Economics of Biorenewable Resources

This chapter focuses on the problem of manufacturing biobased products that are cost-competitive with products already produced from petroleum or other fossil resources. The goal of cost estimating is to obtain an estimate that is within +/− 30% of the actual cost if an enterprise were pursued. Such estimates are relatively easy to develop. Two kinds of costs are considered in this chapter: the cost of producing biorenewable resource feedstocks and the cost of manufacturing biobased products from these feedstocks. The principle of economies of scale predicts that capital costs escalate proportionally slower than the size of the facility; hence, the unit cost of a product generally decreases as the facility becomes larger. Capital cost, operating cost, capital charge, and product cost calculations provide a useful reference point for comparing the economics of different facilities employing biorenewable pathways.