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Bio-jet 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 also produces sustainable aviation fuel (SAF) using historical time-series commodities price data. We find currently available alcohol-to-jet (ATJ) technologies require a premium price of 1. 25 L−1 (6. 46 R L−1) to incentivize bio-jet fuel production from sugarcane. This incentive can be reduced to 0. 5 L−1 (2. 58 R L−1) with emerging ATJ technologies that are undergoing scale-up. Via sensitivity analysis, we also quantify the impact of ATJ conversion, operating costs, and incentives on the fraction of weeks bio-fuel production is favorable to further guide technology and policy development. Currently, sugarcane mills are operated with little flexibility due to the structure of the Brazilian market. We 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 bio-jet fuel policy and technology development in the context of Brazil, and these ideas can be extended to develop bio-jet fuel capacity and supply chains globally.
Watson et al. (2024) studied this question.