Quantifying the Effects of Biomass Market Conditions and Policy Incentives on Economically Feasible Sites to Establish Dedicated Energy Crops

• Main Authors: Sandhya Nepal, Marco A. Contreras, George A. Stainback, John M. Lhotka
• Format: Article
• Language: English
• Published: MDPI AG 2015-11-01
• Series: Forests
• Subjects: woody biomass utilization; spatially-explicit model; sensitivity analysis; Kentucky
• Online Access: http://www.mdpi.com/1999-4907/6/11/4168

This study used a spatially-explicit model to identify the amount and spatial distribution of economically feasible sites for establishing dedicated energy crops under various market and policy scenarios. A sensitivity analysis was performed for a biomass market with different discount rates and biomass prices as well as policy scenarios including propriety tax exemption, carbon offset payments, and the inclusion of farmland for biomass production. The model was applied to a four-county study area in Kentucky representing conditions commonly found in the Ohio River Valley. Results showed that both biomass price and discount rate have a can strongly influence the amount of economically efficient sites. Rising the biomass price by 5 $·t−1 and lowering discount rate by 1% from the baseline scenario (40 $·t−1 and 5%) resulted in an over fourteen fold increment. Property tax exemption resulted in a fourfold increase, a carbon payment on only 1 $·t−1 caused a twelve fold increase and extending the landbase from marginal land to farmland only slightly increase the economically efficient sites. These results provide an objective evaluation of market and policy scenarios in terms of their potential to increase land availability for establishing dedicated energy crops and to promote the bioenergy industry.