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GTAP Resource #4080

"Market Cost of Renewable Jet Fuel Adoption in the United States"
by Winchester, Niven, Dominic McConnachie, Christoph Wollersheim and Ian Waitz


Abstract
A goal of the Federal Aviation Administration (FAA) is that one billion gallons of renewable fuel is used by US aviation each year by 2018. This goal is an aggregate of renewable fuel targets for the US Air Force (0.37b gal p.a.), the US Navy (0.28b gal p.a.) and commercial aviation (0.35b gal p.a.). Existing biofuel policies in the US include the renewable fuel standard (commonly known as RFS2) specified in Title II of the Energy Independence and Security Act (EISA) of 2007. RFS2 sets minimum annual volume requirements for biomass-based diesel, advanced biofuel, cellulosic biofuel, and total renewable fuel that must be used in transportation. The renewable fuel mandates are met by assigning each gallon of renewable fuel a renewable identification number (RIN) and requiring refiners to purchase a certain number of RINs for each gallon of (total) fuel sold. There is not a requirement for renewable fuel to be blended with aviation fuel under RFS2, but renewable jet fuel is eligible for RINs and credit towards the RFS2 mandates.

Against the backdrop of RFS2 mandates and military renewable jet fuel goals, we examine the cost to commercial aviation of consuming 0.35b gal of renewable jet fuel per year. As the cost of renewable jet fuel currently exceeds the price of conventional jet fuel and there are no plans to mandate the use of this fuel, we assume that the aviation biofuel goal is met by airlines and the military voluntarily purchasing renewable fuel. Under this framework, the amount paid per gallon of renewable jet fuel above the cost of conventional fuel can be thought of as an implicit subsidy to renewable fuel producers.

Our analysis considers renewable jet fuel production via a Hydroprocessed Esters and Fatty Acids (HEFA) process. HEFA processes produce a mixed product slate that includes diesel, naphtha and gases, in addition to renewable jet fuel. Feedstocks considered include soybean oil and (in some simulations) rotation oil seed crops grown on ...


Resource Details (Export Citation) GTAP Keywords
Category: 2013 Conference Paper
Status: Published
By/In: Presented at the 16th Annual Conference on Global Economic Analysis, Shanghai, China
Date: 2013
Version:
Created: Winchester, N. (4/8/2013)
Updated: Winchester, N. (4/8/2013)
Visits: 1,112
- Bioenergy
- Climate change policy
- North America


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