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STANFORD UNIVERSITY AVANI SINGH Public Policy Program Ready, Set, Bio (Jet): A Policy Recommendation for Indian Commercial Aviation August 30, 2019 Avani Singh Public Policy Program Stanford University Stanford, CA 94305 [email protected] Under the direction of Professor Bruce E. Cain © 2019 All rights reserved The author hereby grants to Stanford University permission to reproduce and to distribute publicly paper and electronic copies of this thesis document in whole or in part. Signature of Author………………………………………………………………………………… Public Policy Program August 30, 2019 Certified by………………………………………………………………………………………… Bruce E. Cain Professor of Political Science at Stanford University Thesis Advisor Accepted by………………………………………………………………………………………... Gregory L. Rosston Director, Public Policy Program

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Page 1: Public Policy Program Ready, Set, Bio (Jet): A Policy ... · GST = Goods and Services Tax HC = Hydrocarbon ... global man-made CO 2 emissions (ICAO, 2015). In 2017, civil aviation

STANFORD UNIVERSITY AVANI SINGH

Public Policy Program

Ready, Set, Bio (Jet): A Policy Recommendation for Indian Commercial Aviation

August 30, 2019

Avani Singh

Public Policy Program Stanford University Stanford, CA 94305

[email protected]

Under the direction of Professor Bruce E. Cain

© 2019

All rights reserved

The author hereby grants to Stanford University permission to reproduce and to distribute publicly paper and electronic copies of this thesis document in whole or in part.

Signature of Author…………………………………………………………………………………

Public Policy Program August 30, 2019

Certified by…………………………………………………………………………………………

Bruce E. Cain Professor of Political Science at Stanford University

Thesis Advisor

Accepted by………………………………………………………………………………………...

Gregory L. Rosston Director, Public Policy Program

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Ready, Set, Bio (Jet): A Policy Recommendation for Indian Commercial Aviation

August 30, 2019

Avani Singh

Submitted to the Public Policy Program in Fulfillment of the Requirements for the Degree of Master of Arts at Stanford University

ABSTRACT

India is a country with tremendously rich culture, history and economic growth. India’s

aviation industry is the fastest growing in the world. However, it is also responsible for a large share of overall greenhouse gas emissions – an especially relevant problem in a country where a many people are dying due to air pollution every year. This proposal contains a cost-benefit analysis of adopting biofuel, also known as Sustainable Aviation fuel (SAF), in the commercial aviation sector as a replacement to Aviation Turbo Fuel (ATF) which is currently used. A thorough investigation shows that the adoption of biofuel will significantly reduce the aviation sector’s contribution to greenhouse gas emissions, specifically CO2, HC, CO and SOx emissions, under certain taxation assumptions. This will allow India’s aviation industry to play a role in reducing air pollution and ensuring that the country’s population remains healthy and is able to contribute to India’s economic growth. The spillover benefits of adopting biofuels also exceed the costs, therefore contributing positively to work-force participation and productivity. Keywords: biofuels, civil aviation, emissions, traditional fuel, routes, short haul, medium haul, long haul, taxation structure, jatropha Acknowledgements: I would like to thank Professor Bruce Cain for his invaluable support in advising me on this thesis. His interest in my topic of research and confidence in me motivated me to take risks and trust myself. Next, I would like to thank Dr. Anjan Ray for sparing his precious time to answer my questions, discuss ideas and share the results of his research with me. Furthermore, I would like to thank my father, and SpiceJet airlines, for helping me with data collection and sharing their classified files with me. I would also like to thank the Public Policy Program – Professor Greg Rosston, Kelly Walsh and my peers, for believing in me, being critical when required, and helping me brainstorm. Finally, I would like to thank my friends and family for willingly listening to me talk about biofuels and aviation at dinner parties.

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Table of Contents

1. Introduction ------- pg. 5-6

2. Research Question and Motivation ------- pg. 6-7

3. Literature Review ------- pg. 7-10

4. Cost-Benefit Analysis ------- pg. 11-25

i. Environmental Cost of Fuel Emissions pg. 11-12

ii. The comparison of biofuel and traditional fuel –

financial and environmental costs pg. 12-22

a. Flight routes and fuel consumption

b. Environmental costs of biofuel and traditional fuel

c. Comparison between traditional and biofuel emissions

iii. Comparison of financial costs and environmental benefits of biofuel and

traditional fuel pg. 22-25

a. Purchase Price of Biofuel

b. Purchase Price of Traditional Fuel

c. India’s Tax Structure for Jet Fuel

5. Results ------- pg. 26

6. Stakeholder Implications and Further Research ------- pg. 26-27

7. Conclusion ------- pg. 27

8. Works Cited ------- pg. 28-30

9. Appendix ------- pg. 31-33

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Abbreviations

ATF = Aviation Turbo Fuel

CCU = Calcutta airport code

CO = Carbon monoxide

CO2 = Carbon dioxide

DEL = Delhi airport code

DGCA = Directorate General of Civil Aviation

GST = Goods and Services Tax

HC = Hydrocarbon

HEFA = Hydro-processed esters and fatty acids

ICAO = International Civil Aviation Organization

IIP = Indian Institute of Petroleum

NOx = Nitric oxide

PM = Particulates

PW = Pratt and Whitney Engine

SOx = Oxides of sulfur

TRV = Thiruvananthapuram airport code

UDR = Udaipur airport code

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Introduction

India’s aviation market is the fastest growing in the world, with an average passenger

growth rate of 20% every year for the last three years (“India Records Double-Digit Air

Passenger Growth,” 2018). However, the industry is also responsible for a large number of

greenhouse gas emissions. Emissions of gases such as CO2, HC, CO and SOx, among others,

contribute to air pollution, which was reported to cause 1.2 million deaths in India in 2018 (“Air

Pollution Kills 1.2 mn Indians in a Year,” 2019). Furthermore, air transport accounts for 2% of

global man-made CO2 emissions (ICAO, 2015). In 2017, civil aviation emitted eight hundred and

fifty-nine million tons of CO2 globally (ICAO, 2015). Emissions within the aviation industry are

most generated from Aviation Turbo Fuel (ATF), which is used in large quantities for each flight

flown.

In addition to the negative environmental effects generated by ATF, the fuel is also

extremely costly, especially in India where the taxation structure is not conducive to low fuel

prices. In India, fuel makes up 34% of airline carriers’ costs – an extremely high percentage

compared to the global average of 24.2% (Kundu, 2018). Furthermore, the country imposes two

kinds of taxes on ATF – an excise duty tax imposed by the central government, as well as a sales

tax imposed by different state governments. While the sales tax varies by state, it is the highest in

the most populous sectors, i.e., Delhi and Mumbai, of the country. Additionally, a recent decline

in the value of the Indian rupee along with other economic factors make ATF financially costly,

thus contributing to repeated failures in the country’s commercial aviation industry; the most

recent being the shut-down of one of India’s major airlines, Jet Airways.

In this paper, I explore the potential replacement of ATF with biofuels. An

environmentally sustainable alternative, biofuels have been strongly considered by the Indian

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government as well as by airlines as an entrant in the industry. Biofuels are environmentally

sustainable fuels derived from naturally occurring carbon-containing sources such as plant-

derived materials, oils and fats, and other organic feedstock (Ray, 2019). One of India’s leading

low-cost airlines, SpiceJet airlines, recently operated a test flight using a 25% biofuel blend with

ATF in one engine and fossil fuel derived ATF in the other engine - for reference and for safety.

Obtained from the seed oil of the jatropha plant (a species of flowering plant belonging to the

spurge family and native to the American tropics), the fuel, which was used for the flight

operated from Dehradun (DED) to Delhi (DEL), resulted in lower emissions as well as an

improved engine performance of approximately 1% (Janick, 2008; Ray, 2019). Following the

push in the industry as well as in the Indian government to apply the Goods and Standard Tax

(GST) to biofuels, thus replacing all state and federal taxes by a single moderate tax, I find that

replacing ATF with biofuel could be financially sustainable in the long run. Since biofuels emit

less CO2, HC, CO and SOx, they are also environmentally beneficial. The following paper

illustrates a cost-benefit analysis under this taxation assumption.

Research Question and Motivation

The main research question for this study is: Do the environmental benefits of

transitioning to biofuels in Indian commercial aviation outweigh the financial costs?

In the summer of 2018, I was working at SpiceJet in New Delhi, India. During my time

there, I was fortunate to attend SpiceJet’s biofuel test flight – the first of its kind in India.

Relevant government officials from the current government, which has openly declared the

importance it places on moving towards a more sustainable India, attended the event, including

Mr. Jayant Sinha, India’s former Minister of State for Civil Aviation, Mr. Nitin Gadkari,

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Minister of Road Transport and Highways and Dr. Harsh Vardhan, Minister of Science and

Technology. Minister Gadkari, for example, has promoted the use of bio-fuels in road transport

for years, and as a result, his office has collected large amounts of data on the topic.

After this event, I became very interested in the topic of biofuels in aviation and began

exploring the idea further. I learned that although the production of this fuel in large quantities

could be considered a challenge, existing refineries can be used for the production of biofuels,

thus making the process significantly more efficient. Furthermore, India, which imports up to 80

percent of its total oil needs, has committed to spending $1.5 billion on setting up 12 biofuel

refineries in the future. This will allow India to produce its own biofuel, as it does ATF, and

avoid a potential import tax on the fuel.

I spoke to Dr. Anjan Ray, Director of the Indian Institute of Petroleum in Dehradun,

India. Dr. Ray’s team was responsible for producing the small amount of biofuel used for

SpiceJet’s test flight. Dr. Ray spoke about the tremendous potential of biofuels but expressed

concern about the lack of research and policy support. He said that it had taken him several years

to convince an airline to work with him. Excited and motivated, I decided to look into the idea in

more detail, which led me to researching it for my Master’s Thesis.

Literature Review

The most common concern with using biofuels in aviation is the cost of production of the

fuel. Despite the fact that biofuels are obtained from natural sources, a lack of production

facilities, transportation and logistics costs and lack of government incentives makes the cost of

transitioning from ATF to biofuels the biggest challenge. However, government attention is

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increasing and there is greater interest in commercial production of biofuels, making the

transition a possibility in the future.

Biofuels in Commercial Aviation

Various countries have explored the possibility of transitioning from ATF to biofuels in

commercial aviation. A good starting point is Braun-Unkhoff et al’s paper, ‘About the emissions

of alternative jet fuels.’ Not limited to a certain country, this scientific study investigates the

advantages of using bio fuels in aviation that go beyond the reduction of CO2 emissions.

Specifically, the study finds that the use of biofuels in aviation was shown to find less soot

particle emissions, in mass and in number concentration, for certain production methods

including HEFA – the method studied in this thesis. Thus, Braun-Unkhoff et al’s paper shows

that using biofuels in aviation has strong environmental benefits universally that go far beyond

the benefits obtained from a reduction of CO2 emissions.

Among other countries, the United States has strongly researched the entry of biofuels

into commercial aviation. Winchester et al’s study conducted in 2013 investigates the economic

emissions impact of using biofuels in the US aviation market. The United States Federal

Aviation Administration (FAA) has a goal that one billion gallons of renewable jet fuel will be

consumed by the country’s aviation industry each year from 2018 (Winchester et al, 2013). The

results of this study show that if soybean oil is used as a feedstock, meeting the aviation biofuel

goal by 2020 will require an implicit subsidy from airlines to biofuel producers of $2.69 per

gallon of renewable jet fuel. This subsidy varies according to the input used for production. The

subsidy for using oilseed rotation crops, for example, is calculated to be $0.35 per gallon of

renewable jet fuel. On the environmental side, the study finds that the cost per ton of CO2 abated

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due to aviation biofuels is between $50 and $400, making the adoption of biofuels along with

airline subsidy an environmentally and financially sustainable option in the future.

Delving deeper into the mechanical process of transitioning from ATF to biofuels,

Hazariah Mohd Noh’s paper studies the adaption of biofuels into aircraft engine maintenance in

the European market. He finds that using biofuels rather than fossil fuels could have a direct

impact on reducing the maintenance required by aircraft engines. This paper acknowledges the

urgency of exploring the option of switching to biofuels, given high oil prices and high emissions

from air transport. It also argues that biofuels in aviation expands the aviation business by

creating more jobs and a more sustainable approach. Like Winchester et al, this paper also

explores the use of incentives to increase the use of biofuels in aviation.

The Indian Aviation Industry

India’s lack of infrastructure and the high taxes levied on the aviation sector are making

the country’s rapidly growing sector commercially unviable. This is evident from the economic

failure of many small and large airlines. For example, in 2012, Kingfisher Airlines, a large

Indian airline went bankrupt (Sinha, 2019). In 2018, Jet Airways, one of India’s largest airlines

which had been in operation for twenty-four years unexpectedly shut down (Rapier, 2019).

India’s government-owned airline, Air India, continues to face great financial stress (Mishra,

2019). Due to a lack of formal literature on the topic, I turned to interviews, newspaper articles

and personal conversations to gain a better understanding of the sector’s relationship with the

country’s economic growth.

In an interview with LiveMint, the online version of one of India’s financial daily

newspapers called Mint, IATA director general and CEO Alexandre de Juniac expressed his

concern about India’s ability to sustain its growth in civil aviation. Among other

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recommendations, Juniac strongly recommended the need for India to reduce the taxes it levies

on the aviation sector. He recommended bringing ATF under the GST, i.e., applying a single

(and moderate) country-wide tax on fuel rather than a separate excise duty and sales duty tax.

Numerous civil aviation lobbyists in the country have expressed similar concerns about

the taxation structure of ATF, and recommended bringing the fuel under GST. These include

India’s Civil Aviation Minister, Suresh Prabhu, Chairman and Managing Director of SpiceJet

airlines, Ajay Singh, as well as the central government (“ATF Should be Brought under GST,”

2019; “ATF Should be Brought under GST to Provide Level Playing Field to Airlines,” 2019).

While including ATF under GST may take time since it needs an agreement between the central

and state governments in the GST Council, biofuels are already included under GST and taxed at

a single rate of 5% (“A GST Boost for Alternative Fuels,” 2018). ATF taxes, central and state,

average about 35%. Thus, when comparing ATF with biofuels, biofuels are at a significant cost

advantage in terms of taxation. Furthermore, given the environmental and social benefits of

biofuel, I have proposed that the GST on biofuels be eventually reduced to zero. Additionally,

unlike ATF, rising global crude oil prices will not affect biofuels, making them a more reliable

and less volatile alternative.

SpiceJet’s test flight using biofuel resulted in reduced emissions compared to regular

flights operated on ATF. Furthermore, the load on the engine was reduced by 1% (Ray, 2019).

Despite the success of this operation, and the support it gained from senior government officials,

the Indian government has been slow to consider incorporating biofuels in the commercial

aviation space. My hope is that this paper expedites this process, since biofuels provide a viable

alternative to a sustainable civil aviation future for India.

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Cost-Benefit Analysis

Environmental cost of fuel emissions

The following cost-benefit analysis is heavily indebted to Cherie Lu’s work in her paper

titled “When will biofuels be economically feasible for commercial flights? Considering the

difference between environmental benefits and fuel purchase costs” to guide me (Lu, 2018).

Lu’s paper uses the dose-response technique to estimate the aggregated impacts of each

pollutant during flights. There are 6 main pollutants that are emitted from aircraft, with CO2

being emitted in the highest volume:

a) PM = Particulates

b) SOx = Oxides of sulfur

c) NOx = Nitric oxide

d) HC = Hydrocarbon

e) CO = Carbon monoxide

f) CO2 = Carbon dioxide

My analysis draws from this cost-benefit, and thus uses the same method in Indian

commercial aviation. Unlike Lu’s paper, my study is limited to the Indian domestic airspace,

since my goal is to only test the effect of transitioning to biofuels in the Indian air space. I will

attempt to estimate the environmental cost of current aircraft exhaust pollutants by estimating the

environmental costs imposed through the damage on human health, vegetation, buildings, and

climate change and global warming, based on the dose-response relationships between pollutions

and effects, and then summing the individually derived monetary result (Lu). Lu applies the

average unit social cost for each pollutant to fuel flow and emissions data for the various phases

of flight (ICAO, 2015) to derive the social costs for individual aircraft movements with specific

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engine types and standard flight modes. Since this data is applicable universally, the following

table is directly obtained from Lu’s paper:

Converting this data into Indian rupees and adjusting for 2018 inflation, using an inflation

calculator to convert from July 2015 numbers into December 2018 numbers (Statbureau), I

obtained the following:

Table 1 The social unit costs (in 2018 rupees) of 6 different exhaust pollutants per kg. of pollutant emitted:

The comparison of biofuel and traditional fuel – financial and environmental costs

Flight routes and fuel consumption

I selected three domestic flight routes operated by the low-cost carrier SpiceJet in India

(SpiceJet, Arora). These represent three of the most popular routes from India’s capital city, New

Delhi, and are representative of short-haul, medium-haul and long-haul flights of the airline.

• Short haul: Delhi – Udaipur (DEL-UDR). 80 mins.

• Medium haul: Delhi – Kolkata (DEL-CCU). 135 mins.

CO2 HC CO NOx PM SOxDhar et al. (2009) 3.93 -- -- -- -- --ExternE-Pol (2005) 1.96 -- 2.70 – 5.40

260.88 – 287.86

28 741.63 - 53974.88

260.88 – 965.25

Gallagher & Taylor (2003) -- -- 17.09

89.95 – 1079.49 --

89.95 – 267.87

Average 2.7 797.03 5.4 1064.2 26346.93 1102.88

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• Long haul: Delhi – Thiruvananthapuram (DEL-TRV). 200 mins.

In order to select these routes, I identified every city within India that SpiceJet flies to from

New Delhi. I then ranked these routes according to their flight duration (in minutes) and divided

them into short-haul, medium-haul and long-haul routes, where:

• Short haul = S < 100 mins

• Medium haul = 100 mins ≤ M < 180 mins

• Long haul = 180 mins ≤ L

All relevant data used is attached in the appendix. Following the abovementioned calculations, I

obtained the following:

Table 2 Total number of routes originating from New Delhi for short-haul, medium-haul and long-haul flights.

Weighted Average = (weight)*(total)

To determine the three representative routes mentioned above, I took the average of

short-haul minutes, medium-haul minutes and long-haul minutes to find DEL-UDR, DEL-CCU

and DEL-TRV respectively. The weights mentioned above refer to the proportion of the total

number of flights that each haul occupies.

In addition to flight durations and routes, there are numerous flight characteristics that

affect fuel burn, and are thus important to consider in this research. These are included in the

Short-HaulMedium-Haul Long-Haul

No. of Flights 15 17 4Weight 0.41666667 0.47222222 0.11111111

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study, and are shown in the table below. Numbers are obtained from operations officials at

SpiceJet:

Table 3 Airline’s flight characteristics for selected routes.

Route DEL-UDR DEL-CCU DEL-TRV

Aircraft Type DHC 8 402 (Q400) B737-800W B737-800W

Engine Type PW 150 A CFM56-7B24 CFM56-7B24

Flight Distance (km) 680 1424 2363

Flight Altitude (ft) 17000 39000 39000

Flight time/Block

time (hours)

1.18/1.43 1.95/2.2 3.01/3.27

Load factor 80% (62 pax) 80% (152 pax) 80% (152 pax)

Cruise Speed 620km/hr 855 km/hr 855 km/hr

Table 4 Fuel consumption for LTO and cruise stages.

Route DEL-UDR DEL-CCU DEL-TRV

Aircraft Type DHC 8 402 (Q400) B737-800W B737-800W

LTO (below 3000 ft)

(kg/flight)

241kg 712 kg 673kg

Cruise (kg/flight) 1023kg 4385 kg 6953kg

Total (kg/flight) 1264kg 5097kg 7627kg

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Environmental costs of biofuel and traditional fuel

Traditional Fuel

To find the environmental costs of traditional fuel, I will use emission indices from

ICAO’s 2019 emission data set, which categorizes emissions by engine type (ICAO 2019). The

DEL-UDR route uses engine PW150A, which is a Pratt & Whitney engine used for the

Bombardier Q400 airplane. Since the ICAO dataset is missing information about this engine, I

will use data about PW127, which is the Pratt & Whitney engine most similar to the 150A, as it

is the predecessor to this engine in the same series (Pratt and Whitney website).

While CO, HC and NOx data is taken from the ICAO database, the emission index for

CO2 is 3.157kg/kg fuel, SO2 and PM are 0.84 and 0.2 g/kg respectively (Lu).

In order to obtain CO, HC and NOx data from the database, I took the average of each

emission across takeoff (T/O), climb out (C/O), approach (App) and idle (Idle) conditions for

both engine types.

The environmental costs of traditional fuel are depicted in the first (grey) section of the

following table:

Left intentionally blank. Please refer to the next page.

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Table 5 LTO and cruise emissions for different flights with traditional fuel and biofuel.

From purely looking at environmental emissions of various gases, biofuels, whether

blended at 20% or 100%, are clearly superior to ATF. In most cases, biofuels show lower

emissions compared to the positive ones seen through ATF.

Biofuel

To find the emission reduction rates for bio jet fuel, I spoke to Dr. Anjan Ray. Dr. Ray’s

team produced the bio jet fuel used for India’s first, and so far, only, test bio jet flight for a

commercial airline (“SpiceJet Operates India’s First Biofuel-Powered Flight,” 2018). Although

both SpiceJet and Dr. Ray did not conduct real-time in-flight emissions monitoring for the test

Fuel Route Airplane Engine Flight Stage CO2 HC CO NOx PM SOx

DEL-UDRDHC 8 402 (Q400) PW 150A LTO 760.837 4.2175 942.31 3549.3275 48.2 202.44

Cruise 3229.611 17.9025 3999.93 15066.2325 204.6 859.32

Traditional DEL-CCU B737-800WCFM 56-7B24 LTO 2247.784 480.6 4485.6 10733.4 142.4 598.08

Cruise 13843.445 2959.875 27625.5 66103.875 877 3683.4

DEL-TRV B 737-800WCFM 56-7B24 LTO 2124.661 454.275 4239.9 10145.475 134.6 565.32

Cruise 21950.621 4693.275 43803.9 104816.475 1390.6 5840.52

DEL-UDRDHC 8 402 (Q400) PW 150A LTO 723 -22.2925 911.944 3546.4355 4.82 154.24

Cruise 3069 -94.6275 3871.032 15053.9565 20.46 654.72

Bio 20 DEL-CCU B737-800WCFM 56-7B24 LTO 2136 402.28 4395.888 10724.856 14.24 455.68

Cruise 13155 2477.525 27072.99 66051.255 87.7 2806.4

DEL-TRV B 737-800WCFM 56-7B24 LTO 2019 380.245 4155.102 10137.399 13.46 430.72

Cruise 20859 3928.445 42927.822 104733.039 139.06 4449.92

DEL-UDRDHC 8 402 (Q400) PW 150A LTO 592.137 4.2175 942.31 3549.3275 120.5 -36.15

Cruise 2513.511 17.9025 3999.93 15066.2325 511.5 -153.45

Bio 25 DEL-CCU B737-800WCFM 56-7B24 LTO 1749.384 480.6 4485.6 10733.4 356 -106.8

Cruise 10773.945 2959.875 27625.5 66103.875 2192.5 -657.75

DEL-TRV B 737-800WCFM 56-7B24 LTO 1653.561 454.275 4239.9 10145.475 336.5 -100.95

Cruise 17083.521 4693.275 43803.9 104816.475 3476.5 -1042.95

DEL-UDRDHC 8 402 (Q400) PW 150A LTO 572.134 -131.4655 838.198 3563.3055 -85.314 -38.56

Cruise 2428.602 -558.0465 3557.994 15125.5665 -362.142 -163.68

Bio 100 DEL-CCU B737-800WCFM 56-7B24 LTO 1690.288 79.744 4178.016 10774.696 -252.048 -113.92

Cruise 10409.99 491.12 25731.18 66358.205 -1552.29 -701.6

DEL-TRV B 737-800WCFM 56-7B24 LTO 1597.702 75.376 3949.164 10184.509 -238.242 -107.68

Cruise 16506.422 778.736 40800.204 105219.749 -2461.362 -1112.48

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flight due to cost and flight duration limitations, Dr. Ray has used proxies based on the fuel

characteristics to arrive at emission reduction estimates. His research suggests the following:

• Sulphur content in the Biofuel was 20ppm compared to a specification of 3000 ppm for

the fossil jet fuel. Thus, at least a 99% reduction can be assumed for SOx.

• NOx difference would be negligible as the nitrogen content for both normal and bio-jet

are below 50ppm.

• Lifecycle CO2 emissions per ton of fuel would be between 60-80% lower than fossil jet

fuel as biofuels (capture) CO2 from the air for growing the tree and its fruits, unlike fossil

fuels. To simplify my calculations, I took the average of this percentage range (70%).

• IIP’s bio jet fuel is essentially HEFA. Since HEFA does not comply with fossil jet

aromatics, the fuel used has a slightly higher aromatic content to match fossil jet fuel

properties. Aromatics are good for lubricity and safety of seals and gaskets, but generally

generate higher PM.

• HC and CO should not change significantly.

Using these emission reduction rates, I conducted emissions calculations as seen in the white

sections of table 5 above. I assumed that fuel efficiency and volume of fuel consumed for biofuel

is the same as that of traditional fuel. My calculations for table 5 are included in the appendix.

Comparison between traditional and biofuel emissions

I compared the emissions from traditional fuel burn and biofuel burn in two ways:

1. A weighted calculation

2. An un-weighted calculation

In order to do this, I first added the LTO and Cruise emissions for each flight route for each

emission type, for each fuel type. This can be seen in the ‘total’ row of table 6 below (an

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extension of table 5). Then, I found weighted and unweighted averages using the weights found

in table 2.

Left intentionally blank. Please refer to the table on the next page for:

Table 6 LTO and cruise emissions for different flights: Totals and Weights.

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Fuel Route Airplane Engine Flight Stage CO2 HC CO NOx PM SOx

DEL-UDRDHC 8 402 (Q400) PW 150A LTO 760.837 4.2175 942.31 3549.3275 48.2 202.44

Cruise 3229.611 17.9025 3999.93 15066.2325 204.6 859.32Total 3990.448 22.12 4942.24 18615.56 252.8 1061.76

Traditional DEL-CCU B737-800WCFM 56-7B24 LTO 2247.784 480.6 4485.6 10733.4 142.4 598.08

Cruise 13843.445 2959.875 27625.5 66103.875 877 3683.4Total 16091.229 3440.475 32111.1 76837.275 1019.4 4281.48

DEL-TRVB 737-800W

CFM 56-7B24 LTO 2124.661 454.275 4239.9 10145.475 134.6 565.32

Cruise 21950.621 4693.275 43803.9 104816.475 1390.6 5840.52Total 24075.282 5147.55 48043.8 114961.95 1525.2 6405.84Weighted Average 3978.78464 735.278472 7520.34722 18938.1007 252.061111 1058.65667Unweighted Average 14718.9863 2870.04833 28365.7133 70138.2617 932.466667 3916.36

DEL-UDRDHC 8 402 (Q400) PW 150A LTO 723 -22.2925 911.944 3546.4355 4.82 154.24

Cruise 3069 -94.6275 3871.032 15053.9565 20.46 654.72Total 3792 -116.92 4782.976 18600.392 25.28 808.96

Bio 20 DEL-CCU B737-800WCFM 56-7B24 LTO 2136 402.28 4395.888 10724.856 14.24 455.68

Cruise 13155 2477.525 27072.99 66051.255 87.7 2806.4Total 15291 2879.805 31468.878 76776.111 101.94 3262.08

DEL-TRVB 737-800W

CFM 56-7B24 LTO 2019 380.245 4155.102 10137.399 13.46 430.72

Cruise 20859 3928.445 42927.822 104733.039 139.06 4449.92Total 22878 4308.69 47082.924 114870.438 152.52 4880.64Weighted Average 3780.91667 596.644861 7361.54872 18922.977 25.2061111 806.595556Unweighted Average 13987 2357.19167 27778.2593 70082.3137 93.2466667 2983.89333

DEL-UDRDHC 8 402 (Q400) PW 150A LTO 592.137 4.2175 942.31 3549.3275 120.5 -36.15

Cruise 2513.511 17.9025 3999.93 15066.2325 511.5 -153.45Total 3105.648 22.12 4942.24 18615.56 632 -189.6

Bio 25 DEL-CCU B737-800WCFM 56-7B24 LTO 1749.384 480.6 4485.6 10733.4 356 -106.8

Cruise 10773.945 2959.875 27625.5 66103.875 2192.5 -657.75Total 12523.329 3440.475 32111.1 76837.275 2548.5 -764.55

DEL-TRVB 737-800W

CFM 56-7B24 LTO 1653.561 454.275 4239.9 10145.475 336.5 -100.95

Cruise 17083.521 4693.275 43803.9 104816.475 3476.5 -1042.95Total 18737.082 5147.55 48043.8 114961.95 3813 -1143.9Weighted Average 3096.57075 735.278472 7520.34722 18938.1007 630.152778 -189.04583Unweighted Average 11455.353 2870.04833 28365.7133 70138.2617 2331.16667 -699.35

DEL-UDRDHC 8 402 (Q400) PW 150A LTO 572.134 -131.4655 838.198 3563.3055 -85.314 -38.56

Cruise 2428.602 -558.0465 3557.994 15125.5665 -362.142 -163.68Total 3000.736 -689.512 4396.192 18688.872 -447.456 -202.24

Bio 100 DEL-CCU B737-800WCFM 56-7B24 LTO 1690.288 79.744 4178.016 10774.696 -252.048 -113.92

Cruise 10409.99 491.12 25731.18 66358.205 -1552.29 -701.6Total 12100.278 570.864 29909.196 77132.901 -1804.338 -815.52

DEL-TRVB 737-800W

CFM 56-7B24 LTO 1597.702 75.376 3949.164 10184.509 -238.242 -107.68

Cruise 16506.422 778.736 40800.204 105219.749 -2461.362 -1112.48Total 18104.124 854.112 44749.368 115404.258 -2699.604 -1220.16Weighted Average 2991.96539 25.7264444 6975.89522 19011.1984 -446.14817 -201.64889Unweighted Average 11068.3793 245.154667 26351.5853 70408.677 -1650.466 -745.97333

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Although there are variations between weighted and unweighted calculations, between

the same fuel types, with weighted calculations generally showing less emissions exuded, there

is not much variation in the comparison between traditional fuel and biofuel emissions in both

versions. The relationships observed in Table 5 still prevail.

Next, I wanted to investigate how much emissions are reduced by with the use of biofuels

compared to traditional fuel. For this, I found the percent changed between the two fuel types at

20, 25 and 100% blends. Using both weighted and unweighted figures, I found the following

results:

Table 7 Percentage change in emission reduction – Weighted.

Table 8 Percentage change in emission reduction – Unweighted.

Percentage change formula used:

[α(fx) – α(tx)) / α(tx)] * 100 where:

• α = weighted or unweighted average

Emissions B20 B25 B100CO2 -4.9730757 -22.172949 -24.802027HC -18.854572 0 -96.501129CO -2.1115847 0 -7.2397189NOx -0.0798584 1.921E-14 0.38598233PM -90 150 -277SOx -23.809524 -117.85714 -119.04762

Emissions B20 B25 B100CO2 -4.9730757 -22.172949 -24.802027HC -17.869269 -3.169E-14 -91.458169CO -2.0710003 0 -7.1005724NOx -0.0797682 2.0747E-14 0.3855461PM -90 150 -277SOx -23.809524 -117.85714 -119.04762

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• f = fuel type (traditional / B (20/25/100))

• x = gas emitted (HC/CO/NOx…)

• t = traditional fuel

As expected, from a percentage change perspective, the comparison between the fuel types is

exactly the same for both weighted and unweighted figures. Thus, whether the data is studied

from a purely numbers perspective, or changes in percentages are observed, biofuels, in general,

appear to be far more environmentally superior compared to traditional fuel for each emission

studied.

Next, I study the above comparison for the specific routes I have chosen for this study. In

order to find these specific environmental costs, I multiplied table 6 with table 1 to find:

Table 9 Environmental costs of traditional and bio fuel (Rs. / flight).

Results from this table show that even for our specific routes, biofuels appear to be

superior to traditional fuels from an environmental perspective. The positive effect on the

environment for a 100% switch to biofuel is 30.78%, 70.51% and 70.51% respectively for the

three routes.

Flight from DEL Traditional Fuel Biofuel (B100)

To UDR To CCU To TRV To UDR To CCU To TRVCO2 10774.2096 43446.3183 65003.2614 8101.9872 32670.7506 48881.1348HC 17630.3036 2742161.79 4102751.78 -549561.7494 454995.734 680752.887CO 26688.096 173399.94 259436.52 23739.4368 161509.658 241646.587NOx 19810679 81770228.1 122342507 19888697.58 82084833.2 122813211PM 6660503.9 26858060.4 40184337.6 26346.93 -47538767 -71126278SOx 1170993.87 4721958.66 7064872.82 -223046.4512 -899420.7 -1345690.1Total 27697269.3 116309255 174018909 19174277.74 34295821.7 51312524.3% change -30.77195624 -70.513248 -70.513248

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Comparison of financial costs and environmental benefits of biofuel and traditional fuel

Purchase Price of Biofuel

The price of biofuel varies significantly depending on the feedstock, quantity purchased,

production method, geographical location and purpose of production. For my calculations, I used

a 20% premium on biofuels compared to ATF (Ray, 2019; Arora, 2019). For fuel characteristics,

I used the properties of the biofuel purchased by SpiceJet for its test flight. This fuel was

obtained from the jatropha plant using the HEFA process.

Although SpiceJet purchased biofuel for Rs. 180/Kg (US$2.63/liter) for its test flight

which flew from Dehradun to Delhi (DED-DEL) in August 2018, this was for a small quantity

purchased only for a short flight (Arora, 2019). The duration of the flight was 40 minutes, and

the Bombardier Q400 aircraft was used. According to Dr. Ray, the purchase price of biofuel is

expected to show a steady fall in the future, not only compared to SpiceJet’s purchase price, but

also compared to the current purchase price stated for large quantities of purchases, mainly due

to an increase in both supply and demand. Research typically states the price of biofuels to range

from a low of US$0.99/liter for SPK and FT to a high of US$10.11/liter for HRJ/HEFA (Lu,

2018).

Purchase Price of Traditional Fuel

In India, fuel makes up 34% of airline carriers’ costs – an extremely high percentage

compared to the global average of 24.2% (“India Needs to Reduce Taxes Levied on Aviation

Sector,” 2018). India’s complex tax structure makes the country’s purchase price of turbo jet fuel

one of the highest in the world. Furthermore, the rupee has seen a sharp decline in recent years.

In fact, in September 2018, the rupee fell to a historic low of Rs. 72.45 to the dollar. In 2018

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alone, the currency saw a 12% drop against the dollar, making it one of Asia’s worst performing

currencies (“The Indian Rupee Keeps on Sliding,” 2018). Being an importer of 80% of its fuel

needs, India’s currency setback had a significant impact on the country’s aviation sector. Finally,

airlines in the country are unable to pass down the high purchase price of jet fuel fully to their

passengers, thus operating, in large part, at a loss. India’s second largest airline by passengers,

Jet Airways, which had been in operation for 24 years, shut down its operations in 2019. This

shut-down not only affected the airline’s 20,000 employees, but also had a direct impact on more

than 60,000 people.

India’s Tax Structure for Jet Fuel

Indian states charge as much as 30 percent in sales tax on aviation turbine fuel, on top of

a 11 percent excise duty, making it the costliest in Asia. Fuel accounts for 40% of airline losses.

Like most countries, India’s tax structure is divided in direct and indirect taxes. For our

purposes, it is important to focus on indirect taxes, i.e., “taxes levied on the sale and provision of

goods and services” (Invest India).

Taxes in India are levied by the Central Government and many different State

Governments. Some minor taxes may also be levied by the local authorities such as the

Municipality and the Local Governments (Invest India). Although the Indian Government has, in

recent years, taken measures to reform policies to simplify the taxation structure in the country,

Aviation Turbine Fuel (ATF), or traditional jet fuel, has not benefitted through these policies. A

notable policy measure is the implementation of the Goods and Services Tax (GST) to ease the

complex multiple indirect tax regime in the country. Airlines are actively lobbying to tax ATF

under GST at a moderate rate (and receive input tax credit against the output tax paid by airlines

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on the sale of tickets under the GST mechanism), as this would reduce the purchase price of ATF

and offset many losses that the aviation sector is facing as a result of high and multiple ATF

taxes. The government of India is strongly considering this suggestion (The Economic Times,

2019).

Excise Duty:

Until recently, the Indian government imposed a 14% excise duty tax on ATF in the

country. As a response to protests by industry activists and to the volatile nature of the country’s

aviation industry, the government has now reduced this tax to 11%.

Sales Tax:

Delhi and Mumbai, which dominate 60% of India’s aviation market, tax ATF at 25%

sales tax (Indian Petroleum & Natural Gas Statistics, 2016, pg. 130). The sales tax imposed on

ATF varies by state.

Only after the excise duty and sales tax are both added to the fuel cost can the purchase

price of ATF in India be found. These factors lead to ATF in India being at the highest purchase

price in Asia. For the routes studied, the purchase price of ATF ranged from a low of Rs. 68.5/kg

($1/liter) to a high of Rs. 86.7/kg ($1.26/liter). The prices, as stated by SpiceJet officials are as

follows:

• Delhi (DEL): Rs. 79.4/kg ($1.16/liter)

• Udaipur (UDR): Rs.68.5/Kg ($1/liter)

• Calcutta (CCU) – Rs. 86.7/kg ($1.26/liter)

• Thiruvananthapuram (TRV) – Rs. 68.6/kg ($1/liter)

To calculate the purchase cost of both fuel types, I used the following numbers:

• SpiceJet’s ATF purchase cost for Delhi = Rs. 79.4/kg

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• Biofuel purchase cost at a 20% premium of the above = Rs. 95.28/kg

• Total fuel used for the different routes, from table 4:

Route DEL-UDR DEL-CCU DEL-TRV

Aircraft Type DHC 8 402 (Q400) B737-800W B737-800W

LTO (below 3000 ft)

(kg/flight)

241kg 712 kg 673kg

Cruise (kg/flight) 1023kg 4385 kg 6953kg

Total (kg/flight) 1264kg 5097kg 7627kg

• A fuel density of 0.81 kg/L (Lu) = 810 kg/m3

• Fuel density of ATF = 840.0 kg/m3 (Bharat Petroleum Corporation)

A summary of the above can be seen in the following table:

Table 10 Fuel Facts (in kg).

Thus, the purchase cost of both fuel types for selected routes are as follows:

Table 11 Purchase cost of traditional and bio fuel (Rs/flight).

Fuel Type Flight Route Purchase Price Density DEL-UDR DEL-CCU DEL-TRV

Traditional 79.4 840Biofuel 95.2 810Fuel Used 1264 5097 7627

Fuel Type Flight routeDEL-UDR DEL-CCU DEL-TRV

Traditional 84303744 339949512 508690392Biofuel 97469568 393039864 588133224Environmental benefit 46871547.1 150605077 225331433

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Results

Summarizing from the above table, as well as from Table 9, the environmental gain from

adopting biofuels is seen to be extremely large for the 3 routes. Subtracting this environmental

benefit from the purchasing cost of biofuel, we obtain the following data:

Table 12 Purchase cost of traditional and bio fuel (Rs/flight) – adjusted for environmental gain.

From the above table, we can see that after calculating environmental gains, biofuels are

seen to be less expensive in purchasing cost compared to traditional fuels for the medium-haul

and long-haul routes considered. It is possible that for the short-haul route of DEL-UDR, the

flight time is not enough to obtain accurate emission data. Furthermore, it is important to keep in

mind that the purchasing price used for biofuel is a conservative one – especially given the

current lack of biofuel production factories in the country. Thus, in the long run, the cost of

biofuel is expected to fall. Moreover, governmental incentives and programs to adopt biofuels

have not been considered in this proposal. Thus, I argue that biofuels are a financially sustainable

option for India’s aviation industry.

Stakeholder Implications and Further Research

The adoption of biofuels in India’s commercial aviation space will have significantly

positive effects for various stakeholders. For the population of the country, decreased emissions

and lower ticket fares in the future will mean an improved quality of life. For the aviation

industry, biofuels will lead to reduced economic costs in the future due to lower taxes and a more

Fuel Type Flight RouteDEL-UDR DEL-CCU DEL-TRV

Traditional 84303744 339949512 508690392Biofuel 50598020.9 242434787 362801791

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sustainable fuel alternative which undergoes less fluctuation as a result of change in fuel prices

and the volatility of the rupee. For the Indian government, implementing subsidies for the

adoption of biofuels in aviation will allow them to have a better political standing since they will

be able to add an improvement to the environment, the creation of more jobs, and the economic

advancement of the country to their portfolio.

As an extension to this study, it is important to explore the kinds of subsidies that the

government and the aviation industry could provide in order to offset the small difference in cost

between ATF and biofuels that still persists. According to a US study, the subsidy for using

oilseed rotation crops is only required to be $0.35 per gallon of renewable jet fuel (Winchester et

al, 2013). A similar number would need to be calculated for India. Furthermore, it is important

for the Indian government to reduce the GST imposed on biofuels to 0% - a study outlining this

proposal would be beneficial in the future.

Conclusion

In this paper, I conducted a cost-benefit analysis to investigate the viability of

transitioning from fossil fuels to biofuels in India’s commercial aviation market. A high taxation

structure and economic decline of the country is threatening the country’s aviation sector. In

light of these factors, a policy change is required to ensure the long-term sustainability of India’s

aviation market, which is the third largest aviation market in the world and rapidly growing.

My analysis found that the environmental benefits of transitioning to biofuels in Indian

commercial aviation outweigh the financial costs of this transition, even under existing

regulations and infrastructure. The environmental benefits of biofuels significantly offset the

damage ATF does to the environment. Since these negative externalities fall indiscriminately

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over the whole population, the responsibility to pay attention to this problem falls on the

population as a whole, irrespective of financial status. Furthermore, a trend of increased

production factories and the desire to move towards a greener India make biofuels a larger

possibility in the future, under certain subsidies and regulations. The specificities of these

regulations will need to be thoroughly investigated in the future.

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Appendix

Data relevant to table 2:

SpiceJet Routes

Table (i)

Rank City Hour Minute TotalMinutesHaul Average1 Jaipur 0 55 55 S2 Adampur 0 55 55 S3 Dehradun 0 55 55 S4 Kishangarh 1 5 65 S5 Udaipur 1 20 80 S X6 Gorakhpur 1 20 80 S7 Kanpur 1 25 85 S8 Srinagar 1 25 85 S9 Varanasi 1 25 85 S10 Leh 1 25 85 S11 Dharamshala 1 30 90 S12 Bhopal 1 30 90 S13 Ahmedabad 1 35 95 S14 Patna 1 35 95 S15 Jammu 1 35 95 S16 Surat 1 45 105 M17 Shirdi 1 50 110 M18 Jharsuguda 1 55 115 M19 Jabalpur 1 55 115 M20 Durgapur 2 0 120 M21 Bagdogra 2 5 125 M22 Pakyong 2 5 125 M23 Pune 2 10 130 M24 Hyderabad 2 10 130 M25 Pune 2 10 130 M26 Vishakhapatnam 2 10 130 M27 Bombay 2 15 135 M28 Kolkata 2 15 135 M X29 Guwahati 2 30 150 M30 Goa 2 35 155 M31 Bangalore 2 45 165 M32 Chennai 2 50 170 M33 Coimbatore 3 0 180 L34 Kochi 3 5 185 L35 Thiruvananthapuram 3 20 200 L X36 PortBlair 3 35 215 L

117.222222

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SpiceJet routes weighted

Table (ii)

Data relevant to table 5:

Traditional Fuel Emissions data from IACAO

Table (iii)

Biofuel Emissions data

Table (iv)

Short-HaulMedium-Haul Long-Haul

No.ofFlights 15 17 4Weight 0.41666667 0.47222222 0.11111111

UID Engine Combustor Eng ---------------EI HC--------------No Identification Description Type T/O C/O App Idle

---------------g/kg--------------

19PW127 PW814GA TALON X TF 0 0 0.02 0.053CM032 CFM56-7B24 TF 0.10 0.10 0.10 2.40

---------------EI CO-------------- ---------------EI NOx--------------Idle T/O C/O App Idle T/O C/O App Idle

---------------g/kg-------------- ---------------g/kg--------------

0.05 0 0 1.76 13.88 23.26 17.94 11.46 6.252.40 0.40 0.60 2.20 22.00 25.30 20.50 10.10 4.40

BiofuelEmissionsData

FROMCBA

BIOFUELemissionsdataDr.Ray FROMCBA

B20 B25 B100CO2 -0.157 -0.7 -0.783HC -0.11 0 -0.563CO -0.126 0 -0.432Nox -0.012 0 0.058PM -0.18 0.3 -0.554Sox -0.2 -0.99 -1

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Emissions data by routes (SpiceJet)

Table (v)

Route DEL-UDR DEL-CCU DEL-TRV

Aircraft TypeDHC 8 402

(Q400)B737-800W B737-800W

LTO (below 3000 ft)

(kg/flight)241 712 673

Cruise (kg/flight)

1023 4385 6953

Total (kg/flight)

1264 5097 7627