Renewable jet fuel supply chain network design: Application of direct monetary incentives

Abstract

Currently, the global aviation industry uses around 341 billion liters of jet fuel per year, with demand predicted to grow by 50% by the end of 2050. Renewable jet fuel (RJF) may cut greenhouse gas emissions (GHG), increase fuel diversity for the aviation industry, and promote rural economies. The commercialization of RJF has been delayed due to a shortage of sustainable biomass resources. This study recommends using winter carinata crops as a reliable biomass feedstock in the southeastern US states, where the availability of resources will be investigated in each agricultural zone. RJF production is more expensive than traditional jet fuel production. Investors and legislators need to learn more about prospective federal financial initiatives, such as subsidies and grants, to help with RJF supply chain implementation. In this paper, using a mathematical programming approach, we designed an RJF supply chain and then investigated the effects of three direct monetary incentive programs, including producer credit program (PCP), biomass crop assistance program (BCAP), and biorefinery assistance program (BAP), to accelerate the commercialization of RJF manufacturing. According to the findings, the amount of incentives through PCP needed to fulfill 50% of the RJF demand was assessed to cover 16.70% of the total costs, while the BCAP could reach the commercialization threshold by receiving incentives for 22.84% of the biomass purchasing cost. Furthermore, having the BAP covering 89.39% of the annual capital and operating costs could help commercialize RJF production. This study also evaluated the effects of changes in renewable fuel prices, demand fulfillment rates, biomass yield rates, and the price of biomass feedstock and its resulting meal on the profitability of the supply chain. The study's findings will advise policymakers and investors on developing the RJF supply chain given various financial assistance programs and subsidies.