EFFECTS OF SUPPLY HETEROGENEITY IN DECENTRALIZED AGRICULTURAL WASTE MARKETS FOR THE PRODUCTION OF ADVANCED BIOFUELS: SIMULATION IN AN AGENT-BASED MODEL

  • Author
  • Stéphani Cetimia Mariotti Ruiz
  • Co-authors
  • José Maria Ferreira Jardim da Silveira , Marcelo Marques de Magalhães
  • Abstract
  •  

    ?    The use of agricultural residues as a source of biomass for ethanol production contributes positively to the development of the bioeconomy, in several aspects: (i) it improves productivity in ethanol production without increasing the crop area, avoiding greater pressure on food production by land use change; (ii) favor sugarcane production, optimizing the amount of straw remaining in the field; (iii) reduces the seasonality of ethanol supply, contributing to a reduction in price variability and; (iv) contributes to the mitigation of GHG emissions both by improving biofuel productivity and by replacing fossil fuels. The objective of this paper is to analyze the results of the formation of a decentralized biomass market in the presence of heterogeneous agents and stochastic shocks at different points in the production chain, with distinct levels of supplier land concentration. Market conditions are simulated using an agent-based model. On the demand side, there is a biorefinery that takes ethanol prices and purchases biomass on the market at an internal price. On the other hand, the suppliers compare the price offered by the biorefinery with their own reserve price. Suppliers are distributed in different sizes, forming a heterogeneous offer depending on the concentration of land. Land distribution is simulated using the Gini index of sugarcane producers according to different Brazilian regions. Production costs are referenced in data from the National Supply Company (CONAB). The results show that the biorefinery's dependence on suppliers is greater under higher levels of land concentration, leading to greater exposure to the risk of biomass supply, therefore greater risk to the consolidation of the market itself. Parallel to this process, there is a tendency for biomass prices to rise, putting pressure on the biorefinery's profit margin. The risk present in the market is caused by the greater variation in ethanol prices, and the possibility of greater bargaining power of suppliers, resulting in increased dependence of the biorefinery on suppliers. On the other hand, a less concentrated market favors a situation that tends to a Nash equilibrium, in which more suppliers have positive returns and the biorefinery can offer lower prices for biomass. Under these conditions, stability develops and suppliers do not wish to leave, promoting long-term market sustainability. The development of an agricultural waste supply chain will contribute to: (i) increasing the availability of biofuels; (ii) increased income for agricultural producers; (iii) reducing pressure on food production by land use change; (iv) reducing the negative effects of climate change and; (v) a virtuous cycle of adoption of innovations, through the reduction of transaction costs and the feasibility of raw material commercialization.

     

  • Keywords
  • Agent based model, designer market, transaction costs, bioeconomy, residual supply chain
  • Modality
  • Comunicação oral
  • Subject Area
  • Disruptive innovation and energy transition
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  • Oil and Gas Markets and Investments
  • Energy Security and Geopolitics
  • Electricity markets
  • Energy and finance
  • Energy demand
  • Country studies
  • Energy and society
  • Energy Policy and Regulation
  • Climate Change: mitigation and adaptation
  • Disruptive innovation and energy transition
  • Energy and macroeconomics
  • Local governments
  • System integration
  • Energy and transport
  • Regional energy integration
  • LNG Markets in Latam
  • Social Dimensions of Energy Transition
  • Variable Renewable Energies
  • Distributed Energy Resources
  • System Integration, Energy Networks and Resilience
  • Energy Investment and Finance
  • Energy Market Design
  • Technology, Innovation and Policies
  • Low Carbon Hydrogen
  • Bioenergy and Biofuels
  • Energy and Development
  • New Supply Chains
  • Future of Utilities
  • Energy Efficiency
  • Energy Modeling
  • Energy and Macroeconomics
  • Energy Subsidies
  • Transportation and (e-) mobility
  • Nuclear Energy in Latam