Multi-Year Analysis Plan (Page 12 of 80) in pdf

Multi-Year Analysis Plan Page 12

$0.90

$1.10

$1.30

$1.50

$1.70

$1.90

$2.10

Ethanol Market Selling Price ($/gal)

Figure 3: Hypothetical Supply and Demand Curves for Biomass-Based Ethanol

A set of tools to link demand and supply curves will need to be developed so that market sizes

(intermediate outcomes) for each of the primary products can be estimated.

Value-added products will not be used directly in environmental and economic outcome

estimations. Instead they will alter supply curves so that more of the high-impact model product

can be produced with the value-added product than without it. To determine the value-added

product’s effect on the high-impact product’s supply curve, a process like the following is

necessary:

1. The value-added product is determined (or steps 2-3 can be estimated for a class or

hypothetical value-added product).

2. The value-added product’s affect on conversion costs of the high-impact product is

estimated.

3. The volume of the high-impact product that the cost reduction is valid for is determined.

4. The supply curve for the high-impact product is adjusted.

The new supply curve will be matched to the demand curve and a larger volume of the high-

impact product will be produced at the given time points. The larger volume will then be used to

calculate final outcomes.

Multi-Year Analysis Plan Page 12