The impact of commodity price uncertainty on the economic value of waste-to-energy conversion in agricultural processing

• Main Authors: BIN, Li, BOYABATLI, Onur, AVCI, Buket
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2023
• Subjects: Process industries; technology management and strategy; Agribusiness; Operations and Supply Chain Management
• Online Access: https://ink.library.smu.edu.sg/lkcsb_research/7459
• Institution: Singapore Management University

This section studies the economic implications of waste-to-energy conversion; that is, converting organic waste into a saleable product to be used as a feedstock in another firm (e.g., biomass boiler) to generate energy (e.g., heat, electricity). We focus on the context of an agricultural processor that uses a commodity input to produce both a commodity output and organic waste. By making a comparison with a benchmark case in which waste goes to landfill, we characterize the economic value of waste-to-energy conversion. Using a model calibration based on palm oil industry in Malaysia, we examine how this economic value is impacted by (i) input and output spot price uncertainties and (ii) organic waste price’s dependence on the output spot price.