A probabilistic approach for accounting for externalities from air pollution and GHG emissions in a TEA for biofuels for aviation

Abstract

This master's thesis expands the work of Bann et al. (2017) by the addition of externalities. Two biofuel pathways, (1) HEFA yellow grease (YG), and (2) F-T municipal solid waste (MSW), and two externalities, (1) climate change, the emission of greenhouse gases more precisely, and (2) air quality regarding the emission of fine particulate matter, were selected. Subsequently, the effect of the two externalities on the two pathways regarding net present value (NPV) and middle distillate selling price (MSP) was evaluated.

Mean NPV of the HEFA YG pathway rose with 56 $M, from -0.111 $B to -0.055 $B, an increase of 50%, and the probability of a positive NPV rose with 41%, from 26.88% to 38.01%. Mean MSP decreased with $0.08/liter, from $0.91/liter to $0.83/liter, a decrease of 9%.

Mean NPV of the F-T MSW pathway increased with 43 $M, from -0.206 $B to -0.163 $B, an increase of 21%. The probability of a positive NPV increased with 77%, from 7.13% to 12.62%. Mean MSP decreased with $0.068/liter, from $1.124/liter to $1.056, a decrease of 6%.

The addition of the externalities had a distinct positive effect for both pathways. The effect of the externalities was larger for the HEFA YG pathway than for the F-T MSW pathway, due to the fact that jet fuel output is larger for the HEFA pathway. However, mean NPV remained negative and mean MSP still remained well above the average conventional jet fuel price.