Title:
Short-Term Global Warming Mitigation Costs of Fischer-Tropsch Diesel Production and Policy Scenarios In Norway
Author(s):
Bright, R.M., Strømman, A.H.
Document(s):
Paper
Abstract:
We perform an economic analysis of Fischer-Tropsch diesel (FTD) produced from Norwegian forest biomass at a pioneer commercial plant in Norway followed with a cost growth analysis to estimate production costs after uncertainty in early plant performance and capital cost estimates are considered. Results after the cost growth analysis imply that the initial production cost estimates for a pioneer producer may be underestimated by up to 30%. Using this estimate, we then assess through scenarios how various financial support mechanisms designed to encourage near-term investment would affect production costs over a range of uncertain future oil prices. For all policy scenarios considered, we evaluate trade-offs between the levels of public expenditure, or subsidy, and private investor profitability. When considering the present value of the subsidy required to incentivize commercial investment during a future of low oil prices, we find that greenhouse gas (GHG) mitigation via wood-FTD is likely to be considered cost-ineffective. However, should the government expect that mean oil prices in the coming two decades will hover between $97-127/bbl, all the incentive policies considered would likely spur investment at net present values = $-100/tonne-fossil-CO2-equivalent avoided.
Keywords:
cost analysis, Fischer Tropsch, greenhouse gases (GHG), policies, wood, policy
Topic:
Policies and ensuring sustainability
Subtopic:
Agro-environmental assessments
Event:
18th European Biomass Conference and Exhibition
Session:
OC11.5
Pages:
2085 - 2094
ISBN-13:
978-88-89407-56-1
ISBN-10:
88-89407-56-5
Paper DOI:
10.5071/18thEUBCE2010-OC11.5
Price:
FREE
