Economic and Emissions Impacts of Renewable Fuel Goals for Aviation in the US
AbstractThe US Federal Aviation Administration (FAA) has a goal that one billion gallons of renewable jet fuel is consumed by the US aviation industry each year from 2018. We examine the economic and emissions impacts of this goal using renewable fuel produced from a Hydroprocessed Esters and Fatty Acids (HEFA) process from renewable oils. Our approach employs an economy-wide model of economic activity and energy systems and a detailed partial equilibrium model of the aviation industry. If soybean oil is used as a feedstock, we find that meeting the aviation biofuel goal in 2020 will require an implicit subsidy from airlines to biofuel producers of $2.69 per gallon of renewable jet fuel. If the aviation goal can be met by fuel from oilseed rotation crops grown on otherwise fallow land, the implicit subsidy is $0.35 per gallon of renewable jet fuel. As commercial aviation biofuel consumption represents less than two per cent of total fuel used by this industry, the goal has a small impact on the average price of jet fuel and carbon dioxide emissions. We also find that, under the pathways we examine, the cost per tonne of CO2 abated due aviation biofuels is between $50 and $400.
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Bibliographic InfoPaper provided by Agricultural and Applied Economics Association in its series 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. with number 155003.
Date of creation: Aug 2013
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Aviation; Biofuels; Climate Change; Emissions abatement; Environmental Economics and Policy; Resource /Energy Economics and Policy;
This paper has been announced in the following NEP Reports:
- NEP-AGR-2013-08-23 (Agricultural Economics)
- NEP-ALL-2013-08-23 (All new papers)
- NEP-ENV-2013-08-23 (Environmental Economics)
- NEP-REG-2013-08-23 (Regulation)
- NEP-RES-2013-08-23 (Resource Economics)
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- Xavier Gitiaux & Sebastian Rausch & Sergey Paltsev & John M. Reilly, 2012. "Biofuels, Climate Policy, and the European Vehicle Fleet," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 46(1), pages 1-23, January.
- Gurgel Angelo & Reilly John M & Paltsev Sergey, 2007. "Potential Land Use Implications of a Global Biofuels Industry," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 5(2), pages 1-36, December.
- Anger, Annela, 2010. "Including aviation in the European emissions trading scheme: Impacts on the industry, CO2 emissions and macroeconomic activity in the EU," Journal of Air Transport Management, Elsevier, vol. 16(2), pages 100-105.
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