Strategic Design of Bioethanol Supply Chains Including Commodity Market Dynamics

The blending between bio-based and conventional fuels is mandatory according to European Directives. Bioethanol proved to have beneficial effects for energy security issues in some countries of the world (e.g., U.S.A., Brazil) but it is still not widespread in Italy. This paper analyzes the establishment of a corn-based bioethanol supply chain in northern Italy through a Mixed Integer Linear Programming modeling framework, which allows evaluating its financial performance by optimizing the spatially explicit layout in terms of production technologies, biomass production sites, and transport network.

The paper relaxes the too stiff and limiting assumption of keeping constant, for long-term horizons, the price/cost of raw materials, products, and utilities. The economic assessment is based on the forecasted price dynamics of the commodities related to ethanol production. Specifically, three price forecast models are introduced and tuned according to the Italian context. The supply chain robustness to changes respect to prices evolution is assessed to mitigate the risk for investors. Finally, different strategies to maintain operative the supply chain are discussed, and their impact on final customers and on Italian taxpayers is detailed.