chemical composition, with the conversion 

stage process design reports. The U.S. Department of Energy, Office of Energy Efficiency and Renewable 

Energy, Office of the Biomass Program is actively developing more advanced feedstock supply and 

logistics systems (i.e., uniform format systems) that are expected to take advantage of economies of scale 

and enable feedstock blending to meet specific refinery needs. The advanced feedstock supply and 

logistics systems, as currently conceived, involve the use of densification, rail transport, and blending 

facilities as key aspects of their designs.

Figure E.1. Schematic diagram showing three feedstock supply and logistics designs developed 

by Idaho National Laboratory.

Specific unit operations from the field to the biorefinery are shown.
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

110 

Table E.1 summarizes the material losses associated with specific machinery that is used from harvesting 

through delivery to the biorefinery. Material lost through handling has a profound effect on delivered 

costs. The further down the supply chain the loss occurs, the more significant the overall impact is. All 

costs in subsequent tables are on delivered biomass.

Table E.1. Key Parameters for the Conventional Bale System 

SG = switchgrass, CS = corn stover, DM = dry matter, MBtu = thousand Btu, NA = not applicable, 

T = transportation

Equipment

Yield

(DM ton/acre)

Moisture Content

Energy Use (MBtu/DM ton)

SG CS SG CS SG CS

Field

180 horsepower Tractor and 15-foot Flail Shredder 

With Windrower NA 3 NA 50% NA 50.1

Self-propelled Windrower with Disc Header 5 NA 34% NA 30.9 NA

275 hp Tractor and Large Square Baler 4 2.4 12% 12% 61.2 61.2

Self-propelled Loader 4 2.4 12% 12% 13.7 13.7

Self-propelled Stacker 4 2.4 12% 12% 25.4 25.4

Weather Protection 4 2.4 12% 12% 0 0 

Self-propelled Loader 3.8 2.28 12% 12% 12.4 12.4

Sub-Total for Field Operations - - - - 143.6 162.8

3-Axle Daycab Tractor with 53-ft Flat Bed Trailer 3.8 2.28 12% 12% 12.6 12.6

Biorefinery

Truck Scale (Weighing) 3.8 2.28 12% 12% 0 0 

Unloading 3.8 2.28 12% 12% 12.4 12.4

Loading (To Grinder) 3.8 2.28 12% 12% 5.1 5.7

Grinder In-Feed System (Conveyor) 3.8 2.28 12% 12% 6.1 6.1

Horizontal Grinder 3.8 2.28 12% 12% 125 125

Wernerberg 1/4-Grinder 3.8 2.28 12% 12% 90.9 45.4

Dust Collection System 3.8 2.28 12% 12% 76.5 76.5

Surge Bin and Conveying System 3.8 2.28 12% 12% 6.1 6.1

Subtotal at Biorefinery - - - - 322.1 277.2

Costs associated with the following seven feedstocks are reported in Table E.2: corn stover, switchgrass, 

corn grain, soybeans, SRWC, forest residues, and algae. These costs are from Idaho National 

Laboratory’s Biomass Logistics Model (BLM) version 6.45 (INL 2011), with the exception of corn grain 

and soybeans. Published costs were used for corn grain (Benson and Bullen 2007) and soybeans (Reinbott 

2012). 
TRANSPORTATION ENERGY FUTURES SERIES Biomass

111 

Table E.2. Costs Associated with Using a Conventional Feedstock Supply and Logistics System 

Covers harvest, transportation, preprocessing, storage, handling, and total costs for seven feedstocks. Costs are reported in 2005 

dollars.

Conventional Uniform Design*

2005$ per Dry Short Ton

Feedstock Harvest and

Collection Transportation PreProcessing Storage Handling andQueuing Total

Stover 13.29 7.47 11.16 5.53 1.14 38.59

Switchgrass 16.53 8.49 11.11 5.37 1.14 42.64

Corn 5.42 5.46 5.80 0.00 0.00 16.69

Soy 5.42 5.46 5.80 0.00 0.00 16.69

Forest Residues 0.00 4.58 21.88 1.24 1.40 29.10

SRWC 18.03 5.47 32.00 1.90 1.49 58.90

Algae NA NA NA NA NA NA

Table E.3 presents the amount of diesel, electricity, and natural gas consumed, per dry short ton, for the 

feedstocks assessed in the BLM. The energy use presented in Table E.3 includes all energy used from 

harvesting though delivery to the biorefinery gate. The relationship between diesel, electricity, and natural 

gas costs was assessed through sensitivity analysis and least-squares regression. For each feedstock in the 

BLM, the diesel, electricity, and natural gas costs were varied and the model was run. The parameters 

were varied in isolation as well as simultaneously. The results of the sensitivity analysis were then used to 

develop least-squares estimates for the parameters such that delivered feedstock cost(s): 

[$ dry ton (dt-1)] = 

α[diesel cost ($ gal

-1)] + β{electricity cost [$ kilowatt-hour (kWh)-1]} + γ[natural gas cost ($ 106

Btu-1)] + ε

Table E.3. Conventional 2012 Feedstock Supply and Logistics Total Costs, Diesel Use and Cost, 

Electricity Use and Cost, and Natural Gas Use and Cost 

Data are from Idaho National Laboratory’s BLM version 6.4 (INL 2011). Costs are reported in 2005 dollars.

Feedstock Total Diesel Electricity Natural Gas

$ DT-1 Gal DT-1 $ Gal-1 kW DT-1 $ (kWh)-1 106

Btu DT-1 $ 106Btu

CS 38.60 0.24 2.31 8.1 0.05 0 6.87

SG 42.64 0.23 2.31 8.1 0.05 0 6.87

SRWC 58.90 0.39 2.31 7.2 0.05 1.9 6.87

FR 29.10 0.24 2.31 6.7 0.05 1.9 6.87

Abbreviations: CS = corn stover; SG = switchgrass; SRWC = short-rotation woody crop; FR = forest residue; 106 = million; dt = 

dry short ton

Table E.4 shows the parameters that would be used to estimate feedstock delivery costs as a function of 

energy prices with harvesting included as part of delivery. Since the feedstock cost curves include 

harvesting (Appendix C), parameters used to calculate the feedstock delivery costs as a function of energy 

prices are reported in Table E.5. 
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

112 

Table E.4. Results with Harvest and Collection Costs 

Data represent the Conventional 2012 Cases for each respective feedstock. Costs are reported in 2005 dollars.

Feedstock -------------- Parameter Estimate --------------

ε (Intercept) α (Diesel Cost

Factor)

β (Electricity Cost

Factor)

γ (Natural Gas Cost

Factor)

Corn Stover 29.08 5.59 0.857 0 

Switchgrass 32.12 6.02 1.53 0 

SRWC 37.07 8.97 0.888 1.46

Forest Residue 18.0 2.39 7.28 1.65

Where: delivered feedstock cost(s) ($ dt-1) = α[diesel cost ($ gal-1)] + β[electricity cost ($ kWh-1)] + 

γ[natural gas cost ($ 106

Btu-1)] + ε

Table E.5. Results without Harvest and Collection Costs. 

Data represent the conventional 2012 cases for each respective feedstock and are reported in 2005 dollars.

Feedstock -------------- Parameter Estimate --------------

ε (Intercept) α (Diesel Cost) β (Electricity Cost) γ (Natural Gas Cost) 

Corn Stover 15.37 4.56 0.855 0 

Switchgrass 15.25 4.81 1.80 0 

SRWC 19.31 7.32 0.829 1.46

Forest Residue 16.29 2.38 7.28 1.65

Where: delivered feedstock cost(s)($ dt-1) = α[diesel cost ($ gal-1)] + β[electricity cost ($ kWh-1)] + 

γ[natural gas cost ($ 106

Btu-1)] + ε

Figure E.2 displays the approximate feedstock logistics and transport costs used for each of the biomass 

sources. The actual costs are dependent upon the diesel, natural gas, and electricity prices within each 

BASE run. Note that harvest and collection costs are shown in the figure, but are not included in the 

BASE calculations, because they are included in the biomass supply curves. Logistics and transport costs 

for algae are not included, because they are inherently part of the algae growth, collection, and conversion 

costs discussed in the section on conversion.
TRANSPORTATION ENERGY FUTURES SERIES Biomass

113 

Figure E.2. Feedstock logistic and transport costs

(Sources: Benson and Bullen 2007, Reinbott (2012), Idaho National Laboratory (INL 2011)) 

$0

$10

$20

$30

$40

$50

$60

$70

2005$/dt

Harvest & Collection

Transportation

Pre-Processing

Storage

Handling & Queuing
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

114 

APPENDIX F: BIOMASS CONVERSION COSTS AND EFFICIENCIES

Conversion costs and LCOE calculations were developed for the BASE model as part of the 

Transportation Energy Futures (TEF) study. These conversion costs were developed for two specific 

timeframes: circa 2020 and circa 2050. Several liquid fuels and fuel pathways were used, including: 

ethanol (from both corn and cellulosic biomass), butanol (from both corn and cellulosic), biodiesel 

(derived from soybean oil), pyrolysis-based gasoline and diesel, hydrogenated diesel, FT diesel, and 

diesel derived from algae. In this analysis, bio-based diesel products are considered available for jet fuel 

and bunker fuel without additional conversion costs. Data for each of these fuel pathways was supplied 

from publicly available sources when possible, and from non-public sources when otherwise not 

available. 

Tables F.1 and F.2 show specific data inputs for 2020 and 2050 analysis years, respectively. Those inputs 

include total capital costs/project investment, plant capacity (gallon per year), operating costs (OM, 

$/gallon), byproduct credit (Byp, $/gallon), conversion yield (Yield, gal/dry short ton), and energy content 

of fuel (Btu/gallon) on a lower heating value (LHV) basis. The value for “Cap” in the LCOE equation for 

fuel was computed by dividing the total project investment by the plant capacity. The following sections 

provide references and reasoning behind selection of those references. Within BASE, a single fixed 

charge rate of 0.132 was assumed for all fuel pathways, but not for electricity, which has a specific fixed 

charge rate for each conversion technology based on data. This was based upon the capital charge factor 

computed in NREL’s most recent design reports for cellulosic ethanol. Within these reports, a discounted 

cash flow analysis was used over an assumed 30-year plant life with a 10% discount factor. 

Equation F.1. Levelized Cost of Energy for Biofuels

LCOEfuel = FCR • Cap + OM − Byp + Log + Feed

Yield + FuelTrans + CPrice• CFactor

The analyses were done using dollars from different years so the GDP chain-type price index was used to 

convert them to 2005$ (as described in Appendix M). 
TRANSPORTATION ENERGY FUTURES SERIES Biomass

115 

Table F.1. 2020 Conversion Data

Cellulosic 

Ethanol

Cellulosic 

Butanol

Pyrolysis 

Gasoline

Pyrolysis 

Diesel

FT 

Distillate 

Diesel

Biodiesel 

from 

Soybeans

Corn 

Ethanol

Corn 

Butanol

Algal 

Diesel

Total 

Capital 

Cost 

(million $)

$422.5 $479 $303 $303 $498 $56.25 $94.95 $327.6 $390

Capacity 

(million 

gal/yr)

61 25 76 76 32.3 45 45 42 10

Operating 

Costs¥

($/gal)

$0.73 $2.04 $1.00 $1.00 $1.28 $0.47 $0.50 $2.05 $3.97

Byproduct 

Credits 

($/gal)

$0.11 $2.20 $0.00 $0.00 $0.20 $0.15 $0.32 $2.55 $0.00

Feedstock 

Yield 

(gal/dry 

short ton)

79.0 32.4 65.0 65.0 47.2 111† 118‡ 58.8 N/A

Fuel LCOE* 

($/gal) $2.05 $3.61 $2.14 $2.14 $3.96 $3.94 $1.88 $2.86 $9.12

Year$ 2007 2007 2007 2007 2007 2007 2007 2007 2007

¥ Operating Costs only represent the costs to operate the facility and do not include the feedstock costs.

* LCOE is calculated within BASE using variable feedstock costs. Results reported here are for example only and use a fixed 

charge rate of 0.132 and feedstock cost of $40/dry short ton for lignocellulosic biomass, $383/dry short ton for soybeans 

[$10/bushel, 13% moisture, 60 lb (wet) per bushel], or $168/dry short ton for corn ($4/bushel, 56 lb/bushel, 15% moisture). † Based on 2.9 gal/bushel

‡ Based on 2.8 gal/bushel

Table F.2. 2050 Conversion Data

Cellulosic 

Ethanol

Cellulosic 

Butanol

Pyrolysis 

Gasoline

Pyrolysis 

Diesel

FT 

Distillate 

Diesel

Biodiesel 

from 

Soybeans

Corn 

Ethanol

Corn 

Butanol

Algal 

Diesel

Total Capital 

Cost (million $) $359.1 $407.15 $257.55 $257.55 $423.555 $56.25 $94.95 $278.46 $175

Capacity (million 

gal/yr) 172 37 212.8 212.8 90.44 45 45 62.16 10

Operating 

Costs¥ ($/gal) $0.06 $1.39 $1.00 $1.00 $1.28 $0.47 $0.50 $2.05 $2.00

Byproduct 

Credits ($/gal) $0.06 $0.61 $0.00 $0.00 $0.20 $0.15 $0.32 $2.17 $0.00

Feedstock Yield 

(gal/dry short 

ton)

98.0 47.9 100 100 59 111 118 87.02 N/A

Fuel LCOE* 

($/gal) $0.68 $3.07 $1.56 $1.56 $2.37 $3.94 $1.88 $2.40 $4.31

Year$ 2006 2007 2007 2007 2007 2007 2007 2007 2007

¥ Operating Costs only represent the costs to operate the facility and do not include the feedstock costs.

* LCOE is calculated within BASE using variable feedstock costs. Results reported here are for example only and use a fixed 

charge rate of 0.132 and feedstock cost of $40/dry short ton for lignocellulosic biomass, $383/dry short ton for soybeans 

[$10/bushel, 13% moisture, 60 lb (wet) per bushel], or $168/dry short ton for corn ($4/bushel, 56 lb/bushel, 15% moisture). † Based on 2.9 gal/bushel

‡ Based on 2.8 gal/bushel
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

116 

The current version of the BASE model uses 2005$ consistently so the values in Tables F.1 and F.2 were 

converted to 2005$ using the GDP chain-type indicators (methodology described in Appendix M). The 

results of the conversions are shown in Tables F.3 and F.4. 

Table F.3. 2020 Conversion Data in 2005$

Cellulosic 

Ethanol

Cellulosic 

Butanol

Pyrolysis 

Gasoline

Pyrolysis 

Diesel

FT 

Distillate 

Diesel

Biodiesel 

from 

Soybeans

Corn 

Ethanol

Corn 

Butanol

Algal 

Diesel

Total Capital 

Cost (Million $) $398 $451 $285 $285 $469 $52.9 $89.3 $308 $367

Capacity 

(million gal/yr) 61 25 76 76 32.3 45 45 42 10

Operating 

Costs ($/gal)¥ $0.69 $1.92 $0.94 $0.94 $1.20 $0.44 $0.47 $1.93 $3.73

Byproduct 

Credits ($/gal) $0.10 $2.07 $0.00 $0.00 $0.19 $0.14 $0.30 $2.40 $0.00

Feedstock Yield 

(gal/dry short 

ton)

79.0 32.4 65.0 65.0 47.2 111† 118‡ 58.8 N/A

Fuel LCOE* 

($/gal) $1.96 $3.47 $2.05 $2.05 $3.78 $3.91 $1.86 $3.36 $8.58

Year$ 2005$ 2005$ 2005$ 2005$ 2005$ 2005$ 2005$ 2005$ 2005$

¥ Operating Costs only represent the costs to operate the facility and do not include the feedstock costs.

* LCOE is calculated within BASE using feedstock costs that vary. Results reported here are for example only and use a fixed charge 

rate of 0.132 and feedstock cost of $40/dry short ton for lignocellulosic biomass, $383/dry short ton for soybeans [$10/bushel, 13% 

moisture, 60 lb (wet) per bushel], or $168/dry short ton for corn ($4/bushel, 56 lb/bushel, 15% moisture). † Based on 2.9 gal/bushel

‡ Based on 2.8 gal/bushel

Table F.4. 2050 Conversion Data in 2005$

Cellulosic 

Ethanol

Cellulosic 

Butanol

Pyrolysis 

Gasoline

Pyrolysis 

Diesel

FT 

Distillate 

Diesel

Biodiesel 

from 

Soybeans

Corn 

Ethanol

Corn 

Butanol

Algal 

Diesel

Total Capital 

Cost (million $) $348 $383 $242 $242 $398 $52.9 $89.3 $262 $165

Capacity 

(million gal/yr) 172 37 212.8 212.8 90.44 45 45 62.16 10

Operating 

Costs ($/gal) $0.06 $1.31 $0.94 $0.94 $1.20 $0.44 $0.47 $1.93 $1.88

Byproduct 

Credits ($/gal)¥ $0.06 $0.57 $0.00 $0.00 $0.19 $0.14 $0.30 $2.04 $0.00

Feedstock Yield 

(gal/dry short 

ton) 

98.0 47.9 100 100 59 111† 118‡ 87.02 N/A

Fuel LCOE* 

($/gal) $0.67 $2.94 $1.49 $1.49 $2.27 $3.91 $1.86 $2.38 $4.05

Year$ 2005$ 2005$ 2005$ 2005$ 2005$ 2005$ 2005$ 2005$ 2005$

¥ Operating Costs only represent the costs to operate the facility and do not include the feedstock costs.

* LCOE is calculated within BASE using feedstock costs that vary. Results reported here are for example only, and use a fixed charge 

rate of 0.132 and feedstock cost of $40/dry short ton for lignocellulosic biomass, $383/dry short ton for soybeans [$10/bushel, 13% 

moisture, 60 lb (wet) per bushel], or $168/dry short ton for corn ($4/bushel, 56 lb/bushel, 15% moisture). † Based on 2.9 gal/bushel

‡ Based on 2.8 gal/bushel
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F.1. Cellulosic Ethanol

The data for the cellulosic ethanol pathway were derived from a recently released NREL technical report

(Humbird et al. 2011) that documented a substantial re-design of a biochemical conversion facility for 

converting corn stover to ethanol. This conversion data is being utilized for all lignocellulosic feedstocks 

in the TEF study. The biomass undergoes dilute acid pretreatment, followed by enzymatic hydrolysis, cofermentation using bacteria, and ethanol purification using distillation and molecular sieve dehydration. 

The byproduct lignin residue is combusted on-site to provide electricity and power for the biorefinery. 

The capital cost for this 2000-dry-metric-ton-per-day biomass facility was $422.5 million (year 2007$) 

and included wastewater treatment, utilities, and so on. With the 79 gal/dry short ton yield, 61 million 

gallons of ethanol were produced per year. The operating costs of $0.73/gallon included all raw materials, 

with the exception of feedstock. The byproduct credit of $0.11/gallon was taken for selling electricity 

back to the grid. The lower heating value (LHV) of ethanol was obtained from the Alternative Fuels Data 

Center (Alternative Fuels & Advanced Vehicles Data Center, NREL). 

To forecast improvements for the 2050 case, a different study was referenced (Laser et al. 2009). The 

Role of Biomass in America’s Energy Future (RBAEF) study was geared toward understanding the 

potential of biomass—in the distant future (2030 or greater)—to contribute to the U.S. energy vision. 

Within this study, detailed engineering and economic models investigated how improved technology 

advances, increased scale, process integration, and the role of coproducts could lead to enhanced future 

economics. Capital costs, operating costs, and process yields were taken directly from this study. 

Comparing the 2050 (RBAEF) values to the 2020 (NREL) values, the capital costs were 15% lower, the 

capacity was 280% higher, and the yield was 24% higher (from 79 gal/dry short ton to 98 gal/dry short 

ton). This cost and yield trend was validated by comparing it to a learning curve analysis that was 

conducted for several biomass industries such as corn ethanol, sugarcane ethanol, and U.S. biomass 

power (Beck 2010), and similar trends were seen for the existing industries over time.

F.2. Cellulosic Butanol

The data for the cellulosic butanol process was taken from a recent NREL milestone report that developed 

techno-economic data for both cellulosic and corn-based butanol (Tao and Aden 2011). This work is an 

extension of the 2011 NREL cellulosic ethanol design report. Starting with that model, the ethanol 

fermentation, distillation, and recovery sections were removed and replaced with n-butanol fermentation 

using a Clostridium strain. The fermentation broth contained a mixture of butanol, acetone, ethanol, and 

organic acids. Continuous vacuum stripping was used to draw off butanol from the fermentation in order 

to reduce toxicity effects. Hydrogen was also produced as a byproduct of fermentation and was recovered 

using pressure swing adsorption. The butanol and other products were separated from one another 

through a series of unit operations that included distillation, decantation, and dehydration. 

For the same 2000 dry metric tons per day feedrate of biomass, 25 million gallons of butanol were 

produced, because the yields of this process (32.4 gallon per dry short ton) were much lower than for 

ethanol. The overall capital cost was also quite high at $479 million. Some of this high cost was offset 

with coproduct credits for acetone ($0.45/lb), ethanol ($0.35/lb), and hydrogen ($1.30/lb). The yield of 

acetone was 13 gal/dry short ton and the yield of ethanol was 10.4 gal/dry short ton. The lower heating 

value of butanol was obtained from the Hydrogen Analysis Resource Center (Hydrogen Analysis 

Resource Center). 

For the 2050 scenario, an improved yield sensitivity case from the milestone was utilized. This raised the 

yield from 32 to almost 48 gallons per dry short ton, and raised the butanol production to 37 million 

gallons per year. Coproduct production was consequently lowered. This reduced the processing costs 

from the 2020 scenario. Consistent with cellulosic ethanol, a 15% reduction in capital cost was applied to 

cellulosic butanol for 2050 for this study. 
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F.3. Pyrolysis Gasoline and Diesel

Fast pyrolysis can be used to produce a mixture of liquid hydrocarbons that are subsequently distilled into 

separate gasoline and diesel-range fuels. While pyrolysis gasoline and diesel are listed separately in the 

BASE model cases, the costs are identical, because the same process is used to produce both. The only 

difference between them is the energy content of the fuel. Because of lack of data on LHV of distilled 

fuels from pyrolyzed biomass, the finished fuels were assumed to have the same LHV as their respective 

petroleum gasoline and diesel counterparts.

The costs for pyrolysis were obtained from a PNNL pyrolysis design report (Jones et al. 2009). In this 

study, costs were developed for conversion of 2000 dry metric tons per day of hybrid poplar. Yields of 

100 gallons per dry short ton were calculated, but did not include the natural gas used in steam reforming 

for hydrogen production. If no natural gas was used, and hydrogen was generated from biomass, the 

yields would be closer to 65 gallons per dry short ton, which was the yield assumed in the BASE model. 

No byproduct credits were assumed, because the costs were for a single liquid fuel product (yet to be 

distilled into gasoline and diesel). 

For the 2050 case, researchers used a methodology that is similar to cellulosic ethanol. Yields were 

increased to 100 gallons per dry short ton, plant production was raised by 280%, and capital costs were 

reduced by 15%. Other processing costs were held constant between 2020 and 2050. 

F.4. Fischer-Tropsch Diesel

Numerous studies have calculated production costs of Fischer-Tropsch (FT) diesel from biomass. This 

has been an active area of research for over two decades. The data provided for the BASE model was 

derived from a recent collaboration between NREL, ConocoPhillips, and Iowa State University (Swanson 

et al. 2010). In this collaborative project, comparative techno-economic analysis was conducted for 

several fuels pathways, including FT diesel. Techno-economic models were developed based on a 

conceptual process, using corn stover feedstock. The corn stover was gasified using lower temperature 

indirect gasification followed by tar reforming, syngas cleanup, fuel synthesis (using cobalt-based FT 

catalyst in a fixed bed), and hydroprocessing. Hydroprocessing is necessary to crack waxes produced 

through FT synthesis. Naphtha-range liquids are also produced as a byproduct. 

With yields of 47 gallons per dry short ton calculated, 32 million gallons per year of diesel are produced 

for a biomass feedrate of 2000 dry metric tons per day. The total capital cost is just shy of $500 million. 

The LHV of FT diesel was obtained from the Hydrogen Analysis Resource Center.

For the 2050 scenario, the same processing costs were assumed. However, the same capacity increase of 

2.8x was assumed that was used for cellulosic ethanol, while the capital costs were reduced by 15%. 

Based on expert judgment, a yield increase of 25% was also assumed for this scenario.

F.5. Biodiesel from Soybeans

Biodiesel from soybean oil and other vegetable oils is a commercial industry in the United States today, 

although, at less than 750 million gallons per year, it is substantially smaller market than corn ethanol. 

The biodiesel costs included in this study were also derived initially from the Tao study (Tao and Aden 

2009), and then modified to account for current trends. The production costs were given for a 45 milliongallon-per-year facility. As with corn ethanol, the capital intensity factors for biodiesel—total capital 

investment divided by the annual product produced in gallons per year—have also risen. While this used 

to be 1.0 or less, expert judgment based on long-term industry interactions considers 1.25 to be a more 

reasonable value. Yields of 2.9 gallons per bushel of soy (60 lb/bushel, 13% moisture) were used, which 

equate to 111 gallons per dry short ton. Feedstock costs were much higher than corn ethanol and were 

based on USDA National Agricultural Statistics Service (NASS) data. In the example LCOE calculation, 

an assumed $10/bushel value was used, which equates to $383/dry short ton. The energy content of the 
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biodiesel product was also obtained from the Alternative Fuels Data Center (Alternative Fuels & 

Advanced Vehicles Data Center). 

Between 2020 and 2050 in the study, no process or cost improvements were assumed. However, USDA 

and other organizations are researching alternative lower cost feedstocks for biodiesel production, such as 

Camelina and waste grease.

F.6. Corn Ethanol

Corn ethanol is a commercial industry in the United States, producing over 13 billion gallons of ethanol 

annually. As such, the production costs are fairly well known and are largely dependent upon feedstock 

cost (corn). While this data is available from a number of sources, the data for the BASE model comes 

initially from a study published in 2009 (Tao and Aden 2009) for a 45-million-gallon-per-year plant. The 

data was subsequently adjusted for this study. Assumed yields were 2.8 gallons per bushel of corn, which 

equates to 118 gallons per dry short ton. The installed capital intensity of 2.11 was based on expert 

judgment and used to calculate the capital cost of $95 million. While this capital intensity used to be 

much lower in the past (~1.25), industry sources indicated that capital intensity has risen, because of the 

increased cost of steel. For the example LCOE calculation, a feedstock cost of $168/dry short ton was 

used, based on USDA predictions of corn price circa 2020 of $4/bushel (56 lb/bushel, 15% moisture). 

Corn ethanol production costs were assumed to be identical in 2020 and 2050. While the price of corn is 

expected to rise, the conversion costs are not likely to improve substantially. USDA and other

organizations continue to attempt to improve corn ethanol performance through R&D and coproduct 

development. However, with marginal room for improved yields, this assumption is considered 

appropriate at present.

F.7. Algal Diesel

Algae, either micro or macro-algae (seaweed/kelp), represent sources of non-terrestrial biomass that can 

potentially contribute to biofuels production. The data for microalgal-based biofuels (diesel primarily) 

was obtained from a recently published NREL study (Davis, Aden, and Pienkos 2011). In this study, two 

algal cultivation methods were modeled and costed: open ponds and closed photobioreactors. Data for the 

open pond model were used to supply costs for the BASE model. 

Algae are grown in unlined ponds, followed by harvesting. To constantly reduce the moisture content, a

series of steps is used, including settling, dissolved air floatation, and centrifugation. The oils/lipids in the 

algae are then extracted through a combination of mechanical and solvent-based extraction. Oil and water 

is allowed to phase separate and spent solvent and nutrients are recycled within the process. The spent 

biomass is then sent to anaerobic digestion, where biogas is generated to help power the facility. The oils 

are subsequently hydroprocessed and upgraded to diesel and naphtha-range hydrocarbons. 

For a facility producing 10 million gallons of diesel per year, the capital cost is estimated at $390 million 

in 2020. Yields (gallon per dry short ton) were not calculated, because the carbon source is CO2 (instead 

of biomass), as the algae grow photosynthetically. Improvements for the 2050 scenario were obtained 

from the sensitivity analysis shown in the published report. In particular, improvements in lipid content 

and algal productivity were shown to have the greatest impact on cost. With forecasted technological 

improvements, the processing and capital costs can be reduced from the 2020 costs. 
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

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F.8. Fuel Heat Content

As described previously, the BASE model competes all fuels on an equivalent gallon basis, using gallons 

gasoline equivalent. The heat content (Btu/gal) are provided in Table F.5 for the different fuels.

Table F.5. Heat Content by Fuel Type

Fuel Heat Content (Btu/gal)

Gasoline 116,090

Ethanol 76,330

Butanol 99,840

Pyrolysis Gasoline 116,090

Diesel 128,450

Jet Fuel 124,614

Bunker Fuel 140,353

Pyrolysis Diesel 128,450

Algal Diesel 128,450

FT Diesel 123,670

Biodiesel 119,550

F.9. Other Potential Biofuels

While a large number of biofuels were included in this study, there were other potential biofuels that were 

not included. For example, there is a classification of biofuels that has recently become commercial—

“hydrogenated fuels”—where natural plant oils are reacted with hydrogen over a catalyst. This serves to 

saturate double bonds and remove oxygen from the oils, therefore creating high cetane diesel and jet 

fuels. Dynamic Fuels, LLC, and Neste-oil are two examples of companies that are producing these fuels

from a variety of oil feedstocks on a commercial scale. However, these fuels were not included in the TEF 

project, because good cost models or data were not currently available. Also, the economics were 

anticipated to largely mirror those of biodiesel (transesterification), where the majority of the cost is 

associated with the feedstock itself.

In addition, this study did not include gaseous fuels from biomass, such as dimethyl ether (DME), 

methane, or hydrogen. In order to utilize these fuels, vehicles with substantially different fuel systems are

required. 
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APPENDIX G: DELIVERY AND DISPENSING COSTS FOR 

CONVENTIONAL FUELS AND BIOFUELS

Fuel distribution costs were obtained from the Annual Energy Outlook for conventional fuels and the TEF 

fuel infrastructure task for ethanol and biodiesel. Drop-in fuels were assumed to have the same 

distribution cost as their conventional counterparts. 

Table 131 (Components of Selected Petroleum Product Prices) in Annual Energy Outlook 2011 breaks 

out the fuel wholesale price, distribution costs, and taxes (energy, federal, and state). The distribution cost 

segment represents “the part of the supply chain where wholesale gasoline is brought to a retail station 

and sold to the final consumer. This portion of the gasoline price is the retail price minus the other three 

price components. It represents both the costs and profits associated with selling retail gasoline to the 

final consumer.” (EIA, What We Pay for in a Gallon of Regular Gasoline) 

Table G.1 shows the projected 2020 distribution and marketing costs for each fuel category from Table 

131 in Annual Energy Outlook 2011. Distribution and marketing costs for ethanol and bunker fuel were 

not reported. The diesel and gasoline distribution cost projections changed by less than 2.5% between 

2008 and 2035 (less than $0.005/gal), so they are considered as unchanging for this analysis (i.e., the 

costs in 2020 and 2050 are the same). 

Table G.1. Annual Energy Outlook 2011 Distribution and Marketing Cost Projections (2009$)

Marketing and Distribution Costs – 2020 projection

Diesel $0.18/gal

Gasoline $0.16/gal

Jet Fuel $0.00/gal

Since bunker fuel distribution costs were not estimated in the Annual Energy Outlook, they were set to the 

same cost as jet fuel ($0.00/gal) to be consistent with EIA. 

Ethanol distribution costs were estimated by the TEF Fuels Infrastructure Team as $0.13/gal (2009$) 

higher than gasoline. These costs were based on a delivery cost calculator that the team developed, from 

references (Morrow, Griffin, and Matthews 2006), and from the U.S. Government Accountability Office 

(GAO, 2007). Therefore, in this analysis, the ethanol distribution cost was set at $0.29/gal (2009$). 

Biodiesel has distribution issues similar to ethanol, so the distribution and marketing costs for biodiesel 

were set equal to those of ethanol. 

Pyrolysis products, FT diesel, and algal diesel were considered as drop-in fuels for this analysis, so they 

are assumed to use the same distribution systems as gasoline, diesel, jet fuel, and bunker fuel. As a result,

their distribution costs are set equal to the conventional fuels in that market. 

Butanol was considered to have similar distribution issues as ethanol in 2020; however, it was also 

considered to be a proxy for a fermentative drop-in gasoline replacement in 2050. For that reason, the 

2050 distribution cost of butanol was set equal to the 2050 distribution cost of gasoline. 

Table G.2 shows the distribution and marketing costs for all fuels in 2009$. Table G.3 shows the same 

information in 2005$, with the conversion made using the gross domestic product chain-type index, as 

was done throughout this analysis. 
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

122 

Table G.2. Distribution and Marketing Costs Used in this Analysis (2009$)

Fuel Type Market 2020 Values 2050 Values

Diesel Diesel $0.18/gal* $0.18/gal*

Gasoline Gasoline $0.16/gal* $0.16/gal*

Jet Fuel Jet Fuel $0.00/gal* $0.00/gal*

Bunker Fuel Bunker Fuel $0.00/gal* $0.00/gal*

Ethanol Gasoline $0.29/gal $0.29/gal

Butanol Gasoline $0.29/gal $0.16/gal

Pyrolysis Gasoline Gasoline $0.16/gal $0.16/gal

Pyrolysis Diesel Diesel $0.18/gal $0.18/gal

FT Diesel Diesel $0.18/gal $0.18/gal

Biodiesel Diesel $0.29/gal $0.29/gal

Algal Diesel Diesel $0.18/gal $0.18/gal

Pyrolysis Diesel Jet Fuel $0.00/gal $0.00/gal

FT Diesel Jet Fuel $0.00/gal $0.00/gal

Biodiesel Jet Fuel $0.00/gal $0.00/gal

Algal Diesel Jet Fuel $0.00/gal $0.00/gal

Pyrolysis Diesel Bunker Fuel $0.00/gal $0.00/gal

FT Diesel Bunker Fuel $0.00/gal $0.00/gal

Biodiesel Bunker Fuel $0.00/gal $0.00/gal

Algal Diesel Bunker Fuel $0.00/gal $0.00/gal

*Note: the distribution and marketing costs are included in the prices of conventional fuels reported in 

Appendix H below, so they are not added separately in the BASE model. 
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123 

Table G.3. Distribution and Marketing Costs Used in the BASE Model (2005$)

Fuel Type Market 2020 Values 2050 Values

Diesel Diesel $0.16/gal* $0.16/gal*

Gasoline Gasoline $0.15/gal* $0.15/gal*

Jet Fuel Jet Fuel $0.00/gal* $0.00/gal*

Bunker Fuel Bunker Fuel $0.00/gal* $0.00/gal*

Ethanol Gasoline $0.26/gal $0.26/gal

Butanol Gasoline $0.26/gal $0.15/gal

Pyrolysis Gasoline Gasoline $0.15/gal $0.15/gal

Pyrolysis Diesel Diesel $0.16/gal $0.16/gal

FT Diesel Diesel $0.16/gal $0.16/gal

Biodiesel Diesel $0.26/gal $0.26/gal

Algal Diesel Diesel $0.16/gal $0.16/gal

Pyrolysis Diesel Jet Fuel $0.00/gal $0.00/gal

FT Diesel Jet Fuel $0.00/gal $0.00/gal

Biodiesel Jet Fuel $0.00/gal $0.00/gal

Algal Diesel Jet Fuel $0.00/gal $0.00/gal

Pyrolysis Diesel Bunker Fuel $0.00/gal $0.00/gal

FT Diesel Bunker Fuel $0.00/gal $0.00/gal

Biodiesel Bunker Fuel $0.00/gal $0.00/gal

Algal Diesel Bunker Fuel $0.00/gal $0.00/gal

*Note: the distribution and marketing costs are included in the prices of conventional fuels reported in 

Appendix H below, so they are not added separately in the BASE model. 

Figure G.1 graphically displays the data in Tables G.2 and G.3. 
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124 

Figure G.1. Fuel distribution and marketing costs

(Sources: DOE 2011a, Morrow et al. 2006, U.S. Government Accountability Office 2007)

$0.00

$0.05

$0.10

$0.15

$0.20

$0.25

$0.30

ethanol

butanol

pyrolysis

pyrolysis

FT diesel

biodiesel

algal diesel

gasoline diesel

2005$/gal

2020

2050
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APPENDIX H: CONVENTIONAL FUEL PRICE PROJECTIONS

Projected fuel prices are either taken directly from the EIA’s Annual Energy Outlook 2011, in the case of 

the 2020 scenario, or extrapolated from Annual Energy Outlook data, in the case of the 2050 scenario. 

Extrapolation for 2050 is accomplished by adding a yearly increment that is computed as the average 

slope between 2030 and 2035. Currency is converted from 2009 to 2005 dollars using the gross domestic 

product Chain-type Price Index (2005=1.000) by dividing by 1.096, as described in Appendix M. All 

prices are taken from Table 3, Energy Prices by Sector and Source, United States (Reference Case). The 

data were reported in dollars per million British thermal units and were converted to dollars per gallon of 

gasoline or diesel equivalent using the conversion factors provided in Table 147 (Reference Case). 

Researchers subtracted federal and state motor fuels taxes from the prices based on EIA sources (see 

Table H.1). Researchers used 41 cents per gallon and 47.5 cents per gallon for motor gasoline and diesel, 

respectively, which was based on data from the Petroleum Marketing Monthly (August 2011) (EIA, 

2011b). Furthermore, the Annual Energy Outlook lists federal taxes at 4.4 cents per gallon for jet fuel and 

the number was doubled to 8.8 cents per gallon since average state taxes for gasoline and diesel tend to 

be roughly equivalent to the federal tax. In the study, bunker fuel was assumed as having the same tax as 

jet fuel.

Demand elasticities, or the effect of increased/decreased demand on the price of conventional fuels, were 

considered for this analysis. Inelastic prices were chosen, because the level of elasticity is especially 

challenging to estimate for long-term trends. Additional review of potential elasticities should be 

considered in future analysis. Appendix N discusses the findings of this study.

Table H.1. Pricing Data Used in the BASE Model

Fuel Year

Annual Energy 

Outlook Value/ 

Extrapolated Value

Annual Energy 

Outlook Units

BASE 

Value BASE Units

Gasoline 2020 28.15 2009$/million Btu 2.66 2005$/gallon

Gasoline 2050 32.61 2009$/million Btu 3.15 2005$/gallon

Diesel 2020 25.69 2009$/million Btu 2.75 2005$/gallon

Diesel 2050 29.62 2009$/million Btu 3.25 2005$/gallon

Jet Fuel 2020 22.03 2009$/million Btu 2.68 2005$/gallons diesel

equivalent

Jet Fuel 2050 27.02 2009$/million Btu 3.31 2005$/gallons diesel

equivalent

Bunker Fuel 2020 14.54 2009$/million Btu 1.73 2005$/gallons diesel

equivalent

Bunker Fuel 2050 15.66 2009$/million Btu 1.88 2005$/gallons diesel

equivalent
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

126 

APPENDIX I: MARKET SIZES

Data for projected market sizes were either taken directly from the EIA’s Annual Energy Outlook 2011, in 

the case of the 2020 scenario, or extrapolated from Annual Energy Outlook data, in the case of the 2050 

scenario. Extrapolation for 2050 was accomplished by adding a yearly increment that was computed as 

the average slope between 2030 and 2035. Total electricity sales and transportation-related electricity 

sales were taken from Table 8, Electricity Supply, Disposition, Prices, and Emissions (Reference Case). 

They were reported in billion kilowatt-hours and converted to megawatt-hours (see Table I.1). Fuel 

consumption was obtained from Table 11, Liquid Fuels Supply and Disposition (Reference Case) with the 

exception of bunker fuel, which is the sum of all residual fuel oil used for domestic and international

shipping and military use [which was taken from Table 46, Transportation Sector Energy Use by Fuel 

Type within a Mode (Reference Case)]. The data in Table 11 were reported in million barrels per day and 

converted to gallons per year, whereas the data in Table 46 were reported in trillion British thermal units

and converted to gallons per year using the conversion factors provided in Table 147 (Reference Case). 

The total volume of the gasoline market was estimated by summing the gasoline market size with the E85 

market size, once the E85 market size was converted to a gallon gasoline equivalent (gge) basis. The total 

volume of the diesel market was estimated by summing the diesel market size with the biodiesel and 

“other biomass-derived fuels” market sizes once the latter two were converted to a gallon diesel 

equivalent (gde) basis. Market sizes for liquefied petroleum gas and “distillate fuel (other than diesel)” 

were reported in the Annual Energy Outlook, but they were not included in the market sizes for BASE.
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Table I.1. Market Size Data Used in the BASE Model

Fuel Year

Annual Energy 

Outlook Value/ 

Extrapolated 

Value

Annual Energy 

Outlook Units BASE Value BASE Units

Electricity 2020 3,976 Billion kilowatt-hours 3.98 billion Megawatt-hours

Electricity 2050 4,990 Billion kilowatt-hours 4.99 billion Megawatt-hours

PHEV - Electricity 2020 10 Billion kilowatt-hours 10 million Megawatt-hours

PHEV - Electricity 2050 34 Billion kilowatt-hours 34 million Megawatt-hours

Gasoline 2020 9.19 Million barrels/day 141 billion Gallons/year

Gasoline 2050 10.27 Million barrels/day 158 billion Gallons/year

Diesel 2020 3.9 Million barrels/day 59.9 billion Gallons/year

Diesel 2050 5.17 Million barrels/day 79.3 billion Gallons/year

Jet Fuel 2020 1.62 Million barrels/day 24.3 billion Gallons diesel equivalent/year

Jet Fuel 2050 1.84 Million barrels/day 27.6 billion Gallons diesel equivalent/year

Bunker Fuel 2020 801.63 Trillion Btu 5.82 billion Gallons diesel equivalent/year

Bunker Fuel 2050 838.49 Trillion Btu 6.09 billion Gallons diesel equivalent/year

Biodiesel 2020 0.101 Million barrels/day 1.44 billion Gallons diesel equivalent/year

Biodiesel 2050 0.132 Million barrels/day 1.88 billion Gallons diesel equivalent/year

E85 2020 0.219 Million barrels/day 2.65 billion Gallons gasoline equivalent/year

E85 2050 0.944 Million barrels/day 11.5 billion Gallons gasoline equivalent/year

Other BiomassDerived Fuels 2020 0.048 Million barrels/day 683 million Gallons diesel equivalent/year

Other BiomassDerived Fuels 2050 0.797 Million barrels/day 11.3 billion Gallons diesel equivalent/year
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

128 

APPENDIX J: ELECTRICITY DATA

The data used in the electricity-generation technologies and fuels were largely based on EIA’s Annual 

Energy Outlook 2011 reference scenario projections, however, in some cases, modifications to the data 

were made and are noted below. 

J.1. Electricity-Generation Technology Cost and Performance Data

Table J.1 shows 2020 projected cost and performance data (in 2009$) for the seven electricity-generating 

technologies represented in the BASE model. Many of the columns [specifically, capital, fixed charge 

rate, fixed operation and maintenance (O&M) costs, variable O&M, and heat rate columns] represent data 

that was directly reported in Annual Energy Outlook 2011 for the reference scenario. In Annual Energy 

Outlook 2011, EIA made projections of the commodity index. To eliminate macro-economic effects on 

capital costs, the commodity index projections were removed. In other words, the BASE model implicitly 

assumed a commodity index of 1.0 for all years, whereas Annual Energy Outlook 2011 projected a 

commodity index of 1.00894 in 2020 and 0.81886 in 2035. In Table J.1, all columns are directly from the 

Annual Energy Outlook, with the exception of the column labeled “capital net commodity index.” That 

column reflects modifications to the capital cost that have been made for the BASE model to remove 

commodity index effects. Table J.2 converts the 2020 cost data used in the BASE model to 2005$. 

The “maximum annual capacity factor” values in Tables J.1 and J.3 for dispatchable technologies, which 

include all technologies except wind and solar, were based on data used in NREL’s ReEDS model (Short 

et al. 2011) and consider typical planned and forced outage rates for these plant categories. For the 

variable renewable generation technologies (wind, PV, and CSP), the annual capacity factors shown were 

from Annual Energy Outlook 2011. The wind capacity factor was based on class 4 resources; the solar 

capacity factors were based on the straight average across all regions in EIA’s National Energy Modeling 

System, as used in Annual Energy Outlook 2011. 

Another category of electricity-generation technology, referred to as “other RE,” is included in BASE and 

represents dispatchable renewable resources (but non-biomass), including geothermal, hydropower, and 

concentrating solar power with thermal storage. Typically, these resources are site-specific in that the 

developable potential and/or performance quality varies strongly from one region to another. As such, 

capital costs or capacity factors for these technologies also vary substantially across the country. To 

account for these variations, electric-sector models typically rely on supply curves to represent these 

technologies or limit the deployment of these resources. While acknowledging that these effects do exist, 

and that more detailed modeling may be necessary to accurately model these technologies, the BASE 

model does not include supply curves for the technologies under the “other RE” category. Instead, BASE 

uses single-point estimates of technology cost and performance projections for geothermal as the 

representative, dispatchable non-biomass renewable technology. More specifically, O&M costs assumed 

were based on projections from Annual Energy Outlook 2011 and the assumed capital cost was based on 

an NREL resource assessment (Augustine, Young, and Anderson 2010) for geothermal technologies. In 

particular, the assumed capital cost was based on a capacity-weighted average over the supply curve for 

identified hydrothermal geothermal resource (Augustine et al. 2010). This averaging resulted in a capital 

cost of approximately $6,000/kW (in 2009$), which was applied in BASE for the “other RE” category for 

both 2020 and 2050. Although this simplified treatment of the dispatchable, non-biomass renewable 

electricity-generation technologies can be improved, researchers do not expect these simplifications to 

have an effect on the trends for biomass consumption in biopower presented in this report. 

Finally, the BASE model was set up to allow user-defined production tax credits ($/MWh) and 

integration cost adders ($/MWh). Given the long time horizon of the scenarios examined and the 

equilibrium nature of the BASE model, the production tax credit was set to zero for all technologies. 

Integration cost adders for wind and PV were set to $8/MWh (in 2005$), based loosely on estimates from 
TRANSPORTATION ENERGY FUTURES SERIES Biomass

129 

the Eastern Wind Integration and Transmission (EWITS) study, however, since integration costs have 

been estimated to vary substantially with deployment levels and the flexibility of the electric grid, these 

values are admittedly uncertain. 

Table J.1. 2020 Cost and Performance Data for Electricity Generation Technologies (2009$)

Technology Capital 

($/kW)

Capital net 

commodity 

index ($/kW)

Fixed 

Charge 

Rate

Fixed O&M 

($/kW-yr)

Variable 

O&M 

($/MWh)

Maximum 

Annual 

Capacity Factor

Heat Rate 

(106

Btu/MWh)

Nuclear $4,843 $4,800 0.144 $87.69 $2.00 0.90 10.45

Coal $2,751 $2,726 0.139 $29.31 $4.20 0.85 8.77

Natural GasCC $959 $951 0.133 $14.44 $3.07 0.90 6.37

Natural GasCT $632 $626 0.119 $14.52 $6.90 0.92 9.01

Other RE - $6,000 0.109 $107.27 $9.52 0.85 - 

Biopower $3,590 $3,558 0.114 $99.30 $6.43 0.84 13.50

Wind $2,405 $2,384 0.098 $27.73 $0.00 0.33 - 

PV $4,048 $4,012 0.097 $25.73 $0.00 0.25 - 

CSP $3,401 $3,370 0.104 $63.23 $0.00 0.26 - 

Table J.2. 2020 Cost Data for Electricity Generation Technologies Used in the BASE Model (2005$)

Technology

Capital net

commodity index

($/kW)

Fixed O&M

($/kW-yr)

Variable O&M 

($/MWh)

Nuclear $4,380 $80.01 $1.83

Coal $2,487 $26.75 $3.83

Natural Gas-CC $867 $13.18 $2.80

Natural Gas-CT $571 $13.25 $6.29

Other RE $5,474 $97.87 $8.69

Biopower $3,247 $90.60 $5.87

Wind $2,175 $25.30 $0.00

PV $3,660 $23.47 $0.00

CSP $3,075 $57.69 $0.00

Tables J.3 and J.4 are similar to Tables J.1 and J.2, respectively, however, 2035 cost and performance 

data were shown instead of 2020. In the BASE model, 2050 scenarios were evaluated using the 2035 cost 

and performance data provided here. Annual Energy Outlook 2011 only made projections up until 2035 

and no extrapolations beyond 2035 were assumed in the BASE model assumptions. 
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

130 

Table J.3. 2035 Cost and Performance Data for Electricity Generation Technologies (2009$)

Technology Capital 

($/kW)

Capital net 

commodity 

index 

($/kW)

Fixed 

Charge 

Rate

Fixed 

O&M 

($/kW-yr)

Variable 

O&M 

($/MWh)

Maximum 

Annual 

Capacity 

Factor

Heat Rate 

(106

Btu/MWh)

Nuclear $3,423 $4,180 0.143 $87.69 $2.00 0.90 10.45

Coal $2,118 $2,587 0.139 $29.31 $4.20 0.85 8.74

Natural GasCC $711 $869 0.131 $14.44 $3.07 0.90 6.33

Natural GasCT $456 $557 0.118 $14.52 $6.90 0.92 8.55

Other RE - $6,000 0.108 $124.13 $9.52 0.85 - 

Biopower $2,686 $3,280 0.112 $99.30 $5.92 0.84 13.50

Wind $1,933 $2,360 0.097 $27.73 $0.00 0.33 - 

PV $2,487 $3,037 0.096 $25.73 $0.00 0.25 - 

CSP $2,001 $2,443 0.103 $63.23 $0.00 0.26 -

Table J.4. 2035 Cost Data for Electricity Generation Technologies Used in the BASE Model (2005$)

Technology

Capital net

commodity index

($/kW)

Fixed O&M

($/kW-yr)

Variable O&M

($/MWh)

Nuclear $3,814 $80.01 $1.83

Coal $2,360 $26.75 $3.83

Natural Gas-CC $793 $13.18 $2.80

Natural Gas-CT $508 $13.25 $6.29

Other RE $5,474 $113.25 $8.69

Biopower $2,993 $90.60 $5.41

Wind $2,154 $25.30 $0.00

PV $2,771 $23.47 $0.00

CSP $2,230 $57.69 $0.00
TRANSPORTATION ENERGY FUTURES SERIES Biomass

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J.2. Non-Biomass Fuel Data for Competing Electricity-Generation 

Technologies

Fossil-fuel and uranium price projections for 2020 and 2050 were also based on Annual Energy Outlook 

2011 projections. More specifically, the uranium price in 2020 was directly taken from the Annual Energy 

Outlook 2011 reference case, whereas the 2050 uranium price was based on an extrapolation (using 2025‒

2035 projections) of the same reference case. Because of the greater degree of elasticity in fossil-fuel 

prices (especially natural gas), linear supply curves were used for natural gas and coal. The methodology 

to develop the supply curves are described (Short et al. 2011), and the same supply curves presented here 

are used in NREL’s ReEDS model. In short, fossil-fuel elasticity parameters were derived using a linear 

regression of fossil-fuel consumption and price across three cases from Annual Energy Outlook 2011: the 

reference case, and high-economic growth and low-economic growth cases. The elasticity parameters 

represent the increase in per unit price of fossil fuel for each additional unit of electric sector consumption 

of the fuel. The elasticity parameters were assumed constant over time. In addition to the elasticity 

parameters, a minimum fixed fossil-fuel price was used to fully define the linear supply curve; the yintercept of a fossil-fuel supply curve was defined by the fixed price and the slope was defined by the 

elasticity parameter. The fixed price changes over time and was calibrated to match the Annual Energy 

Outlook 2011 reference case consumption and price for all years. To obtain the 2050 supply curve, the 

fixed price was based on extrapolations from 2025 to 2035 in the Annual Energy Outlook 2011 reference 

case.

Table J.5 shows the uranium and fossil-fuel prices and elasticities for 2020 and 2050 in 2009$ (based on 

the method described above). Table J.6 contains the same data in 2005$. The BASE model uses these 

values and endogenously finds the equilibrium price for natural gas and coal in each scenario based on 

their supply curves. 

Table J.5. 2020 and 2050 Fossil-Fuel and Uranium Prices (2009$)

Fuel Elasticity ($/106

Btu per 

Quadrillion Btu) Price ($/106

Btu)

2020 Natural Gas 0.353 $2.53

2020 Coal 0.048 $1.24

2020 Uranium n/a $0.82

2050 Natural Gas 0.353 $4.85

2050 Coal 0.048 $1.53

2050 Uranium n/a $1.30

Table J.6. 2020 and 2050 Fossil-Fuel and Uranium Prices (2005$)

Fuel Elasticity ($/106

Btu per 

Quadrillion Btu) Price ($/106

Btu)

2020 Natural Gas 0.322 $2.31

2020 Coal 0.044 $1.13

2020 Uranium n/a $0.75

2050 Natural Gas 0.322 $4.43

2050 Coal 0.044 $1.39

2050 Uranium n/a $1.19
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

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Appendix K: LIFE CYCLE GHG EMISSIONS AND PETROLEUM 

CONSUMPTION

Well-to-wheel (WTW) and well-to-tank (WTT) life cycle GHG emissions and petroleum consumption 

data used in the BASE model are illustrated in Figure K.1 and listed in Table K.1 for the years 2020 and 

2050. The primary data source is the Greenhouse Gases, Regulated Emissions, and Energy Use in 

Transportation (GREET) model version 1.8d (GREET Model: The Greenhouse Gases, Regulated 

Emissions, and Energy Use in Transportation). Supplemental fuel pathways for microalgae-based fuels 

grown in an open pond were partially generated in the GHGenius model version 3.19a ((S&T)2 

Consultants 2004). Supplemental fuel pathways for pyrolysis-oil-based fuels were partially based on 

GREET and a SimaPro v.7.2 model of pyrolysis oil processing to gasoline and diesel (Hsu 2011). Table 

K.2 lists the fuel economies taken from GREET that are used to calculate tank-to-wheel life cycle GHG 

emissions and petroleum consumption estimates. 

Life cycle GHG emissions and petroleum consumption estimates for fuel pathways present in GREET 

were generated with few changes to default parameters, other than switching among feedstocks. Fuel 

pathways for the 2020 and 2050 scenarios were both modeled based on default GREET assumptions for 

2020, because 2050 default parameters in GREET were not available. The electricity grid for 2020 and 

2050 and associated life cycle GHG emission intensities were modeled based on the Renewable Energy 

Future’s (REF) study’s 80% renewables projections (Mai et al.). Parameters for specific fuel pathways 

were modified to reflect conversion efficiencies assumed for 2020 and 2050, as outlined in Section 3.6. 

Existing GREET fuel pathways were modified to model several fuel pathways not present in GREET. 

Lignocellulosic butanol life cycle GHG emissions and petroleum consumption estimates were generated 

based on modified GREET lignocellulosic ethanol pathways. Modifications were based on data from Tao

and (Tao and Aden 2011; Mullins, Griffin, and Matthews 2010). The portion of Hsu’s SimaPro model 

(Hsu 2011) for biomass conversion to pyrolysis oil and then to fuels was modified to reflect pyrolysis fuel 

conversion efficiencies; outlined in Section 3.6. This data was combined with lignocellulosic feedstock 

production and fuel distribution data from the GREET model to produce total life cycle GHG emissions 

and petroleum consumption estimates. Coal- and biomass-based electricity [with carbon capture and 

storage (CCS)] life cycle GHG emissions and petroleum consumption estimates were modified based on 

using CCS rates from Fischer-Tropsch diesel pathways. Energy losses from CCS were taken from Spath 

and Mann {Spath, 2004 #46 to complete modeling of the coal-with-CCS-electricity pathway.

The GHGenius model’s algae-based fuel pathways (i.e., renewable diesel and biodiesel) were generally 

unmodified to produce the WTT results listed in Figure K.1 and Table K.1. Like the GREET model, the 

electricity grid mix and associated life cycle GHG emissions were modified to reflect the REF 80% 

renewables scenario for 2020 and 2050. Life cycle GHG emissions and petroleum consumption estimates 

for 2020 and 2050 were based only on 2020 default parameter assumptions. The available 2050 

assumptions were not used in order to parallel 2050 scenarios in the GREET model. Tank-to-wheel life 

cycle GHG emission estimates for biodiesel and renewable diesel were taken from GREET and combined 

with GHGenius WTT data to get WTW results.
TRANSPORTATION ENERGY FUTURES SERIES Biomass

133 

2020 Life Cycle GHG Emissions

Figure K.1. WTW and WTT life cycle GHG emissions and petroleum consumption estimates used in the BASE model for 2020 and 2050.

The dotted line represents an 80% GHG emission or petroleum consumption reduction from gasoline.

[Sources: Argonne National Laboratory 2011, (S&T)2 Consultants 2011, Hsu 2011, Spath and Mann 2004, Mullins et al. 2010, Tao and Aden 2011, Mai et al. 2012] 

CNG = compressed natural gas; CD = conventional diesel; CG = conventional gasoline; F-T = Fischer-Tropsch; LNG = liquefied natural gas; PO = pyrolysis oil; RD = renewable diesel; 

BD = biodiesel
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

134 

2050 Life Cycle GHG Emissions
TRANSPORTATION ENERGY FUTURES SERIES Biomass

135 

2020 Petroleum Consumption
Biomass TRANSPORTATION ENERGY FUTURES SERIES 

136 

2050 Petroleum Consumption
TRANSPORTATION ENERGY FUTURES SERIES Biomass

137 

Table K.1. Life Cycle GHG Emissions and Petroleum Consumption Estimates Used in the BASE 

Model for 2020 and 2050

(WTW and WTT Data are Listed with the Source) 

2020
Biomass TRANSPORTATION ENERGY FUTURES SERIES

138 

2050
TRANSPORTATION ENERGY FUTURES SERIES Biomass

139 

Table K.2. Vehicle Fuel Efficiencies Used to Calculate WTW Life Cycle GHG Emissions and 

Petroleum Consumption Estimates. 

Fuel Efficiencies Taken from GREET 1.8d.

Figure and Table Acronyms

CNG or CN = compressed natural gas

LNG or LN = liquid natural gas

EtOH = ethanol

BuOH = butanol

PO – D = pyrolysis oil to diesel

PO – G = pyrolysis oil to gasoline

RD = renewable diesel

F-T Diesel = Fischer-Tropsch diesel

CCS = carbon capture and storage

PV = photovoltaic

NG = natural gas

BD = biodiesel

CD = conventional diesel

CG = conventional gasoline

CC = combined cycle
Biomass TRANSPORTATION ENERGY FUTURES SERIES

140 

APPENDIX L: CONVENTIONAL FUEL PRICES AND MARKET SIZES 

USED FOR THE LOW OIL PRICE SENSITIVITIES

Tables L.1 and L.2 provide the pricing and market size data, respectively, used in the BASE Model low 

oil price scenario. 

Table L.1. Pricing Data Used in the BASE Model Low Oil Price Scenario

Fuel Year

Annual Energy 

Outlook Value/ 

Extrapolated Value

Annual Energy 

Outlook Units

BASE 

Value BASE Units

Gasoline 2020 17.34 2009$/106

Btu 1.68 2005 Chained $/gal

Gasoline 2050 13.30 2009$/106

Btu 1.19 2005 Chained $/gal

Diesel 2020 15.55 2009$/106

Btu 1.67 2005 Chained $/gal

Diesel 2050 13.08 2009$/106

Btu 1.33 2005 Chained $/gal

Jet Fuel 2020 10.66 2009$/106

Btu 1.35 2005 Chained $/gal

Jet Fuel 2050 13.86 2009$/106

Btu 1.78 2005 Chained $/gal

Bunker Fuel 2020 5.16 2009$/106

Btu 0.69 2005 Chained $/gal

Bunker Fuel 2050 2.55 2009$/106

Btu 0.29 2005 Chained $/gal

Table L.2. Market Size Data Used in the BASE Model Low Oil Price Scenario

Fuel Year

Annual Energy 

Outlook Value/ 

Extrapolated 

Value

Annual Energy 

Outlook Units BASE Value BASE Units

Electricity 2020 3,998 Billion kilowatthours 3.98 billion Megawatt-hours

Electricity 2050 5,053 Billion kilowatthours 5.05 billion Megawatt-hours

PHEV - 

Electricity 2020 9 Billion kilowatthours 9 million Megawatt-hours

PHEV - 

Electricity 2050 25 Billion kilowatthours 25 million Megawatt-hours

Gasoline 2020 9.69 Million 

barrels/day 149 billion Gallons/year

Gasoline 2050 12.72 Million 

barrels/day 195 billion Gallons/year

Diesel 2020 3.96 Million 

barrels/day 60.75 billion Gallons/year

Diesel 2050 5.26 Million 

barrels/day 80.69 billion Gallons/year

Jet Fuel 2020 1.63 Million 

barrels/day 25.01 billion Gallons diesel equivalent/year

Jet Fuel 2050 1.85 Million 

barrels/day 28.38 billion Gallons diesel equivalent/year

Bunker Fuel 2020 801.26 Trillion Btu 5.35 billion Gallons diesel 

equivalent/year

Bunker Fuel 2050 835.85 Trillion Btu 5.6 billion Gallons diesel 

equivalent/year
TRANSPORTATION ENERGY FUTURES SERIES Biomass

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APPENDIX M: CONVERSION TO 2005$

The TEF project uses 2005 U.S. dollars throughout the project. The GDP chain-type price index, as 

reported in the Annual Energy Outlook 2011,

26 was used to make all conversions to 2005$ by dividing 

expenses in each year’s dollars by the index value for that year (as shown in Table M.1). In the Annual 

Energy Outlook, values were only reported to 2035, so the index was extrapolated to 2050 (as indicated in 

brackets below). 

Table M.1. GDP Chain-Type Price Index Values

 

26 Table M-1 (Macroeconomic Indicators)

Year 2005 2006 2007 2008 2009 2010

Index Value 1 1.033 1.063 1.086 1.096 1.106

Year 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Index Value 1.12 1.133 1.152 1.173 1.197 1.22 1.246 1.272 1.298 1.324

Year 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Index Value 1.35 1.374 1.399 1.424 1.45 1.476 1.504 1.532 1.561 1.589

Year 2031 2032 2033 2034 2035 [2036] [2037] [2038] [2039] [2040]

Index Value 1.619 1.65 1.682 1.715 1.749 1.781 1.813 1.845 1.877 1.909

Year [2041] [2042] [2043] [2044] [2045] [2046] [2047] [2048] [2049] [2050]

Index Value 1.941 1.973 2.005 2.037 2.069 2.101 2.133 2.165 2.197 2.229
Biomass TRANSPORTATION ENERGY FUTURES SERIES

142 

APPENDIX N: GASOLINE PRICE ELASTICITY OF DEMAND

N.1. Summary

N.1.1. Gasoline 

In the past 5 years, new analysis of gasoline price elasticity of demand (Egp) suggests that it may, in fact, 

be less elastic than previous widely-used estimates (Havarnek et al. 2011; Hughes et al. 2007). In light of 

this research, there are valid reasons for the TEF to employ relatively conservative (i.e., inelastic) 

estimates in the range of -0.10 for short run Egp and -0.30 for long run Egp. This is a change from typical 

practice, as historical estimates of short-run gasoline Egp have been in the range of -0.15 (as used in 

Annual Energy Outlook 2010 and 2011) to -0.30 [as estimated by Dahl (Dahl 2012), Espey (Espey 1998), 

and Dahl and Sterner (Dahl and Sterner 1991)]. 

N.1.2. Diesel

Dahl (2012) estimates short-run diesel price elasticity of demand (Edp) to be lower than that of 

gasoline; -0.07 compared to -0.30. Internationally, Dahl (2012) finds the median short-run diesel price 

elasticity to be -0.16. 

Short- and long-run estimates are given in Table N.1 and Figure N.1. 

N.2. Discussion and Additional Key Points

Both Havranek (Havranek et al. 2011) and Dahl (2012) note that, across international studies, price 

elasticity estimates are skewed towards higher estimates of elasticity, with results tending to cluster 

around the medians. Havranek et al. (2011) theorize that this is an artifact of publication bias. 

Regarding publication selection bias issues in the literature, Havranek et al. (2011) performed a metaanalysis to investigate the likelihood of publication selection bias on elasticity estimates, and concluded 

that there is indeed evidence of publication selection bias. In other words, studies yielding inelastic 

estimates do not get published as often, as such estimates may disagree with theory. It should be noted 

that publication bias methodology is in itself a subject of academic debate, particularly around whether to 

benchmark published results against unpublished working papers versus apply mixed-effects metaregression models that focus on the relationship between reported elasticity versus the reported precision 

(standard error) of the elasticity estimate. Havranek et al. (2011) use the latter and include a discussion of 

the methodological debate and their rationale for using modeled results. 

Robust research on cross-price elasticity substitution is less abundant than research on gasoline and diesel 

and own-price elasticity. A literature review by Dahl and Al-Dossary (Al-Dossary 2008) discovered that 

research cross-price elasticity has been carried out in the most depth for Australia, Indonesia, Italy, the 

Netherlands, Spain, Turkey, and the United Kingdom. Alves (Alves and De Losso da Silveira Bueno 

2003) specified a cross-price elasticity model for Brazilian alcohol-based fuels, and finds a near-zero 

cross-price elasticity even in the long run, a finding that suggests imperfect substitutability. 

Hughes et al. (2007) modeled U.S. elasticity from two periods of rapidly rising gasoline prices (1975‒

1980 and 2001‒2006), and found that demand was far less elastic in the latter period (in the range of -

0.034 to -0.077). They theorized that a range of structural and behavioral changes (including land use, 

increasing disposable income, and more efficient vehicles) had dramatically reduced Egp since 1980. They 

further critiqued the literature for continuing to use data from the 1980s and 1990s. 

Demand for jet fuel is typically estimated to be more inelastic than other fuels. Boshoff (Boshoff 2010) 

estimated long-run jet fuel Ejp in South Africa at -0.10 and a high level of income elasticity of demand 

(0.9), suggesting that jet fuel demand is determined more by economic growth than by price sensitivity. 
TRANSPORTATION ENERGY FUTURES SERIES Biomass

143 

Gjolberg found the elasticity of jet fuel in relation to crude oil prices to be near zero (Gjolberg and 

Johnsen 1999). 

N.3. Select Equations

Hughes et al. (2007) 

Equation N.1. Basic Price Elasticity of Demand Model

lnGjt = β0 + β1 ln Pjt + β2 ln Yjt + εj + εjt (1)

Where Gjt is per capita gasoline consumption in gallons in month j and year t, Pjt is the real retail price of 

gasoline in month j and year t, Yjt is real per capita disposable income in month j and year t, εj represents 

unobserved demand factors that vary at the month level and εjt is a mean zero error term.

Equation N.2. Price Income Interaction Parameter Model

lnGjt = β0 + β1 ln Pjt + β2 lnYjt + β3 ln Pjt lnYjt +εj +εjt (2)

Where the interaction term, lnPjtlnYjt captures the extent to which the responsiveness of consumers to 

price changes increases or decreases as income changes. 

Dahl (2012)

Equation N.3. General Form: Static Equation

Qgt = α + β Pt + χYt + δXt 

“Where Qg is the demand for gasoline, P is the price of gasoline, Y is a measure of income or economics 

activity, X represents other variables, Greek letters are parameters to be estimated, and t indicates 

observation t.” 

Equation N.4. General Form: Dynamic Equation 

“Dynamic equations typically include non-lagged and lagged variables on the right-hand side of the 

equation such as

Dahl also suggests that Egp and Edp grow along with both median income and price. 
Biomass TRANSPORTATION ENERGY FUTURES SERIES

144 

The figures below show gasoline (left) and diesel (right) price elasticities across various price and income 

categories.

Alves et al. (2003) 

Equation N.5. Cross-Price Substitution Model Equation

Where Ct is yearly gasoline consumption per capita measured in liters; Yt is yearly real per capita GDP; Pt

is yearly real gasoline price; At is yearly real alcohol price; et is the residual. 
TRANSPORTATION ENERGY FUTURES SERIES Biomass

145 

Table N.1. Estimates from the Literature

Study/Reference Product Method Short-run Price 

Elasticity

Long-run 

Price 

Elasticity

Long-run Income 

Elasticity

(Havranek et al. 

2011) Gasoline

Meta-analysis 

Correcting for Pub 

Bias

-0.09 -0.31

(Hughes et al. 

2007) Gasoline OLS Model for 

Period 2001‒2006 -0.042 --- ---

(Dahl 2012) Gasoline, Diesel Lit Survey -0.30

(Annual Energy 

Outlook 2010, 

2011a)

All Non-electric 

Fuels

Referencing Dahl 

(1993) -0.15

(Dahl and Sterner 

1991) Gasoline Lit Survey -0.26 -0.86 1.21

(Espey 1998) Gasoline Lit Survey -0.26 -0.58 0.88

(Graham and 

Glaister 2004) Gasoline Lit Survey -0.25 -0.77 0.93

(Brons et al. 

2008) Gasoline Lit Survey -0.34 -0.84 ---

(Dahl 1993) Oil (Developing 

Countries) Lit Survey -0.07 -0.30 1.32

(Cooper 2003) Oil (Avg of 23 

Countries)

Annual Time-series 

Regression -0.05 -0.21 ---

Figure N.1. Summary of gasoline elasticity estimates

(compiled by author)
Biomass TRANSPORTATION ENERGY FUTURES SERIES

146 

N.4. Structural and Behavioral Determinants of Elasticity

In the real world, gasoline elasticity is the result of a combination of social and structural factors facing 

gasoline consumers. The observed inelasticity of demand by Hughes et al. (2008) was attributed nonspecifically to a range of factors, which included land-use change (i.e., longer commutes), improved fuel 

economy via corporate average fuel economy standards, higher disposable income (per capita), increased

prevalence of multiple incomes per household, and decreased options for public transit. Several other 

structural/behavioral factors have been added that may impact both the short- and long-run price elasticity 

of demand (see Table N.2). If any of these structural or behavioral factors change over the study horizon, 

elasticity estimates may also change in response.

Table N.2. Likely Gross Impacts of Selected Structural Factors on Gasoline Elasticity

Increase 

in: Sprawl Fuel Economy

Per cap 

disposable 

income

Wealth 

Effects

Multiple 

incomes/ 

household

Public 

Transit

TelecommutingMarginal 

Consumers

Elite 

Ownership

Impact 

on shortrun Epg

↓ ↓ ↓ ↓ ↓ ↑ ↑ ↓ ↓

N.5. Notes on Selected Factors 

N.5.1 Wealth Effects

In Hughes et al. (2006), it is hypothesized that an increase in disposable income may have driven the 

dramatically lower inelasticity of demand during 2001–2006. This causal logic is extended to include 

‘perceived wealth’, or wealth effects, such as easy credit and asset price appreciation that can yield 

disposable cash even in the absence of wage growth. The 2001–2006 period was marked by easy credit 

and home-equity loans that may have allowed many American consumers to be less price sensitive to 

fuels. The forecast for both sources of ‘perceived wealth’ is dim, and so it may be that demand may return 

to higher levels of elasticity in the short run.

N.5.2. Marginal Consumers 

In some cases, a slight price reduction can cause a disproportionate increase in demand. This effect is 

most commonly studied in regard to other products, for example, air conditioners, where a 10% reduction 

in air conditioning unit price in a developing nation can disproportionately increase electricity demand as 

the price change captures a large number of consumers on the margin. This effect could be observed with 

regard to prices of advanced vehicles and fuels. In the case of multi-fuel-platform competition, a small 

price change for a particular type of biofuel or vehicle could non-linearly improve substitutability of 

biofuel for gasoline, therefore increasing gasoline demand elasticity. 

N.5.3. Elite Ownership

Dahl discussed counter-intuitive elasticity estimates in developing countries, where per capita income is 

low (<$1,000/yr), and yet fuel demand is relatively inelastic. One likely explanation for this finding is that 

vehicle ownership is concentrated among relatively affluent citizens. Coupled with the prevalence of fuel 

subsidies in many developing countries, these vehicle owners can afford to be price insensitive. In the 

scenario in which U.S. vehicle ownership becomes more difficult for medium- and low-income citizens 

(an unlikely deviation from a long-run historical trend), Egp could actually decrease as the mix of owners 

becomes more insensitive to price.

N.5.4. Rebound 

Small et al. estimated short- and long-run transportation rebound effects to be 4.5% and 22.2%, 

respectively. In other words, a 10% improvement in fuel efficiency will result in a “take-back,” in the 
TRANSPORTATION ENERGY FUTURES SERIES Biomass

147 

form of a 0.45% increase in vehicle miles traveled. Annual Energy Outlook 2011 does not assume a takeback due to fuel efficiency: “Only space heating, cooling, and lighting are assumed to be affected by both 

elasticities and the efficiency rebound effect.”

N.5.5. Asymmetry

Dahl (2012) discussed the common assumption that Exp is symmetric, or that fuel price increases and 

decreases operate equally on consumer demand. In general, Dahl found that models that consider 

asymmetry are rarely more accurate than those that assume symmetry, although there is some evidence 

that price movement around historical maxima can have outsized effects. Further research is needed in 

this area.
Biomass Transportation Energy Futures 

148 

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