Market Cost of Renewable Jet Fuel Adoption in the United States

A PARTNER Project 31 (Understanding the Relationship Between Aviation Economics and the Broader Economy) Report
The 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 cost to US airlines of meeting 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 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, as the product slate for HEFA processes includes diesel and jet fuel, there are important interactions between the goal for renewable jet fuel and mandates for ground transportation fuels.
Authors: Niven Winchester, Dominic McConnachie, Christoph Wollersheim, Ian A. Waitz
Issue date: March 2013
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