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H-5 CHAPTER 2 Conducting a Cost­Benefit Analysis of Alternative Jet Fuel Use 2.1 Cost­Benefit Analysis AFIT displays baseline and alternative fuel cost and emis- Assessment Process sion estimates and the relative change between them at the top of each tab, keeping a rolling update as users enter values Making provision for or switching entirely over to an alter- in the lower portions of each tab. The user is able to deter- native jet fuel carries with it a variety of costs. Modifications mine the relative cost changes and compare them to the rel- to equipment and airport infrastructure and their correspond- ative emission reduction benefit for use in deciding the merits ing cost estimates should all be included in the cost­benefit of a switch to an alternative fuel. AFIT does not answer the comparison analysis. It is also possible that adopting a single question of whether alternative fuel use is the right decision. fuel source for aircraft and diesel engine GSE will reduce cost It simply compares the costs and emissions with and without where a new airfield or significant expansion of an existing a drop-in alternative fuel. airfield is involved. AFIT is designed to analyze drop-in fuel use in either exist- AFIT is a software cost and benefit calculation tool and is ing fuel delivery systems, where no additional or new fuel offered to assist users with the complex calculations required delivery upgrades are planned, or in cases where a new airfield to determine costs and emissions reductions. Users can either or significant expansion of the existing fuel delivery system is provide custom inputs based on their own circumstances and planned. requirements or opt for default input values provided in AFIT. Research into typical costs for delivery, storage, blending, filtering, and on-site equipment upgrades and replacements 2.2 Using AFIT produced a range of expected values likely in the switch to an alternative fuel. These default values are offered as guides to AFIT is available on the CD enclosed with this handbook. the user. AFIT displays conversion costs both in terms of per- AFIT can be run to conduct a complete cost and emission gallon of fuel consumed and total cost. reduction benefit assessment. To estimate costs, the user needs AFIT consists of five tabs, or information areas: information on current fuel usage, fuel prices, airport fueling infrastructure, and the ground support equipment that would 1. General setup information--monthly fuel usage, fuel use the fuel. To estimate emissions reductions, the user needs price, and airport fuel conversion type. to have an EDMS run with an emissions inventory. If an EDMS 2. Fuel economics--fuel transport, storage, and blending run is not available, the tool can still be used to estimate the information. change in costs. 3. Equipment costs--GSE part replacements for filters, seals, and fuel pumps (which may be required); avoided capital Download and Launch the Software investment cost of a diesel fueling station in the case of air- port expansion or new facility construction. Copy the AFIT Installer file folder to your computer. Double 4. Emissions--emissions affecting air quality as well as life- click the installer to install AFIT on your computer. Follow cycle greenhouse gas emissions; both are provided for the the instructions, clicking "Next" to complete the instal- current fuel and the alternative fuel. lation. Find the folder titled "AFIT" on your computer's 5. Report--fuel and equipment cost and emissions compar- start menu (typically under "All Programs") and launch the ison results. application.

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H-6 Upon opening AFIT the user is presented with the "Setup" Enter whole gallons (decimal places are not critical) for the tab and can see the other four tabs, or sections of the analysis average fuel consumed in a month. If consumption statistics tool, that group input and output of similar type. The "Setup" are listed in barrels, the conversion factor for barrels to gallons tab collects basic information about the user's monthly fuel is 42 gallons/barrel. (Multiply barrels used by 42 to get gallons consumption, price paid, and fuel scenario. used.) These inputs are only used for estimating monetary costs; they are not used for the emissions calculations, which will be discussed below. Enter the current price for Jet A and Setup diesel fuel. As broad price swings can occur over the course The "Setup" tab, Figure 1, allows the user to select the type of a year, selecting a yearly average or another suitable price of analysis: fuel costs, equipment costs, and/or emissions approximation representative of typical values is suggested. (selecting or not selecting these fields gives or restricts the Several sources exist to help the user with fuel price estimates. user's access to the associated parts of AFIT), the alternative Appendix B contains a list of sources where the AFIT user can fuel composition that will be analyzed, and where it will be find current and historical fuel price information. used. The alternative fuel composition options are (1) JET A Default values exist in AFIT if the user does not know the + SPK, (2) ULSJ, and (3) ULSJ + SPK. Due to ULS standards, input values for the "Setup" tab. Clicking the "Default" button the Jet A + SPK fuel composition cannot be used in the GSE in the lower right corner will import default values. The ana- and can only be used in aircraft. The user selects the blend lyst must provide airport fuel-consumption statistics; other- percentage for the alternative fuel (50% is the maximum wise, a default value of zero will be used. Fuel prices for Jet A blend percentage for alternative fuel in this version of AFIT). and diesel reflect representative values of the fall of 2008; In this tab, the user also inputs monthly fuel-use informa- updated values can be found on the EIA website at http://www. tion for Jet A and diesel in terms of consumption and price. eia.doe.gov/oil_gas/petroleum/info_glance/petroleum.html. Three "Equipment Cost Settings" options are presented on the "Setup" tab. These allow the user to determine whether separate (possibly existing) diesel fuel facilities are to be used or whether fuel supplied to GSE and other diesel equipment will use the jet fuel supply system. These fields activate other functions and calculations in AFIT to help guide the user through the analysis process. · Click the "Existing System" box if the alternative fuel will be delivered to and through the existing fueling system only. After clicking, a check mark should appear. No additional fuel delivery equipment will be purchased or installed. · Click the "New Construction" box if new diesel fueling and delivery equipment will be constructed and installed. After clicking, a check mark should appear. Typically this includes fueling pumps, storage tanks, fueling-island concrete, pip- ing, valves, and so on. · Click the "Decommission Cost" box if diesel fueling equip- ment will be removed or taken out of service. If the user supplies no information, upon clicking to navi- gate to another tab, the software will ask the user if default values should be used. If "no" is selected, other fields are left open for user input values. Selecting "yes" will insert appro- priate fields with default values. There is also a "Finance" option. Since decommissioning costs and new construction can be quite expensive, the ability to calculate typical financ- ing costs over a period of payments is enabled by clicking the Figure 1. "Setup" tab. finance check box.

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H-7 Within the "Setup" tab, the user also selects the fuel compo- sition being examined. Within the "Alternative Fuel Composi- tion" box, the user selects the primary fuel--ULS Jet or SPK. The blend percentage determines the amount of alternative fuel that is being used--values between 0% and 50% are avail- able. The user has two check boxes to select the fuel composi- tion that is being blended with the alternative. The user should select "Jet A" if he or she is interested in examining a blend of SPK fuel with conventional jet fuel. The user should select ULSJ if the user is interested in examining either ULS jet fuel or in examining a blend of SPK fuel with ULS jet fuel. Because conventional jet fuel is not allowed for use in GSE, the AFIT tool will only examine GSE emissions if the ULSJ box is selected. The user selects the fuel being used in the air- craft and GSE by selecting the appropriate boxes underneath "Aircraft Fuel" and "Ground Support Equipment Fuel." If the user had previously selected "Jet A," then the AFIT tool would automatically select "ULS Diesel" for the "Ground Support Equipment Fuel," and the "Alternative" option would not be available. Fuel Economics The "Fuel Economics" tab, Figure 2, captures all the costs associated with production and transportation of the alterna- tive fuel from its production source to the wing of the plane and GSE. Production cost is entered as the purchase price of Figure 2. "Fuel Economics" tab. the alternative fuel from the production facility. Fuel delivery is broken down into "off airport" and "on air- port" components. Off airport includes shipment from pro- "Fuel Cost." The user-entered Jet A and diesel fuel prices are duction to the airport fence line. On airport captures costs shown, as is the estimated alternative fuel price based on user from the fence to the aircraft and GSE. These include airport inputs lower down on the tab. Annual total fuel cost estimates costs such as storage, flowage, volume throughput charges, are shown, as is the cost difference between Jet A and diesel and so on. Delivery is typically by pipeline, rail car, barge, or and the alternative fuel. truck. Selecting one of these modes inserts a default cost, or the user can supply the user's own by typing it into the field. The default costs are truck, $0.35; barge, $0.05; dedicated Equipment Cost pipeline, $0.02; and rail, $0.10 (all per gallon). There is no The "Equipment Cost" tab, Figure 3, captures the costs asso- default cost for "other" in this version of AFIT. To enter any ciated with changes to the aircraft and GSE that accompany a of the above default costs, select a mode of transportation and change in fuel. It also captures the avoided fueling infrastruc- then click default at the bottom of the tab, and the cost will be ture costs associated with using the alternative fuel in both air- entered in the field. If an airport operator is buying an alter- craft and diesel engine GSE and the decommissioning costs of native fuel "at the fence," then by entering zeros for off-airport taking existing diesel fueling equipment out of service. costs, AFIT will reflect the price at the airport. AFIT assumes that the alternative fuel has been certified for The user enters values appropriate to the airport in the aircraft use. As a result there are no equipment costs associated analysis, or typical average cost-per-gallon estimates can be with aircraft, which should be a valid assumption for 50-50 input by clicking the default button in the bottom right corner. alternative fuel blends. Higher alternative fuel concentrations These various off-airport and on-airport handling costs are could require replacement of aircraft seals due to reduced fuel added to the production cost, and new totals are calculated by aromatic content or a decrease in required maintenance due to AFIT and displayed at the top of the tab in the section called reduced sulfur content.

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H-8 over several years and a period of payments is selected by the user. Emissions The "Emissions" tab, Figure 4, captures the changes in emissions that may result if the airport switches to an alter- native jet fuel. It is also where the user must have access to EDMS reports and software. The user must locate an existing EDMS study to form the basis for the baseline in the AFIT study. It is important to note that the emissions displayed are adjusted for this analysis and are not intended to match the EDMS results. To determine the life-cycle emissions of a fuel, a specific feed- stock and production pathway must be selected from the list of potential alternative jet fuels using the pull-down menu. The life-cycle emissions are provided in the form of ranges to give the user a sense of the emissions that may result from each alter- native fuel. The user can also input custom emission factors for another fuel (if it is not on the list) by selecting the "User- defined emission factors" radio button. Additional details on life-cycle emissions can be found in Appendix D. Figure 3. "Equipment Cost" tab. The "Equipment Cost" tab captures the costs associated with upgrades and replacements necessary on certain GSE. Rubber seals, fuel filters, fuel pumps, possible warrantee losses, and the labor associated with replacements are cap- tured here. Quantities and costs of each and the labor required to perform installations and other maintenance must be estimated. While GSE conversion costs add to the price of the alter- native fuel, in the case of a new airfield or expansion of exist- ing facilities, a single fuel source for both aircraft and GSE allows an airport to avoid construction cost for diesel fuel- ing facilities. If the user selected the "New Construction" box on the "Setup" tab, these fields will be active for data entry. Typical diesel fuel delivery infrastructure, equipment, and fabrication costs are represented in this section of the tab. If the user has not checked the "New Construction" box on the "Setup" page, these fields will not be accessible. The user will input construction cost estimates to compute avoided diesel fueling equipment and construction costs. Cost totals are represented at the top of the tab in both total single year expensed cost and monthly costs if the project is financed Figure 4. "Emissions" tab.

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H-9 Report The "Report" tab, Figure 5, compiles the information input by the user, calculated by AFIT, and derived from EDMS to represent, on a single page, the comparison in costs to deliver an alternative drop-in fuel and the reduced emissions that result. The user can view the summary cost and emissions data for comparison. This tab also permits the user to print reports to capture cost and emissions estimates for comparison. Figure 5. "Report" tab.