Economic viability and carbon footprint of switchgrass for cellulosic biofuels: Insights from a spatial multi‐feedstock procurement landscape analysis

Abstract

We study a situation in which a multi‐feedstock cellulosic biofuel plant can procure stover from productive cropland and switchgrass from marginal land, where growing corn for stover is typically not profitable. We calibrate our model to growing conditions in a promising area of Indiana, USA. We find that cost‐minimizing biorefineries are likely to include switchgrass in the mix of feedstocks despite their high cost of production relative to corn stover. This is because the biorefinery can reduce cost by buying switchgrass grown on marginal land near the plant instead of paying to cover high transportation costs to procure stover from more distant suppliers. Moreover, the share of switchgrass will rise further if the procurement region is constrained by transaction costs or natural barriers. This is because procuring switchgrass can alleviate the cost of paying to induce land conversion to corn to procure additional stover from the intensive margin. Under the assumption that switchgrass is grown on marginal land, inclusion of switchgrass in the feedstock mix not only reduces the cost of producing biofuels but also their carbon footprint without displacing food crops. A key caveat is that high transaction costs of contracting for switchgrass and/or farmers’ reluctance to grow switchgrass on marginal land can severely undermine its inclusion in the feedstock mix. However, these forces may be countervailed by a differential subsidy for biofuels that include a higher share of switchgrass, which would be warranted because of their lower carbon footprint.