Ashan Shooshtarian1, Jay Anderson1, Glen Armstrong2, and Marty Luckert1.
1Department of Resource Economics and Environmental Sociology, University of Alberta, Edmonton, Alberta, Canada.
2Department of Renewable Resources, University of Alberta, Edmonton,, Alberta, Canada.
To be financially viable, cellulosic bioethanol facilities will require sustainable quantities of low-cost feedstock. Trees are a potential source of such feedstock, especially in a country like Canada, where so much of the land area is forested. In this study, we analyze the Canadian Wood Fibre Centre’s data on growth rates and costs for producing hybrid poplar in the Peace River region of northern Alberta and British Columbia – an area where hybrid poplar may be able to financially compete with agricultural land uses. Using these data, our models estimate the financial returns for two hybrid poplar production systems: (i) a single-stem production system that involves the planting and harvesting of individual trees according to optimal economic rotations of 22 to 26 years; and (ii) a coppice (multi-stem) production system that involves multiple harvests of new shoots that sprout from a stump following harvest every 3 to 4 years.
Our results suggest that the coppice system is financially inferior to the single-stem system, largely due to high establishment costs. But even the single-stem production system does not appear to be financially feasible given the current environment of high land prices and low biomass prices. However, there is a possibility that biomass prices could increase into the range where hybrid poplar production becomes feasible. Ethanol prices of $0.61 per liter and subsidies of $0.14 per liter could potentially support a feedstock price as high as $148 per oven dry tonne, compared to the current level of approximately $50 per oven dry tonne. This increased biomass price would generate an internal rate of return of approximately 4.6% for poplar producers using a single-stem production system.