2025 AIChE Annual Meeting

(392j) Supply Chain and Policy Design for Integrated SAF Production in Brazil: A Bi-Level Optimization Approach

Authors

Madelynn Watson - Presenter, West Virginia University
Aline Veronese da Silva, University of Sao Paulo
Alexander Dowling, University of Notre Dame
Aviation accounts for ~3% of global CO2 emissions [1]. Furthermore, it cannot rely on common decarbonization technologies (e.g., electrification and hydrogen) in the short- to medium-term (2030-2050) as they require two or three decades of development and capital-intensive investments [2]. Sustainable aviation fuel (SAF) has gained increasing interest from the aviation industry to reduce CO2 emissions due to its economic competitiveness and drop-in compat­ibility with existing aircraft and fuel systems [3]. SAF is expected to account for 65% of total emissions reductions in this sector [4]; however, several challenges currently hinder commercial-scale SAF development. Notable challenges include underdeveloped biomass-to-bioenergy supply chains, high SAF production costs, and a lack of monetary incentives to support capacity development [3,5-6].

Brazil’s experience in renewable energy development, historical government support of biofuels, large ethanol capacity, and existing biomass infrastructure create a unique opportunity for commercial SAF development. Brazil was one of the first countries to use biofuels for transportation and has had multiple biofuel incentive programs that the Brazilian government has supported since the 1970s [7]. They are currently the second-largest bioethanol producer globally and the largest bioethanol producer from sugarcane [7]. Bioethanol from sugarcane can be upgraded to SAF in Brazil via the ASTM-certified pathway alcohol-to-jet (ATJ) [3].

Integration of SAF production in the Brazilian sugarcane industry presents complex, interdependent, multiscale optimization problems, including a strong dependence on sustainable energy policy, undeveloped SAF supply chains, and hierarchical interactions between supply chain managers and individual mill owners.

In this work, we propose a bi-level optimization formulation to design a two-stage SAF supply chain in Brazil to meet 50% of the country’s international airport jet fuel demand. The optimal supply chain network minimizes the total system cost of SAF integration based on existing biomass infrastructure (sugarcane mill and airport locations) and sugar, ethanol, and jet fuel market prices and maximizes individual sugarcane mill profits.

In this bi-level formulation, we consider the supply chain central planner as the leader. The leader sets the commodity prices of sugar, ethanol, and SAF and decides the locations of mills that produce SAF to minimize system costs. Then, the sugarcane mill owners (the followers) determine the production amounts of sugar, ethanol, and SAF that maximize profit. The optimal supply chain design allows us to set realistic incentive and technology targets for successful SAF integration in the Brazilian sugarcane industry. Specifically, we determine break-even SAF incentive prices. Additionally, using sensitivity analysis, we quantify the impact of technological advances in ethanol upgrading technologies on SAF incentives. Furthermore, we compare the bi-level optimization results with single-level supply chain optimization to elucidate the importance of considering this real-world perspective and quantify the value of considering hierarchical optimization.



References

  1. IEA Aviation. 2024, [Online]. Available: https://www.iea.org/energy-system/transport/aviation.
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  3. Watson, M.; Machado, P.; da Silva, A.; Rivera, Y.; Ribeiro, C.; Nascimento, C.; Dowling, A. Sustainable aviation fuel technologies, costs, emissions, policies, and markets: A critical review. Journal of Cleaner Production. 2024, 141472.
  4. IATA, Our commitment to fly net zero by 2050, [Online]. Available: https://www.iata.org/en/programs/sustainability/flynetzero.
  5. Wei, H.; Liu, W.; Chen, X.; Yang, Q.; Li, J.; Chen, H. Renewable bio-jet fuel production for aviation: A review. Fuel. 2019, 254, 115599..
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  7. de Oliveira, S. M.; de Oliveira Ribeiro, C.; Cicogna, M. P. V. Uncertainty effects on production mix and on hedging decisions: The case of Brazilian ethanol and sugar. Energy Economics. 2018, 70, 516–524.