Modeling biomass procurement tradeoffs within a cellulosic biofuel cost model

We develop a long-run cellulosic biofuel cost model that minimizes feedstock procurement and processing costs per gallon. The distinguishing feature of the model is that it accounts for the procurement tradeoff between the intensive margin (biomass producers' participation rate) and extensive margin (biomass capture region). To investigate the extent to which this procurement tradeoff affects processors' cost-minimizing decisions, we apply the model to switchgrass ethanol production in U.S. crop reporting districts. Results suggest that location characteristics will determine the extent to which processors can reduce their total procurement costs by offering a higher biomass price to increase participation near the plant and reduce transportation costs. •Model cellulosic biofuel plant size and feedstock procurement decisions.•Account for the biomass procurement tradeoff between participation rate and capture radius.•Apply model to switchgrass-based ethanol production in U.S. crop reporting districts.•Identify location characteristics that determine plant size and biofuel production.•Capture cost tradeoffs not accounted for in alternative models.