UTIA Family, please refer utk.edu/coronavirus for the latest updates and student information. For UTIA-specific resources, please visit utia.tennessee.edu/coronavirus .

Appalachia SAF from Hardwood : 725_75

Biorefinery Size 725,000 tons per year and distance from a logging road is less than 3 miles​.

Four biorefineries could be located in the Central Appalachia area

  • The biorefineries are located at
    • Surry, NC
    • Buncombe, NC
    • Morgan, KY
    • Russell, VA
  • Total feedstock cost delivered to biorefineries — $219.5 million with an average delivered cost of $76/ton
  • Average per ton-mile distance from field to biorefinery facility is 82.2 miles each ton of hardwood travels.
Map showing locations for five biorefineries in the Central Appalachia area. Locations of biorefineries are Surry, North Carolina; Buncombe, North Carolina; Morgan, Kentucky and Greene, TN.
Legend for map of locations of four biorefineries located in Central Appalachia area.

Biorefinery Cost of Feedstock

CountyStateQuantity Forest residuesTotal CostTransportationAverage DistanceAverage Feedstock Cost
Dry short tons$/yearton milesmiles/ton$/ton
SurryNC725,189$45,362,87639,019,64453.8$62.55
BuncombeNC725,044$52,069,77652,225,97572.0$71.82
MorganKY725,239$52,319,79445,578,54362.8$72.14
RussellVA725,127$69,707,042101,627,746140.2$96.13
Total/Average2,900,599219,459,489238,451,90882.2$75.66

BEA Regions

BEA Regions

Quantity of Forest Residues Supplied to the Biorefineries by BEA region

BEASurryBuncombeMorganRussellTotal
Tons
1067,751204,750466272,967
291,129182,890252,897436,917
3145,760127,05327,414200,227
3382,51982,519
4033,4267,33140,758
66413,26621,365434,630
68161,309161,309
818,269133,77323,14257,059222,243
8897,780189,701287,481
94403,262103,245506,507
11637910,55110,929
138189,01355,097244,111
Total725,189725,044725,239725,1272,900,599

Cost of Delivered Forest Residues Supplied to the Biorefineries by BEA region

BEASurryBuncombeMorganRussellTotal
Dollars
10$4,561,782$11,914,533$33,235$16,509,550
29$80,211$13,146,371$24,385,857$37,612,439
31$3,183,115$10,431,077$2,940,107$16,554,299
33$6,102,353$6,102,353
40$2,353,320$834,607$3,187,927
66$24,531,171$2,320,455$26,851,626
68$10,699,726$10,699,726
81$591,391$10,873,384$1,947,072$3,892,950$17,304,798
88$8,118,092$19,056,970$27,175,062
94$28,770,678$10,358,965$39,129,643
116$32,964$1,084,759$1,117,723
138$12,415,205$4,799,138$17,214,343
Total$45,362,876$52,069,776$52,319,794$69,707,042$219,459,489

Cost to Transport forest residues to biorefinery

BEASurryBuncombeMorganRussellTotal
Dollars
10$1,608,365$2,532,287$7,828$4,148,481
29$38,676$3,336,390$10,881,500$14,256,566
31$908,918$3,637,969$1,492,217$6,039,103
33$1,780,823$1,780,823
40$981,983$424,945$1,406,928
66$5,265,271$1,187,208$6,452,479
68$3,099,417$3,099,417
81$231,199$4,043,645$792,727$972,538$6,040,108
88$2,857,933$8,925,417$11,783,350
94$7,237,426$4,713,193$11,950,619
116$18,801$629,542$648,343
138$4,043,660$2,270,214$6,313,875
Total$12,096,090$16,190,052$14,129,348$31,504,601$73,920,091

Average miles a ton of feedstock travelled

BEASurryBuncombeMorganRussellTotal
Ton-miles
10774005449
29110059139105
316492017697
330070070
400095187111
66410017948
680620062
8190981105588
880940152132
94005814776
11601600192191
138690013383
Total54726314082


Biorefinery Information

  • Biorefinery capacity is measured by feedstock input
  • In this analysis, biorefinery input was 725,000 dry tons per year
  • Assuming a Gasification Fischer Tropsch biorefinery with expected production in terms of  
    • Sustainable Aviation Fuel – 40%
    • Diesel – 40%
    • Naphtha – 20%
  • 2,900,000 wet tons dried 10% moisture content
  • Working 330 days/year and 10 hours/day, 20-21 trucks must be emptied every hour or 1 truck every 2.7 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 19 to 20 trucks per hour. 

The biorefineries

Each with a capacity of 725,000 dry short tons or 657,000 dry MT per year

  • Four biorefineries were located.
    • Surry, NC
    • Buncombe, NC
    • Morgan, KY
    • Russell, VA
  • Each producing
    • SAF – 16.7 million gallons
    • Diesel – 14.13 million gallons
    • Naphtha – 8.3 million gallons
  • Gross revenues
    • Fuel – $978 million
    • RINS — $360 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 — $4.65/gallon
    • Diesel – $4.76/gallon
    • Naphtha – $4.03/gallon

Biorefinery Operations

Biorefinery Investment and Operating

SAF Prices
CountyStateBEA Investment (CAPEX)Operating (OPEX)No IncentivesWith RIN Incentive
Million $$ per gallon
SurryNC66$704$145$6.25$4.39
BuncombeNC10$705$151$6.44$4.57
MorganKY94$705$151$6.44$4.58
RussellVA81$709$169$6.93$5.06
Total/Average  $2,823$616$6.52$4.65

RIN values based on D3 July-Dec 2020 RIN average value or $1.22 multiplied times the EV value of 1.7.
Adapted from Brandt, K, Tanzil AH, Garcia-Perez M, Wolcott M, 2021, GFT_CAEP-v6.xlsm, Excel Notebook, January 1,2021 email.

Operating Expenses

Biorefinery Operating Expenses - Fixed Operating Cost 42%; Feedstock 30%; Catalytic Cost 3%; Utilities 22% and Salary 3%.

Fixed Operating Costs include:
1% of FCI for insurance, 1.5% of FCI for local taxes, and 6% of FCI for maintenance. In addition, Overhead is estimated at 60% of salaries.

FCI=Fixed Capital Investment


Economic Impact of Investment to the Central Appalachian Region if the four Biorefineries Are Established

  • With an investment of $2.8 billion, $2.1 billion is spent in the region
  • This results $3.4 billion in total TIO resulting in a multiplier of 1.7. For every million dollars spent, an additional $0.7 million is generated in the regional economy.
  • This results in an increase in Gross Regional Product of $1 billion.
  • Employment increases also.
  • Over 24,000 jobs are created during the construction period of these biorefineries.
  • Resulting in $705 million in labor income when incorporating the multiplier effect.

Total Industrial Output (TIO Million 2021$)

TypeDirectIndirectInducedTotal
Operating GFTv5452.3141.5151.3745.1
Salary GFTv5120.00.0116.2236.2
Logging50.913.030.594.3
Proprietor Income, RINs and Salaries383.50.0293.3676.7
Transportation111.047.048.5206.6
   Total1,117.6201.5639.81,958.9

Employment (Number of Jobs)

TypeDirectIndirectInducedTotal
Operating GFTv52207921,1192,131
Salary GFTv500861861
Logging554220217992
Proprietor Income, RINs and Salaries0.00.02,161.42,161.4
Transportation1,0893023361,727
   Total1,8631,3144,6947,871

Gross Regional Product (GRP Million 2021$)

TypeDirectIndirectInducedTotal
Operating GFTv5247.265.782.8395.8
Salary GFTv5120.00.063.2183.2
Logging32.87.817.057.6
Labor383.50.0161.1544.6
Transportation61.423.027.4111.8
   Total844.896.6351.61,293.0

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 $6.25 to $6.93 per gallon with a rate of return of 12.2% on their investment.  If the wood qualified for RINs, the price could be reduced to $4.39 to $5.06 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 $1.1 billion through direct expenditures and $2.0 billion after the multiplier affect is occurs. 
  • In addition, the investment in four biorefineries of $2.8 billion leads to a one time increase in total industry output of $3.46 billion.
  • The analysis assumes that no additional investment will be required in the logging industry or the transportation industry.