Effect of Production Parameters On the Economic Feasibility of a Biofuel Enterprise

The optimal allocation of resources and efforts is needed to fulfill the latest Renewable Fuel Standard mandate. In order to warranty the success of the nascent cellulose-based biofuel industry, it is crucial to better understand the effects that production parameters have on the economic feasibility of a biofuel enterprise. The main goal of this study is to estimate the impact that the different feedstock production and biofuel conversion parameters have on the probability of economic success. To this aim, an original stochastic financial model is developed to analyze and identify the most economically relevant components of the biofuel production path. Estimation of the model was carried out using Monte Carlo simulation techniques along with parametric maximum likelihood estimation procedures. Results indicate that operational efficiency strategies should concentrate on improving feedstock yields and extending the feedstock growing season