The Case for Biojet Fuel from Bioethanol in Brazil: An Optimization-Based Analysis Using Historical Market Data.

Biojet fuel is an attractive option to reduce global greenhouse gas (GHG) emissions from the aviation industry. In this paper, we propose a two-stage stochastic linear program to analyze the optimal operation of an integrated sugarcane mill that produces sustainable aviation fuel (SAF) using historical time-series commodities price data from Brazil. We find currently available alcohol-to-jet (ATJ) technologies require premiums between 0.4 $ L (2.07 R$ L) and 2 $ L (10.34 R$ L) to incentivize biojet fuel production from sugarcane. Similarly, with emerging ATJ technologies, premiums between 0.1 $ L (0.52 R$ L) and 1.25 $ L (6.46 R$ L) are required. Sensitivity analysis quantifies the impact of ATJ technologies' conversion and operating costs, as well as SAF incentives, on the fraction of weeks biojet fuel production is favorable, which can guide technology and policy development. Currently, sugarcane mills are operated with little flexibility due to the structure of the Brazilian market. We also estimate that a hypothetical, fully flexible sugarcane mill could gain up to 6 million R$ per year in profit; most of this value comes from the flexible operation of the ATJ process, which motivates standalone upgrading facilities. Finally, we show how analyzing the optimality conditions of the integrated sugarcane mill allows for easy communication of optimal behavior in terms of relative product prices. These results provide a basis to guide biojet fuel policy and technology development in the context of Brazil, and these ideas can be extended to develop biojet fuel capacity and supply chains globally.