Results

Implications of Developing Bio-fuels for Heavy Vehicles

Stefan Danielsson (qbj164 )
Ioana Bejan (cpz597)
Energy Systems and Climate Mitigation
Friday, June 13 2014
Concluding remarks

Closed market approach (DK national only)
The benefit (from avoiding fossil diesel CO2) offsets the cost (price increase &
prod. loss ) pr ha, after y. 2020 in the high yield scenarios because of combined
higher carbon taxes and better land utilization.
2.5% discount rate scenarios increase benefit only slightly but the CO2 costs
are 4-6 times higher compared to 5%. The worst case yield scenario is very
unfavorable after 2020.
Convenient to tax fuels accordingly (activate free market) vs. setting %-mix
goals
Somewhat lower costs expected if 2013 rapeseed area were used (177.705
ha)

Open market approach (global) - Perspectivation
Expanded system: Eliminating domestic prod. loss (keep same food oil
demand) => compensative expansion of global land areas increase footprint as
CO2 sinks are cut (ILUC !). This will increase CO2 costs => reduce NPV in an LCA
perspective.
Intensification of compensating land in fertile regions => increases NVP?
Calculations
Assumptions:
Only biodiesel represents all renewables from directives
LCA (upstream CO2 accounting) no CO2 neutrality from biomass
Fixed rapeseed land area in DK in period (2012-2050)
Price elasticity of demand (cooking oil) = 0.25 (0.23-0.29)
DK domestic good transport (rapeseed agriculture) stable (not boosting economy)
.
Factors disregarded:
2
nd
generation recycling of commerce-used cooking oil for energy use
Sensitivity to different price elasticity
Compensation for the food demand unlike the bioenergy demand


*Total: 127.316 ha (2012) rape-seed for food and energy
**Year (% mix of biofuel in fossil diesel)
18% 3% 1%
25%
4% 2%
255%
38%
20%
100% 100% 100%
0%
20%
40%
60%
80%
100%
120%
400 (min.) 2700 (av.) 5000 (max.)
Scenarios of land intensity/oil yield (L/ha)
2015 (7%)
2020 (10%)
2050 (100%)
Total
1 Total ind.rasp 2012 (ha) 2013 (ha)
127.316 177.705
2 Transportation mio. t*km t*km L / t*km
2010 10.573 10.573.000.000 0,013
3 Needed to provide transport
Fossil diesel
CO2 fossil (pr L)
Bio diesel
CO2 bio (pr L)
Biodiesel used
(barrels)
DK production
1 2,7 0,944 0,63 159 27000
L kg CO2 L kg CO2 L barrels
137.449.000 369.076.019 129.751.856 82.224.232 4.293.000
References:
Rapeseed land area: www.dst.dk/nytudg/17348
Cooking oil elasticity: http://www.epa.gov/ttn/ecas/regdata/IPs/Vegetable%20Oil_IP.pdf
DK Transportation: http://www.trm.dk/~/media/Files/Publication/2012/Ngletal%20for%20transport%202011%20-%20Forside-Blank-Indhold.pdf
Biodiesel CO2 saving coeff.: http://www.biodiesel.org/using-biodiesel/handling-use/emissions-calculator
EU Bio-mix Directives: http://www.ens.dk/sites/ens.dk/files/politik/dansk-klima-energipolitik/denmark2011_unsecured-3.pdf
Social cost of carbon: http://www.epa.gov/climatechange/EPAactivities/economics/scc.html
CO2/gallon: http://efw.bpa.gov/environmental_services/Document_Library/Big_Eddy-Knight/pdf/BEK_FEIS_Volume2_Appendix_G_Greenhouse_Gases.pdf
Diesel density: http://www.iocl.com/Products/DieselSpecifications.pdf
Truck cons.: https://www.landbrugsinfo.dk/Maskiner-markteknik/Transport-og-laesning/Sider/Lastbil_fem_gange_mere_braendstofoekonom.aspx
Cooking oil sales: http://www.dst.dk/pukora/epub/upload/10671/indu.pdf
Energy value, crops: Energy Systems &Climate Mitigation, Presentation Biomass Conversion technologies, slide 46


Case description
.
As a part of planning renewable energy supply case, a simple sustainability
assessment is performed on the food-for-energy-use issue, using social, economical
and environmental instruments with a general screening:
Scope: Danish diesel trucks (transportation sector: 26% of total CO2).
Key: trade-off between the limited land area for rape-seed production
Objective: Study how scenarios of a marginal biodiesel production/use affects
societys willingness to accept a cooking oil price increase (decrease in rapeseed
supply) in favor of a marginally lower CO2 emission. A simple CBA scenario analysis
considers society benefit of this transformation while fulfilling the EU 2050 GHG
goal, compared to using fossil fuel diesel.
Land area Scenarios - land used for energy (from total)
2012 data L/ha
L 400 2.700 5.000
9.082.630 2015 7% 18% 3% 1%
12.975.186 2020 10% 25% 4% 2%
129.751.856 2050 100% 255% 38% 20%
Benefits from avoiding CO2 from fossil (DKK)
CO2 discount 5% CO2 discount 2.5%
DKK per
ton CO2 Gross benefit
DKK per ton
CO2
Gross
benefit
2015 66 1.395.996 335 2.399.039
2020 71 2.160.470 373 3.820.484
2050 154 46.533.196 571 58.430.924
*Using price elasticities from Scenario: 400 2700 500
Assumes 0% biofuel use in 2006. Price
Cooking oil tons L kr/L
2006 117.627 127.855.435 8 8 8
2015 124.477.245 11 11 11
2020 119.778.771 14,4 11,5 11,3
2050 74.567.504 146,1 27,1 19,5
Gross benefit from CO2 reduction
DKK / ha
used 400 2700 5000
Discount 5% 2.5% 5% 2.5% 5% 2.5%
2015 184 938 1.245 6.329 2.305 11.720
2020 136 714 921 4.817 1.705 8.920
2050 7 26 48 178 89 330
Loss in production ,discounted
DKK / ha
left 400 2700 5000
Discount 5% 2.5% 5% 2.5% 5% 2.5%
2015 338 347 286 292 282 289
2020 531 613 329 380 317 366
2050 -5.787 -13.780 2.671 6.360 1.505 3.582
-15000,0
-13000,0
-11000,0
-9000,0
-7000,0
-5000,0
-3000,0
-1000,0
1000,0
3000,0
5000,0
7000,0
2010 2020 2030 2040 2050 2060
NPV (Net Present Value) in DKK pr. hectar
400 (5%) 400 (2.5%)
2700 (5%) 2700 (2.5%)
5000 (5%) 5000 (2.5%)
Fuel Food