Potential Development of a Second-Generation Ethanol Industry in Alberta: Product Prices, Land Use Change, and Co-production Opportunities

• Author / Creator

  Doll, Claire A.

• Alberta holds a vast supply of lands that could be suitable for growing energy crops for biofuels; yet the cellulosic ethanol industry remains in its infancy. This thesis presents two studies that investigate the factors influencing the potential future of the industry. To provide insights into possible future prices, the first study investigates historic price movements of ethanol and two of its potential co-products: electricity and lignin pellets. Time series analyses focus on characterizing the underlying processes driving the series, and exploring seasonal effects and volatility. Each bioenergy commodity is found to evolve according to a mean reverting process. Ethanol and electricity exhibit non-constant volatility over time, while pellet prices vary according to season. These price models are applied in simulating stochastic prices that feed into the land use change analysis of the second study. The second study assesses the conditions under which private landowners might convert land from agriculture to switchgrass or hybrid poplar energy crops. A real options modeling approach is taken; offering landowners the option to switch between land uses and product markets, along with the option to defer the harvest of trees. The model is unique with its focus on co-production of bioenergy commodities and inclusion of two energy crops that deliver feedstocks which are managed and harvested over different time scales. Results suggest that substantial subsidies would be necessary to see the proliferation of energy crops on the landscape. In addition, hybrid poplar appears to dominate switchgrass as a bioenergy feedstock, while co-production of ethanol alongside electricity appears as financially preferred over co-production of ethanol with pellets. This preference for hybrid poplar feedstocks creates a challenge in providing biorefineries with an initial supply of feedstocks. The results of this thesis inform the feedstocks and co-products that may encourage the growth of the cellulosic ethanol industry.

• Subjects / Keywords

  • Real options analysis
  • Second generation ethanol
  • Time series analysis

• Graduation date

  Fall 2017

• Type of Item

  Thesis

• Degree

  Master of Science

• DOI

  https://doi.org/10.7939/R31R6ND9M

• License

  This thesis is made available by the University of Alberta Libraries with permission of the copyright owner solely for non-commercial purposes. This thesis, or any portion thereof, may not otherwise be copied or reproduced without the written consent of the copyright owner, except to the extent permitted by Canadian copyright law.