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A cost-benefit analysis of all-electric flight : How to do a CBA for a non-existing technology?

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Abstract
Increasing climate ambitions mean that emissions of greenhouse gases, even from the aviation sector, must fall. The purpose of this study has been to contribute to this development by doing a benefit-cost analysis of all-electric aviation (AEA). We define AEA as battery-driven aviation without a combustion engine or fuel cell on board. Since the technology only exists in very small scale today, much of the work has been to find guestimates of the costs. However, we have been able to build on very good data on all take-offs and landings in Sweden year 2019. On the other hand, the data we have had on ticket prices is very poor. Based on the available data, we have estimated supply and demand functions for conventional flight in 2019. These estimates have been used to calculate the producer and consumer surpluses from flight, both in 2019, in the business-as-usual using sustainable aviation fuels (SAFs), and for AEAs, the latter two in 2030, 2040, and 2050, respectively. The results indicate that at least from 2040 onwards, with the introduction of larger aircraft with the capacity of up to 100 passengers and a range of 650 km, AEAs will be commercially viable on many, if not all routes studied. AEAs seem to have a higher producer surplus than conventional, SAF-driven aircraft. Since AEAs, at least in 2030 and 2040 are slower than conventional aircraft, the consumer surplus falls given fixed ticket prices. We also calculate the benefits from reduced high-altitude effects, which gives a measure of the societal benefits from AEA and thus an indication of how much public funds that could be invested in airport infrastructure for AEAs. We recommend that investments for AEA infrastructure start from a few airports and are expanded over time. The only further policy we recommend is R&D subsidies for AEA and battery technology development. No other policy instruments seem to be necessary to get AEAs to fly.

Suggested Citation

  • Jussila Hammes, Johanna & Johansson, Magnus, 2023. "A cost-benefit analysis of all-electric flight : How to do a CBA for a non-existing technology?," Working Papers 2023:3, Swedish National Road & Transport Research Institute (VTI).
    • Handle: RePEc:hhs:vtiwps:2023_003
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    More about this item

    Keywords

    All-electric aviation; Benefit-cost analysis; Regional flight; Sweden;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D62 - Microeconomics - - Welfare Economics - - - Externalities
    • R41 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - Transportation: Demand, Supply, and Congestion; Travel Time; Safety and Accidents; Transportation Noise

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