| Summary: | The competitiveness and operational viability of a wood-based lignocellulosic ethanol biorefinery located in Canada were assessed using techno-economic and logistical models, combined with fuel and feedstock market data analyses. Scenario analyses included the ability to compete for forest feedstocks with alternative bioenergy options; for market share with ethanol producers using alternative feedstocks (corn, sugarcane, Brazilian eucalyptus); and for financing, given the market risks and alternative investor options. The model variables used to identify the most competitive lignocellulosic ethanol production conditions included feedstock type and properties, feedstock logistics system design, facility site, facility scale, capital cost, pretreatment technology, operating tactics, co-products, ethanol and co-product revenues, enzymes and other process inputs, ethanol and co-product yields, and taxes and renewable energy support policies. It was determined that a wood-based lignocellulosic ethanol facility in Canada is technically viable, but will find sustainable profitability difficult at current energy prices and without a change in the historical volatility of those prices. Using scenario analyses, it was determined that the minimum ethanol selling price (MESP) of lignocellulosic ethanol produced from Canadian forest biomass is $0.80-1.10 L⁻¹, with most scenarios in the $0.90-0.95 L⁻¹ range. This compares with recent corn and sugarcane ethanol MESP of $0.30-0.40 L⁻¹, highlighting the difficulty of competing with these conventional biofuels. In addition, other bioenergy products, such as wood pellets and combined heat and power, will compete with lignocellulosic ethanol facilities for feedstock but offer more stable markets. Largely due to the lack of correlation between transportation fuel markets and forest feedstock costs, the gross processing margin of lignocellulosic ethanol production was shown to be decidedly volatile. This volatility results in an anticipated cost of capital (>11%) that exceeds other fuel production facilities. Although supplying large (e.g., 800 ML yr⁻¹) lignocellulosic ethanol facilities that maximize economies-of-scale (and minimize cost per unit) with feedstock is logistically possible, high feedstock costs, exceeding $100 bdt⁻¹, are projected to put Canadian producers at a disadvantage relative to tropical country producers. Significant production cost reductions must occur before lignocellulosic ethanol can compete for market share with gasoline and conventional ethanol.
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