The circular bioeconomy of the olive oil industry: Deterministic and probabilistic profitability of olive mill by-product gasification

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In the novel paradigm of the circular economy the value of products, materials, and resources is retained in the economy for as long as possible, thereby minimizing waste generation. In this context, the olive oil producing countries are presented with a new opportunity that lies in the large amount of by-products generated by the olive oil industry, in particular olive pomace. Among the existing options for valorizing it, gasification is a technically proven and economically viable process, especially for moderately high energy prices. This research aims to analyze the profitability of olive pomace gasification, identifying the main uncertainty factors that determine said profitability. To that end, sensitivity analyses and probabilistic scenario analyses using the Monte Carlo method are conducted for the first time in this research context. The results show a positive profit margin of €19.27 per ton of milled olives, a Net Present Value (NPV) of €453,067, and an Internal Rate of Return (IRR) of 9.7 %. The sensitivity analysis indicates that the electricity price is the main determinant of profitability, while other factors, such as the biomass price or the sale of by-products (biochar), are less important. The Monte Carlo analysis reveals the uncertainty involved in these types of projects, showing that the probability of the investment being profitable (NPV>0) is only 25.1 %. The assessment evidences that this kind of projects presents high capital needs and strongly uncertain profitability, recommending the implementation of public and private green finance instruments to overcome high-capital barriers and de-risk these investments.