Volume 13: Proceedings Applied Energy Symposium: CUE2020, Part 2, Japan/Virtual, 2020

Liquid Biofuel Participates in the Refined Product Market Competition: Integrated Supply Chain Optimization Rui Qiu, Donghui Zhao, Qi Liao**, Xiao Yu, Xintong Wei, Haoran Zhang, Yongtu Liang*

Abstract

Replacing traditional fossil energy with renewable biofuel is considered to be an effective way to achieve the emission reduction target. The optimal design and operation of the supply chain is the key step in the large-scale development of biofuel. To fully utilize the extensive oil and gas supply chain infrastructure in China, this paper intends to incorporate liquid biofuel into the existing refined product supply network and explore the benefits of this integrated supply chain. Firstly, a mixed-integer linear programming model for a single-cycle integrated supply chain is developed to obtain the optimal supply scheme, transportation scheme and demand scheme of both liquid biofuel and refined product. The objective is set to minimize the total cost, including depreciated investment cost of bio-refinery, liquid fuel transportation cost, backlog cost on supply side and stock-out cost on demand side. The geographical distribution of biofuel yield, refinery production capacity, oil depot inventory levels and transportation volume requirements are rigorously considered. Finally, the existing refined product supply train in China is taken as a case study and two scenarios (with and without biofuel participation) are carried out for comparison from the perspective of economy and environment. The results demonstrate the economic and environmental benefit of the proposed integrated liquid biofuel-refined product supply chain, which can provide significant guidelines for the decision makers.

Keywords Liquid biofuel; refined product; integrated supply chain; economy and environment; mixed-integer linear programming

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