Appalachia SAF from Hardwood : 545_50

Biorefinery Size 545,000 tons per year and distance from a logging road is less than 1 mile​.

Three biorefineries could be located in the Central Appalachia area

Biorefinery Information

• Biorefinery capacity is measured by feedstock input
• In this analysis, biorefinery input was 545,000 dry tons per year
• Assuming a Gasification Fischer Tropsch biorefinery with expected production in terms of  
  • Sustainable Aviation Fuel – 40%
  • Diesel – 40%
  • Naphtha – 20%
• 1,090,000 wet tons dried 10% moisture content
• Working 330 days/year and 10 hours/day, 16-17 trucks must be emptied every hour or 1 truck every 4 minutes if they are hauling 20 tons of chips. If they have a longer trailer and can haul 22.5 tons of chips, then they need to unload 14 to 15 trucks per hour. 

The biorefineries

Each with a capacity of 545,000 dry short tons or 495,000 dry MT per year

• Three biorefineries were located.
  • Surry, NC
  • McDowell, NC
  • Morgan, Ky
• Each producing
  • SAF – 12.6 million gallons
  • Diesel – 10.7 million gallons
  • Naphtha – 6.2 million gallons
• Gross Revenues
  • Fuel – $425 million
  • RINS — $52 million
    • Assumes RIN price of $1.22 and an EV factor of 1.7 for SAF and Diesel.
• Breakeven Plant Gate Fuel Price when assuming RINs and a 12.2% on investment
  • SAF — $4.90/gallon
  • Diesel – $5.05/gallon
  • Naphtha – $4.26/gallon

Biorefinery Operations

Annual Economic Impact to the Central Appalachian Region if the three Biorefineries are established

• With an investment of $1.7 billion, $1.2 billion is spent in the region
• This results $2.1 billion in TIO resulting in a multiplier of 1.7. For every million dollars spent, an additional $0.7 million is generated in the regional economy.
• The investment transactions result in an one-time increase in Gross Regional Product of $1 billion.
• Leakage does occur as $500 million of the investment leaves the region based on the regions local purchase coefficients.
• Employment increases also.
• Nearly 14,000 jobs are created during the construction period of these biorefineries.
• Resulting in $700 million in labor income when incorporating the multiplier effect.

Total industry output is defined as the annual dollar value of goods and services that an industry produces. Employment represents total wage and salary employees, as well as self-employed jobs in a region, for the both full- and part-time workers. Labor income consist of employee compensation and proprietor income. Total value added is defined as all income to workers paid by employers (employee compensation); self-employed income (proprietor income); interests, rents, royalties, dividends, and profit payments; and excise and sales taxes paid by individuals to businesses.

Final Comments

• Using the  ASCENT GFT to SAF TEA and BioFLAME to simulate the location and transportation of feedstock, it is determined in this static modelling approach that the biorefinery could sell their SAF at $$6.37 to $6.68 per gallon with a rate of return of 12.2% on their investment.  If the wood qualified for RINs, the price would be reduced to $4.59 to $4.78 per gallon assuming D3 RIN price of $1.22 per gallon and an EV factor of 1.7. 
• The economic analysis demonstrates, using GFT, to be feasible, the airlines will need to purchase the fuel at a price higher than current levels of aviation fuel or additional subsidies will be required in order to incentivize production.
• Regional impacts do occur.  It is estimated that the increase in supply chain expenditures would lead to an annual increase of $600 million through direct expenditures and $1.06 billion after the multiplier affect is occurs. 
• In addition, the investment in three biorefineries of $1.7 billion leads to a regional impact of $2.06 billion.
• The analysis assumes that no additional investment will be required in the logging industry or the transportation industry.