Designing a Rice Straw-Based Biofuel Supply Chain Using Mixed-Integer Programming in South Korea

Abstract

To achieve the goal of the 2015 Paris Agreement to limit global warming to 2 degrees C compared to pre-industrial levels, South Korea is implementing a policy to use bioethanol as a transportation fuel based on the Renewable Fuel Standard (RFS). This study proposes a mixed-integer linear programming (MILP) model to design an optimal bioethanol supply chain utilizing rice straw, a readily available resource in South Korea. To minimize the total cost of bioethanol production, the proposed model considers optimal facility locations, i.e., those of feedstock collection (farm), refining (refinery), and consumption (market), and transportation volumes. This experiment is conducted to evaluate the blending ratios of bioethanol in gasoline (3%, 6%, and 9%) specified by the Renewable Fuel Standard (RFS) policy, based on actual gasoline consumption data in South Korea. In the RFS 3% scenario, operating a single large-scale refinery was the most economical option, but in the RFS 6% and RFS 9% scenarios, multiple refineries must be utilized to ensure supply chain economics. In conclusion, the proposed MILP model shows the practicality of gradually increasing the number of refineries and selecting the optimal location for each region as future bioethanol demand increases.