Dynamic cost-benefit assessment of aviation biofuels

Abstract

Aviation activity contributes to anthropogenic climate change through emissions of carbon dioxide (CO2), mono-nitrogen oxides (NOx), aerosols and aerosol pre-cursors, and the formation of persistent linear contrails and aviation-induced cirrus clouds. Lee et al. (2009) estimate that in 2005 aviation activity resulted in approximately 2.0% of annual global CO2 emissions and that, while small in relative terms, aviation’s CO2 contribution is growing: by 2050, aviation CO2 will reach 3.6-4.2% of annual global emissions. In response, there is growing interest in the technical means by which the climate impact of aviation can be mitigated, including operational efficiency improvements, airframe and engine technology improvements, and the use of aviation biofuels. Aviation biofuels are of particular interest because their use could, in principle, eliminate the CO2 climate impact of aviation activity, which accounts for approximately 35-50% of aviation’s total climate impact.

A large body of engineering literature has assessed both the greenhouse gas (GHG) footprint of aviation biofuels by using attributional lifecycle analysis (LCA), and the private cost of production by using techno-economic modeling. These studies reveal that there is a trade-off associated with the use of these technologies: while they may provide a reduction in lifecycle GHG emissions, aviation biofuels also come at a cost premium compared to conventional jet fuels.

However, existing work does not account for the system-level feedbacks and nonlinearities that may also influence the overall environmental and economic impacts of large-scale aviation biofuel adoption. For instance, large aviation biofuel production volumes could increase global demand for biomass feedstock, and thereby influence commodity prices and aviation biofuel production costs. Increases in agricultural commodity prices might also lead to changes in land use patterns and soil and biomass carbon stocks, and this could impact the lifecycle GHG emissions of aviation biofuels [20-23]. In addition, because aviation biofuels come at a production cost premium compared to conventional jet fuels their use might increase overall fuel costs, and Winchester et al. (2015) showed that the resulting reduction in demand for aviation services may account for the majority of the environmental benefit of aviation biofuels. Finally, empirical evidence suggests that there could be significant learning curve effects associated with nascent aviation biofuel production technologies, and this implies that there is endogeneity and path dependence associated with their production cost and environmental performance.

This work presents a societal cost-benefit assessment of aviation biofuel adoption, and employs a system dynamics modeling approach to capture the environmental and economic feedbacks and nonlinearities described above.