ENVIRONMENTAL AND ECONOMIC RESEARCH AND DEVELOPMENT PROGRAM
Wisconsin Farm Biomass
Production and the Emerging
Carbon Economy
Executive Summary
May 2012
PREPARED BY:
CAROL BARFORD;
MITCH MYHRE;
KEITH CRONIN;
TRACEY HOLLOWAY;
GREG NEMET;
CENTER FOR SUSTAINABILITY AND THE GLOBAL ENVIRONMENT (SAGE),
THE NELSON INSTITUTE FOR ENVIRONMENTAL STUDIES,
UNIVERSITY OF WISCONSIN-MADISON
This report was funded through the Environmental and Economic Research and Development Program of Wisconsin’s Focus on Energy.
EXECUTIVE SUMMARY This report describes factors governing the feasibility of switchgrass production for bioenergy in the State of Wisconsin, from the farm perspective. Here we assume that a minimal condition of feasibility is that the farmer profits from the combination of switchgrass production and (1) sales or (2) bioenergy use on-­‐farm. To determine a range of possible net incomes from bioenergy we used three scenarios: switchgrass production and use on-­‐farm in a 50 kW combined heat and power (CHP) unit; switchgrass production and sale for use in an 8.8 MW CHP unit, such as might be found in a school, hospital or district heating system; and switchgrass production and sale to a 50 MW power plant that produces electricity only. The outcome of each scenario was reported by county as annual net income from bioenergy, and as the net present value (NPV) of the bioenergy enterprise for a twenty-­‐year term. Switchgrass yield varied from 3.5 to 8.7 Mg ha-­‐1 across the state, with highest values in the southern counties due to greater heat accumulation during the growing season. Temporal yield variability, simulated over a 57-­‐year record of heat and precipitation data, was significant and quite consistent across counties, with 90% confidence intervals of ~ 6 Mg ha-­‐1. Soil effects on switchgrass yield introduced further spatial variation, with increased yields (and thus decreased production cost) in southwestern counties. Greater farm size also decreased production costs. State median production cost was $74.21 Mg-­‐1, or $4.28 MMBtu-­‐1. Income from switchgrass use depended on a few major factors. First, income from offsetting fossil fuel use with switchgrass depended on the cost of fossil fuel. Offsetting propane ($15.38 MMBtu-­‐1), which is commonly used in rural Wisconsin, was more advantageous than offsetting natural gas ($9.15 MMBtu-­‐1), or coal ($2.06 MMBtu-­‐1). Second, use of heat produced by the CHP units was necessary to achieve feasibility, with at least 25% of heat use required in the state median farm case, when offsetting propane. Offsetting fossil fuel-­‐generated electricity alone was not feasible due to its low cost, especially when generated from coal. Analysis of income and cost together as NPV gave a more complete picture of feasibility: the 8.8 MW scenario had positive NPV in 20 of 72 counties (at a 6.5% discount rate). NPV was quite sensitive to discount rate due to high costs in the first year of switchgrass production. Feasibility of switchgrass production for bioenergy -­‐ and other societal goals -­‐ may be enhanced by compensating farmers for the environmental benefits of perennial grass production. Carbon sequestration is one of those benefits. We analyzed the CO2 (i.e. carbon) balance of switchgrass production in Wisconsin, including net CO2 emissions due to plant growth, soil erosion, diesel fuel combustion and other materials use. We also calculated carbon balances of other common Wisconsin crops and crop rotations. Carbon storage by switchgrass production was similar to that of continuous corn grain: 1001.31 vs. 1328.84 kg C ha-­‐1, respectively, both largely due to high plant productivity relative to the other crops analyzed (soybeans, oats, alfalfa). Corn silage stored twice as much carbon as corn grain and switchgrass, due to a carbon credit for using manure on-­‐farm. This result highlights the sensitivity of carbon accounting to assumptions and life cycle analysis methods. In the event that a market for farm carbon credits re-­‐emerges, careful documentation will be needed to show a real and lasting improvement in farm carbon storage from producing switchgrass. Switchgrass production for heat and power on Wisconsin farms is feasible in many but not all instances. In the case of on-­‐farm biomass use, the best economic outcome requires high yield and a relatively large amount of tillable but uncultivated land; these conditions occur mostly in the central and southern counties. For the bioenergy systems analyzed in this project, economic feasibility also depends on a market for the electricity generated, and significant demand for bioheat, such as a greenhouse, large heated barn, or higher than average grain-­‐drying needs. On the 1 other hand, total Wisconsin residential propane use is currently 23.1 million MMBtu, which is approximately equal to the total heat content of all the potential switchgrass cultivation on Wisconsin CRP land, at similar conversion efficiency. This parity suggests that a sufficient market for switchgrass could develop, depending on the particular scale, efficiency and deployment of bioenergy systems. The general trend toward feasibility would strengthen as fossil fuel prices increase. 2 ACKNOWLEDGEMENTS The investigators would like to thank Bob Battaglia of the Wisconsin Agricultural Statistics Service for assistance and access to USDA Census of Agriculture data. We also thank Mike Casler of the U.S. Dairy Forage Research Center for sharing switchgrass trials data and advising on their interpretation. Mitch Myhre’s and Keith Cronin’s M.S. theses were based on this project, and we thank their committee members for their expertise and contributions: University of Wisconsin-­‐Madison Professors Chris Kucharik, Pete Nowak and Steve Ventura. The investigators would also like to thank Mary Sternitzky for her assistance in preparation of this report. 3 CONTENTS List of Figures……………………………………………………………………………………………………......…5 List of Tables………………………………………………………………………………………………………....…6 List of Acronyms and Abbreviations……………………………………………………………………….…7 1. Introduction…………………………………………………………………………………………………………8 1.1 Background………………………………………………………………………………………………………..8 1.2 Research objectives…………………………………………………………………………………………….8 1.3 Approach……………………………………………………………………………………………………......….9 1.4 Report Outline………………………………………………………………………………………….….…….10 2. Literature Review………………………………………………………………………………………………..10 2.1 Economic feasibility……………………………………………………………………………........………..10 2.2 Farm carbon balances………………………………………………………………………………………..12 3. Switchgrass Yield, Production and Economic Feasibility………………………………………..13 3.1 Methods…………………………………………………………………………………………………………….13 3.2 Results………………………………………………………………………………………………………..……. 16 3.3 Discussion……………………………………………………………………………………..…………………..23 4. Net CO2 Emissions of Switchgrass and Conventional Crops…………...……………………….25 4.1 Methods………………………………………………………………………………………………………...…..25 4.2 Results……………………………………………………………………………………………………..………..30 4.3 Discussion………………………………………………………………………………..………………………..39 5. Conclusions…………………………………………………………………………..………………………….….48 6. References………………………………………………………………………………………………………..….50 Appendix A……………………………………………………………………………………………..……………….57 Appendix B……………………………………………………………………………………………………..……….72 4 List of Figures Figure 1.1 Generalized scheme of Monte Carlo simulation. Figure 3.1 Yield of switchgrass. Figure 3.2 Switchgrass production by county. Figure 3.3 County median switchgrass production costs. Figure 3.4 Relationships between 50 kW system heat use, propane price, and farm income effect. Figure 3.5 NPV of producing and using switchgrass for bioheat and power (50 kW system). Figure 3.6 Relationships between 8.8 MW system heat use, natural gas price, and farm income effect. Figure 3.7 NPV of producing and selling switchgrass for bioheat and power (8.8 MW system). Figure 4.1 Carbon emissions from inputs. Figure 4.2 Carbon emissions from inputs and soil erosion. Figure 4.3 Net carbon emissions for conventional crops and switchgrass. Figure 4.4 Net carbon balance for conventional crops in Wisconsin counties. Figure 4.5 Net carbon balance for switchgrass in Wisconsin counties. Figure 4.6 Average annual net carbon balance for crop rotations in Wisconsin counties. 5 List of Tables Table 3.1 Overview of bioenergy net income scheme Table 3.2 Potential bioenergy production from switchgrass on Wisconsin CRP land Table 4.1 Crops and rotations Table 4.2 Net biome production 6 List of Acronyms and Abbreviations BCAP CDP Ch CHP CO2 CRP CSP CV GDD GHG GREET LCA NASS NBP NEP NPP NPV NRCS PDF Rh RUSLE SOC SSURGO USDA WHIP Bioenergy Crop Assistance Program Center for Dairy Profitability harvested carbon combined heat and power carbon dioxide Conservation Reserve Program Conservation Stewardship Program coefficient of variation growing degree days greenhouse gas Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation life cycle analysis National Agricultural Statistics Service net biome production net ecosystem production net primary production net present value Natural Resources Conservation Service probability density function heterotrophic respiration Revised Universal Soil Loss Equation soil organic carbon Soil Survey Geographic Database United States Department of Agriculture Wildlife Habitat Incentives Program
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