Biomass crops such as switchgrass, miscanthus, and shrub willow are not only intended for bioenergy production but for other non-energy market activities as well. They can be processed into a variety of products useful to many industries along a lengthy supply chain.
In many areas of the United States, the commercialization of biomass crops for energy markets is still in its early stages. Many uncertainties exist for sellers and buyers in the marketplace. Although large-scale biomass production has been widely promoted and an increasing number of producers are growing dedicated bioenergy crops, commercial viability is still not guaranteed.
Energy production remains the primary market for purpose-grown biomass energy crops. But there are a number of other emerging market opportunities, especially as manufacturers perfect their processes for creating a wider variety of biomass-based products.
Kusumal Ruamsook and Evelyn Thomchick at the Smeal College of Business at Penn State University have mapped out potential markets for biomass, with particular attention to purpose-grown energy crops. They explore energy markets and alternative end uses, and identify who will likely participate as producers and buyers of the crops and other biomass-based products. Their in-depth catalogue of market opportunities is a useful starting point for energy-crop growers and entrepreneurs at various points along the supply chain to explore potential commercial venues. More broadly, knowledge and utilization of the full array of available markets could help promote the development and commercialization of these crops.
Ruamsook and Thomchick distinguish four interconnected market tiers in the supply chain for purpose-grown biomass crops like willow, switchgrass, and miscanthus. These tiers range from markets for raw biomass materials, to intermediate biomass-based materials, to more processed and refined biomass-based products. In their paper, Ruamsook and Thomchick describe the markets, products, sellers, buyers, and challenges.
The research also includes a comprehensive appendix of biomass power plants now operating in the United States, their capacities, and the types of feedstocks they use.
Ruamsook and Thomchick detail the supply chain for primary products that can be made from the biopolymers—celluloses, hemicelluloses, and lignin—that compose lignocellulosic biomass. These primary, or “juncture,” products are bio-oil, producer gas, synthetic gas, and glucose. Buyers who use them for energy are one segment of the market, but there are many other industrial uses for these products. In fact, many processed products can be manufactured from them.
The authors discuss the markets and their products and uses in four tiers of increasing processing:
Markets for raw biomass materials. Buyers include the growing number of power plants, electrical utilities, and cogeneration plants that burn biomass, as well as biorefineries that turn the biomass into energy products. Local institutions such as hospitals or schools that heat with wood-fired systems also buy directly from producers, and there are other non-energy uses. Raw biomass materials (typically ground or chipped) can find market opportunities in the following industries:
Products traded in tier-2 markets are refined biomass (e.g., cellulosic ethanol and advanced biofuels, power for fuel cells) and intermediate coproducts (e.g., biochar, synthetic gas, lignin). Buyers of these products might include food producers and the chemical and pharmaceutical industries. Other potential buyers might be found in markets such as:
Products traded in tier-3 markets are intermediate biomass-derived products such as acids and alcohols fermented from cellulose, and aromatic chemicals converted from lignin. Buyers of these products use them as inputs for their operations. These buyers operate in markets such as::
Products traded in tier-4 markets are bio-based end products such as plastics and textile fibers. These products are provided by energy suppliers, and several other manufacturers of tier-3 products. Industrial buyers of these products span a broad spectrum of manufacturing industries, many of which are consumer-driven markets, notably packaging (e.g., packaging films, and bags and food service disposables). In fact, packaging markets are becoming more important to the bioplastic industry as compostables grow in popularity. Other potential buyers include recyclable barrier coating manufacturers, and apparel knitting mills and manufacturers of rubber products such as rubber bands, auto parts, and plastic products.
These tiers include just a few of the products that can be produced from raw biomass and the markets in which these products could find business opportunities.
Obstacles to biomass crops in the energy marketplace have fed a growing interest in non-energy markets that offer other avenues to generate income and develop a sustainable industry. As we can see from this research, market opportunities for biomass are vast and promising.
Although the multi-tier market opportunities are discussed linearly in this research, the tiers are interrelated and relationships between them can be complex. Manufacturers might be both buyers and sellers of biomass products in different market tiers. For this reason, a generic framework developed in this research that details potential markets and participants along the supply chain provides a common language for those in the distributed and rapidly evolving bioenergy industry. It is also a useful reference for biomass producers and for companies buying or selling in this expanding marketplace.
Based on the White Paper by:
The Northeast Woody/Warm-season Biomass Consortium - NEWBio is supported by Agriculture and Food Research Initiative Competitive Grant no. 2012-68005-19703 from the USDA National Institute of Food and Agriculture.
Led by Penn State University, NEWBio includes partners from Cornell University, SUNY College of Environmental Science and Forestry, West Virginia University, Delaware State University, Ohio State University, Rutgers University, USDA’s Eastern Regional Research Center, and DOE’s Oak Ridge National Laboratory and Idaho National Laboratory.