Toward a Model for Generational Transition of Sustainable Energy Platforms: The Greenfield vs. Brownfield Problem

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Toward a Model for Generational Transition of
Sustainable Energy Platforms The Greenfield vs.
Brownfield Problem

• Paul K. Bergey
• North Carolina State University, USA
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• Geoffrey G. Parker
• Tulane University, USA

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Our goal is to build a supply chain from
lignocellulose to butanol. Tony Hayward,
(former) CEO of BP
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A Dark Cloud Appears over Ethanol

• In 2008, there were 170 ethanol plants operating
  in the U.S. and 24 additional plants under
  construction to provide a total production
  capacity of approximately 12.6 billion gallons
  per year
• In 2009, the Renewable Fuels Association reported
  that 24 plants with a combined capacity of over 2
  billion gallons per year are currently not
  producing and about 12 were in bankruptcy.

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It Has a Silver (Biobutanol) Lining

• It has a higher energy density per unit volume
  than ethanol.
• It is compatible with the existing distribution
  infrastructure for petroleum based fuels, and
  thus, can be distributed via the national
  pipeline network, unlike ethanol.
• It is highly resistant to moisture absorption and
  therefore has potential as an aviation fuel
• It can be burned in existing automobile engines
  in any blended proportion (up to 100)
• It is cleaner burning than gasoline or ethanol

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Butamax Advanced Biofuels LLC

• Fuel and fleet testing of biobutanol in real
  vehicles on real roads covering a distance of
  more than 1.3 million vehicle road-miles has
  confirmed the high performance advantages of this
  fuel blend. For example, biobutanol blended at a
  concentration of 16 volume into fuels
  demonstrated excellent vehicle performance. A
  commercial fuels trial confirmed the
  compatibility of butanol with existing fuel
  infrastructure and consumer satisfaction with the
  product.

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The Greenfield vs. Brownfield Problem
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Coalition Definitions
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Necessary Conditions for a Non-Empty Core in a 3
Player Game
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Characteristic Functions 3 Players
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Three Player Game Solution Plane
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The Core is Defined by an Irreducible and
Consistent System of Constraints
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Two Necessary and Sufficient Conditions for a
Non-Empty Core to a 3 player Greenfield vs.
Brownfield Game
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Exploring Equilibria in the DV space
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Exploring Equilibria in the DV space
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Exploring Equilibria in the DV space
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Exploring Equilibria in the DV space
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Conclusions

• The reduced set of sufficiency conditions expose
  tipping points which yield managerial insights
  through sensitivity analysis of the core
• Brownfield conversions only make economic sense
  when the destruction of a productive economic
  asset is justified by the avoided cost of an
  economically equivalent greenfield option
• Early opportunities arise for brownfield
  conversions of lower producing high margin plants
  (particularly those of limited size and
  opportunistic location)
• The social benefit of the 2nd generation biofuel
  plant should exceed the social benefit of the
  1st generation plant to achieve sustainability of
  the core
• Higher levels of 2nd generation biofuel
  production combined with higher levels of social
  benefit on a per unit basis of 2nd generation
  biofuel suggest a stable brownfield grand
  coalition

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Butanol Physical Fuel Properties
Promotum, Gevo
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Bio-Butanol Projecting the 3rd Wave
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Status Domestic Butanol Companies
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Status International Butanol Companies
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