Economic Analysis of Developing a Sustainable Aviation Fuel Supply Chain Incorporating With Carbon Credits: A Case Study of the Memphis International Airport

Christopher N Boyer,T Edward Yu,Burton C English,Bijay P Sharma

doi:10.3389/fenrg.2021.775389

Christopher N Boyer, T Edward Yu + Show 2 more

Open Access

https://doi.org/10.3389/fenrg.2021.775389

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Abstract

Sustainable aviation fuel (SAF) has been considered as a potential means to mitigate greenhouse gas (GHG) emissions from the aviation sector, which is projected to continuously expand. This study examines the impact of developing a SAF sector along with carbon credits on carbon equivalent emissions from aviation using a Stackelberg leader-follower model that accounts for economic interaction between SAF processor and feedstock producers. The modeling framework is applied to an ex-ante optimization of commercial scale SAF production for the Memphis International Airport from the switchgrass-based alcohol-to-jet pathway. Results suggest that supplying 136 million gallons of SAF to the Memphis International Airport annually could reduce 62.5% of GHG emissions compared to conventional jet fuel (CJF). Incorporating with carbon credits, SAF could lower GHG emissions by about 65% in total from displacing CJF and generate additional welfare gains ranging between $12 and $51 million annually compared to the case without carbon credits. In addition, sensitivity analysis suggests advancing SAF conversion rate from biomass could lower the SAF break-even considerably and enhance the competitiveness of SAF over CJF.

Highlights

There is mounting evidence that has documented the negative impacts of increasing cumulative anthropogenic greenhouse gas (GHG) emissions on human and environmental health [United States Environmental Protection Agency (EPA) 2017; Intergovernmental Panel on Climate Change Intergovernmental Panel on Climate Change (IPCC) 2014; Intergovernmental Panel on Climate Change (IPCC) 2018]
Supply-Chain Economic and GHG Emissions Outputs Under the Baseline, the overall cost accrued by the sustainable aviation fuels (SAF) processor from the optimal game-theoretic model is $1,155 million year−1, while the aggregate profit of feedstock producers is $16.88 million
The findings suggest that the evaluated carbon credits are found influential in reducing aviation GHG emissions while simultaneously improving net welfare of SAF sector

Summary

Introduction

There is mounting evidence that has documented the negative impacts of increasing cumulative anthropogenic greenhouse gas (GHG) emissions on human and environmental health [United States Environmental Protection Agency (EPA) 2017; Intergovernmental Panel on Climate Change Intergovernmental Panel on Climate Change (IPCC) 2014; Intergovernmental Panel on Climate Change (IPCC) 2018]. Lowering the atmospheric GHG concentration calls for actions that stabilize the atmospheric carbon content, which has been endorsed by numerous governments and private sectors across the world. One such action that has been a primary focus of researchers is lowering GHG emissions from the aviation sector (Grote et al, 2014). Among various potential approaches to mitigate GHG emissions, utilizing renewable jet fuels (RJF) or sustainable aviation fuels (SAF). Sustainable Aviation Fuel Supply Chain produced from agricultural and forestry residues, energy crops, or municipal wastes could have a crucial role in meeting the GHG emissions reduction goal (Fellet, 2016). As a “drop-in” fuel, SAF can be used in existing aircrafts without modifying engine designs or other engineering aspects (IATA, 2017)

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