Strategic assessment of sustainable aviation fuel production technologies: Yield improvement and cost reduction opportunities

Tanzil, Abid H.; Brandt, Kristin; Wolcott, Michael P.; Zhang, Xiao; Garcı̀a-Pèrez, Manuel

doi:10.1016/j.biombioe.2020.105942

Cited by 66 publications

(36 citation statements)

References 42 publications

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“…AMTX and GEVO have higher WACCs compared to the rest of firms in the sample, consistent with AMTX having the highest leverage level across firms and GEVO perceived by investors as highly risky given the firm's beta (Table 2). However, average WACC for these firms (15 and 18% respectively) are within the range of WACC used in biofuel TEA studies (Tanzil et al, 2021). Figure 2 shows the majority of estimated WACC values are clustered around 7 and 15% and the majority betas are between 1.00 and 2.50.…”

Section: The Weighted Average Cost Of Capital and Discount Rates For Biofuel Firmsmentioning

confidence: 82%

“…Companies producing SAF include Alt Air Paramount (acquired by World Energy), Neste Oyj, Gevo Inc., Virent Inc., and Velocys PLC. (Trejo-Pech et al, 2019;Khanal and Shah, 2021;Tanzil et al, 2021). Gevo Inc. is chosen as one of the companies to include in the sample of firms to analyze in this study because, unlike the other aforementioned firms, Gevo is a publicly traded company listed in a US stock exchange market.…”

Section: Firms In the Samplementioning

confidence: 99%

“…Policies such as the United Nations International Civil Aviation Organization's Carbon Offsetting and Reduction Scheme for International Aviation are mandating reductions in carbon emissions for commercial aviation (ICAO, 2021). Taking 2005 as the baseline, the industry is expected to reduce 50% of carbon emissions by 2050 (Hileman et al, 2013;Khanal and Shah, 2021;Tanzil et al, 2021). Factors such as improved fuel consumption and infrastructure are important, but the use of biomass derived, or sustainable aviation fuel (SAF) is projected to be the most important factor driving carbon reduction in aviation (Wang et al, 2019;Khanal and Shah, 2021).…”

Section: Introductionmentioning

confidence: 99%

“…Tanzil et al (2021) found that hydroprocessed esters and fatty acids (HEFA) is the most competitive current technology for SAF production compared to five lignocellulosebased technologies evaluated. While SAF production volume in the US is still limited, several biorefineries are producing it at demonstration, pilot, and commercial scale (Trejo-Pech et al, 2019;Khanal and Shah, 2021;Tanzil et al, 2021). One of the current challenges is to produce SAF at prices competitive with fossil-based jet fuel.…”

Section: Introductionmentioning

confidence: 99%

“…Buying oilseed above 10.8 ¢ pound −1 , the MBP, would yield on average returns on investment below the crushing facility capital investors' expectation and would discourage reactor-ready feedstock supply. Three crushing facilities are projected to supply bio-oil to one Aviation Sustainability Center's HEFA hypothetical biorefinery as designed by Tanzil et al (2021), which would in turn supply SAF to the Nashville International Airport. Further analysis of the MBP of pennycress oilseed is relevant particularly because pennycress is currently not planted for commercial purposes and the actual cost of production at deployment time may differ from current budgets.…”

Section: Introductionmentioning

confidence: 99%

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Biofuel Discount Rates and Stochastic Techno-Economic Analysis for a Prospective Pennycress (Thlaspi arvense L.) Sustainable Aviation Fuel Supply Chain

et al. 2021

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The international aviation industry has the goal to gradually reduce carbon emissions mainly by using sustainable aviation fuel (SAF). However, currently SAF cannot be produced at competitive prices relative to petroleum-based jet fuel. Pennycress is a crop whose oilseed could be used as a relatively low-cost feedstock to produce SAF, potentially benefiting farmers and the environment. This stochastic techno-economic analysis (TEA) studies an enterprise buying pennycress oilseed from farmers, extracting the bio-oil and selling it to a biorefinery that converts bio-oil into SAF. Maximum buying prices (MBP)—prices that yield a zero net present value—the crushing enterprise could pay farmers for pennycress oilseed are estimated. To conduct the analysis, discount rates are estimated based on financial data of biofuel firms, thus providing a realistic benchmark to evaluate profitability and feedstock buying prices. Estimated risk-adjusted discount rates vary between 12 and 17%, above rates typically used in similar valuations. Estimated stochastic MBP range between 10.18 and 11.73 ¢ pound−1, which is below the price at which farmers are willing to plant pennycress, according to recent research. By considering the crushing facility’s inherent cash flow structure and risk, the distributions of stochastic modified internal rate of return suggest the crushing enterprise could be economically attractive at a 14% discount rate, our most likely estimate. However, between 11 and 17% times the cash flow model is simulated, the firm falls under financial distress. Overall, the findings suggest potential barriers for deployment of a SAF supply chain without governmental incentives or related policies.

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Section: The Weighted Average Cost Of Capital and Discount Rates For Biofuel Firmsmentioning

confidence: 82%

Section: Firms In the Samplementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 3 more Smart Citations

Biofuel Discount Rates and Stochastic Techno-Economic Analysis for a Prospective Pennycress (Thlaspi arvense L.) Sustainable Aviation Fuel Supply Chain

et al. 2021

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Optimal retrofitting of conventional oil refinery into sustainable bio‐refinery under uncertainty

Zhang,

Torres,

Chen

et al. 2024

AIChE Journal

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This article focuses on a novel optimization problem to retrofit a conventional fossil‐based refinery into a hybrid biomass‐based refinery. A mixed‐integer linear programming model, which considers a 10‐year‐long retrofit planning along with operational constraints in each year, is formulated. The problem is extended to a multistage stochastic programming model to handle both endogenous and exogenous uncertainties, and solved through a series of two‐stage stochastic programming subproblems. Furthermore, a Lagrangean decomposition algorithm is implemented to solve such a problem. By determining whether to add new units or retrofit existing units to the selected biomass‐based technologies, the results provide flexible design alternatives with consideration of operational constraints for each year. The results show the advantages of the selected biomass‐based technologies and enhance the performance of the final solution under uncertainty.

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Methodology for quantifying the impact of repurposing existing manufacturing facilities: case study using pulp and paper facilities for sustainable aviation fuel production

Brandt

Camenzind

Zhu

et al. 2022

Biofuels Bioprod Bioref

Self Cite

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Sustainable aviation fuel (SAF) is vital for the reduction of the environmental impact of the aviation industry while decreasing the dependence of the USA on foreign petroleum fuels. To date, SAF, especially from cellulosic feedstocks, have struggled to overcome two barriers: (1) meeting price parity with their petroleum counterparts and (2) the large capital investment required for industrial-scale biorefineries. Repurposing of industrial facilities has been suggested as a means of addressing both challenges. In this study we look at the financial impact of manufacturing SAF using three repurposing value levels. To demonstrate the application of this methodology, we examine case studies based on a wood-based alcohol-to-jet process. Each level evaluated assumes a different portion of the existing facility is useable. The impact on capital costs and minimum fuel selling price is estimated for generalized case studies as well as for specific case studies spread across multiple regions of the USA. The best economic outcomes are achieved when large-scale facilities have both inside and outside battery limit assets that can be repurposed. The geospatially explicit variables that have the largest economic impact are feedstock price, feedstock composition, and industrial natural gas price. However, the scale and value of repurposing both outweigh the geospatial variables within reasonable limits. Of the locations studied, the lowest minimum selling price (MSP) of $1.16/L was calculated at the Washington facility, a nearly 19% reduction from a matching scaled greenfield facility, a result of existing equipment and infrastructure reducing total capital investment by onethird and plentiful feedstock.

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Strategic assessment of sustainable aviation fuel production technologies: Yield improvement and cost reduction opportunities

Cited by 66 publications

References 42 publications

Biofuel Discount Rates and Stochastic Techno-Economic Analysis for a Prospective Pennycress (Thlaspi arvense L.) Sustainable Aviation Fuel Supply Chain

Biofuel Discount Rates and Stochastic Techno-Economic Analysis for a Prospective Pennycress (Thlaspi arvense L.) Sustainable Aviation Fuel Supply Chain

Optimal retrofitting of conventional oil refinery into sustainable bio‐refinery under uncertainty

Methodology for quantifying the impact of repurposing existing manufacturing facilities: case study using pulp and paper facilities for sustainable aviation fuel production

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