ORNL is managed by UT-Battelle for the US Department of Energy

Sensitivity analysis of BT16 scenariosLaurence EatonORNL

Acknowledgements:

Mark Elless, Steve Thomas (DOE-BETO), Matthew Langholtz, Maggie Davis (ORNL)

March 7, 2017

2 BT16 Sensitivity scenarios

Today’s presentation

• Why are energy crops important to the bioeconomy?• What are price and land impacts of energy crop

scenarios to traditional crops?

• What is sensitivity of energy crops to alternate assumptions of yield and land elegibility?

Source: http://www.nexsteppe.com/a-new-sorghum-for-biofuels/

Biomass sorghumMiscanthus x giganteus

Source: http://articles.extension.org/pages/26625/miscanthus-miscanthus-x-giganteus-for-biofuel-production

3 BT16 Sensitivity scenarios

Why energy crops?• Energy crops fill supply gap to a

billion ton annual supply• Competitive across crop and

pastureland, even in Corn Belt

• Measured market impacts

Base-case scenario, $60/dt 2022

Base-case scenario, $60/dt 2040

4 BT16 Sensitivity scenarios

Relation of BT16 results to historical and future commodity prices• Baseline scenario as

reference without shocks• Corn futures March 1,

2017= $3.72/bu,– 1-year range: $3.25-4.50/bu– 3-year range $3.10-7.20/bu

• BT16 results– Baseline, 2016: $3.50, 2040:

$3.77– Basecase, 2040: $4.03– Crossprice elasticities of

biomass to commodity crops all <1

BT16 Sensitivity scenarios

Corn weighted average seasonal prices2001-current

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$8.00

2001

/02

2002

/03

2003

/04

2004

/05

2005

/06

2006

/07

2007

/08

2008

/09

2009

/10

2010

/11

2011

/12

2012

/13

2013

/14

2014

/15

2015

/16

2016

/17

Actual prices

Simulated price, 2009 USDA Baseline

5 BT16 Sensitivity scenarios

Land allocation of energy crops, base case

• Differential response of across energy crops to $60

• Energy crops competitive across ag land

• Switchgrass represents largest pastureland holder, miscanthuscropland holder

• Represents only 8.3% of pastureland and cropland

26%

39%

20%

9%6% 0.1%

Cropland

54%

26%

9%

7%4% 0.1%

Pastureland

Switchgrass

Miscanthus

Poplar and Pine

Willow and EucalyptusBiomass Sorghum

Energycane

6 BT16 Sensitivity scenarios

Stakeholder feedback received in BT16 rollout

• Miscanthus yield growth and supply too optimistic– Miscanthus x giganteus (MxG) sterile triploid– Future improvements will require new varieties

• Sorghum supply too pessimistic– New varieties already exist– “Plug-and-play” annual crop

• Mix of feedstocks in BT16 can change with R&D improvements

7 BT16 Sensitivity scenarios

BT16 Agricultural Results, 2040

All crops increase in supply from base to high yield;MxG benefits disproportionately relative to other energy

crops from yield growth assumptions

3%/year1%/year

$60/dry ton

0

50

100

150

200

250

300

350

400

BT16 BT16

411.1 million tons 736.1 million tons

Base Case High Yield

Mill

ion

dry

tons

/yea

r

SwitchgrassMiscanthusPoplars and PineWillows and EucalyptusBiomass SorghumEnergy cane

8 BT16 Sensitivity scenarios

Alternate scenarios descriptions

Scenario Description

Base case BT16 scenario, MxG and biomass sorghum at 1%, biomass sorghum on 1 in 4 year rotation

Miscanthus focus, base case Miscanthus at 0% annual yield gain

Sorghum focus, base case Biomass sorghum at 1 in 2 year rotation and on pastureland

9 BT16 Sensitivity scenarios

Alternate scenarios descriptions

Scenario Description

Base case BT16 scenario, MxG and biomass sorghum at 1%, biomass sorghum on 1 in 4 year rotation

Miscanthus focus, base case Miscanthus at 0% annual yield gain

Sorghum focus, base case Biomass sorghum at 1 in 2 year rotation and on pastureland

High Yield BT16 scenario, MxG at 3% per year and biomass sorghum at 1.75% per year, biomass sorghum on 1 in 4 year rotation

Miscanthus focus, high yield MxG at 1% annual yield gain

Sorghum focus, high yield Biomass sorghum at 3% per year and 1 in 2 year rotation and sorghum on pastureland

10 BT16 Sensitivity scenarios

Basecase and high yield results, $60/dt, 2040

0

50

100

150

200

250

300

350

400

BT16 Miscanthus focus

Sorghum focus BT16 Miscanthus focus

Sorghum focus

411.1 mil dt 359.8 mil dt 468.3 mil dt 736.1 mil dt 600.4 mil dt 788.3 mil dt

Base Case High Yield

Mill

ion

dry

tons

/yea

r

Switchgrass

Miscanthus

Poplars and Pine

Willows and Eucalyptus

Biomass Sorghum

Energy cane

BT16 Miscanthus focus

Sorghum focus

736.1 mil dt 600.4 mil dt 788.3 mil dt

High Yield

11 BT16 Sensitivity scenarios

Basecase and high yield results, $60/dt, 2040

0

50

100

150

200

250

300

350

400

BT16 Miscanthus focus

Sorghum focus BT16 Miscanthus focus

Sorghum focus

411.1 mil dt 359.8 mil dt 468.3 mil dt 736.1 mil dt 600.4 mil dt 788.3 mil dt

Base Case High Yield

Mill

ion

dry

tons

/yea

r

Switchgrass

Miscanthus

Poplars and Pine

Willows and Eucalyptus

Biomass Sorghum

Energy cane

BT16 Miscanthus focus

Sorghum focus

736.1 mil dt 600.4 mil dt 788.3 mil dt

High Yield

focus

411.1 mil dt 359.8 mil dt 468.3 mil dt

Base Case

736.1 mil dt

12 BT16 Sensitivity scenarios

Basecase and high yield results, $60/dt, 2040

0

50

100

150

200

250

300

350

400

BT16 Miscanthus focus

Sorghum focus BT16 Miscanthus focus

Sorghum focus

411.1 mil dt 359.8 mil dt 468.3 mil dt 736.1 mil dt 600.4 mil dt 788.3 mil dt

Base Case High Yield

Mill

ion

dry

tons

/yea

r

Switchgrass

Miscanthus

Poplars and Pine

Willows and Eucalyptus

Biomass Sorghum

Energy cane

and high yield results, $60/and high yield results, $60/

BT16 Miscanthus focus

Sorghum focus

411.1 mil dt 359.8 mil dt 468.3 mil dt

Base Case

13 BT16 Sensitivity scenarios

Basecase and high yield results, $60/dt, 2040

0

50

100

150

200

250

300

350

400

BT16 Miscanthus focus

Sorghum focus BT16 Miscanthus focus

Sorghum focus

411.1 mil dt 359.8 mil dt 468.3 mil dt 736.1 mil dt 600.4 mil dt 788.3 mil dt

Base Case High Yield

Mill

ion

dry

tons

/yea

r

Switchgrass

Miscanthus

Poplars and Pine

Willows and Eucalyptus

Biomass Sorghum

Energy cane

focus

736.1 mil dt 600.4 mil dt 788.3 mil dt

High Yield

and high yield results, $60/and high yield results, $60/

BT16 Miscanthus focus

Sorghum focus

411.1 mil dt 359.8 mil dt 468.3 mil dt

Base Case

14 BT16 Sensitivity scenarios

Conclusions

• Market effects of energy crops are measured in BT16 and fall within recent historical variability

• Land allocation of energy crops is diverse

• Small changes in feedstock growth parameters and land eligibility result in significant changes in feedstock mix

• BT16 scenarios capture reference case, but may not be “one size fits all” resource assessment

15 BT16 Sensitivity scenarios

Thank you for your attention!

Laurence EatonOak Ridge National Laboratory

eatonlm@ornl.gov

16 BT16 Sensitivity scenarios

Additional Slides

21 BT16 Sensitivity scenarios

Land allocation of energy crops, base case

• Differential response of across energy crops to $60

• Energy crops competitive across ag land

• Switchgrass represents largest pastureland holder, miscanthuscropland holder

• Represents only 8.3% of pastureland and cropland

Note: figure doesn’t include crop rotations rather transitions of county acreage allocated to crops in beginning and ending year

National acreage transitions 2017-2040, Base case

23 BT16 Sensitivity scenarios

Supply comparison to BT16, $60, 2040

Comparison to Base case

Comparison to High yield

Miscanthusfocus

Sorghumfocus

Miscanthusfocus

Sorghumfocus

Stover 0% 0% 2% 2% Straw 0% 0% 4% 4% Switchgrass 27% -28% 56% -6% Miscanthus -79% -23% -208% -215% Poplars 26% -4% 99% 80% Willows 46% -2% 157% 140% Biomass Sorghum 45% 740% 106% 1156% Energy cane 0% 0% 133% -367%

Reformat table to be same as slide 6 color scheme; highlight notable results

here. How does this support