(728f) Designing the Optimal Supply Chain for Biodiesel Production in Spain

The use of new sources of energy like fuel cells, solar energy or biofuels has recently become a priority. Among them, biofuels share some of the storage and distribution advantages of traditional fuels, as opposed to other energy carriers like hydrogen. Furthermore, they also avoid the economy dependence on oil price fluctuations and mitigate global warming. For these reasons, their production is expected to increase in the next years all over the world. Particularly, in Europe, the European Union has published the directive 2003/30/EC. This new legislation pursues the promotion of biofuels and other renewable fuels for transport, and stipulates that by 2010 a total of 5.75% of the total amount of fossil fuels must be replaced by biofuels.

In the transition process towards this new energy system, it is of crucial importance to design efficient supply chains capable of producing and delivering the necessary amount of biofuels to the exact locations and at the right time. This task can be accomplished by developing mathematical models that describe in an integrated manner all the elements of the supply chain within a single framework. Unfortunately, despite the effort made so far, the tools that currently exist in this area are still rather limited.

With the aim to contribute to this emerging research field, this work addresses the optimal design and planning of supply chains for biodiesel production. A mathematical superstructure is postulated, in which all the available manufacturing technologies are embedded, along with the possible locations for the production facilities, and the potential transportation links between the components of the network. The design task is mathematically formulated as a multi-objective mixed integer lineal program (MILP) that simultaneously accounts for the minimization of cost, environmental and social impacts. The Pareto solutions of the problem, which represent the optimal trade-off between the objectives considered in the analysis, are obtained via the epsilon constraint method. To expedite the application of such a method, we introduce a novel bi-level decomposition strategy, which decomposes the model into two hierarchical levels between which an iterative procedure takes place until a finalization criteria is satisfied.

The capabilities of the proposed modelling framework and solution strategy are illustrated through the design of the future supply chain for biodiesel production in Spain. The model is used to investigate a number of strategic decisions that configure the future supply chain that will satisfy the biodiesel demand in the Spanish markets. The data considered in the analysis have been taken from previous state-of-the-art contributions to the biodiesel production literature and other available sources, and has been validated with engineering-oriented methods to reflect the specific features of the country. The solutions obtained show that an inherent trade-off exists between the criteria considered in the study, and that significant environmental and social benefits can be achieved if the economic performance of the network is compromised. These solutions are intended to guide the national policy makers of the government towards the adoption of more sustainable strategic decisions from the environmental and social point of view.

References:

[1] DIRECTIVE 2003/30/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 8 May 2003 on the promotion of the use of biofuels or other renewable fuels for transport