Committee on Aviation Environmental Protection

1

• Committee on Aviation Environmental Protection
• Sixth Meeting
• Montreal, Canada, 2-12 February 2004
• Economic Analysis of NOx Stringency Options
• Forecasting and Economic Support Group

2
FESG Economic Analysis of NOx Stringency Options

• Models, Databases and Methods
• Assumptions
• LTO NOx Benefits Assessment
• Assessment of Costs
• Cost Benefit Results

3
Models, Databases and Methods

• Models
• FAA Emissions Dispersion Modeling System (EDMS)
• Boeing Global Emissions Model (GEM)
• Spreadsheet model to aggregate costs developed by
  Campbell-Hill
• Databases
• FESG Fleet Forecast
• WG3 In-Production Airframe/Engine Database
• Methods
• WG3 Technology Level Matrix (TL1, TL2, TL5A, and
  TL5B)
• Discounting to allow costs and benefits to be
  compared with one another even though they accrue
  at different time periods

4
FESG Economic Analysis of NOx Stringency Options

• Models, Databases and Methods
• Assumptions
• LTO NOx Benefits Assessment
• Assessment of Costs
• Cost Benefit Results

5
Key Modelling Assumptions

• From FESG Fleet Forecast
• Time horizon 2002 to 2020
• Unconstrained demand
• No further improvement to airspace and airport
  capacity and delay
• Increased aircraft size and productivity

6
Key Modelling Assumptions (continued)

• FESG Economic Analysis
• Applying to base case
• No change in NOx technology over forecast period
• Applying to options
• Engine technology is only developed to meet a
  stringency increase
• Technology development defined by level (TL1
  through 5B)
• Technology changes applied across engine family
• No impact to aircraft mission and payload
• No fuel burn penalty except for a TL5B solution
  ( 2)
• Market-driven non-compliant engine cut-off
• Competition to maintain market share

7
Number and Percentage of Types Failing Stringency
Levels
8
Percentage New Engine Deliveries Affect by NOx
Stringency Options
Engine Deliveries from Implementation Date to
2020 FESG Fleet (Aircraft 20 to 650 seats)
9
FESG Economic Analysis of NOx Stringency Options

• Models, Databases and Methods
• Assumptions
• LTO NOx Benefits Assessment
• Assessment of Costs
• Cost Benefit Results

10
LTO NOx Benefits Assessment Scope and Limitations

• Benefits are NOx emitted over the landing and
  take-off cycle using ICAO engine certification
  data and ICAO times in mode
• Analysis of environmental and health impact of
  engine NOx emission has not been made
• Results are not appropriate for
• Comparison with other sectors or other transport
  modes
• Comparison with Local Air Quality Modelling
  results
• Comparison with Climate Change Modelling results

11
LTO NOx Benefits Assessment 2020
Percent Total LTO NOx Reduced
12
FESG Economic Analysis of NOx Stringency Options

• Models, Databases and Methods
• Assumptions
• LTO NOx Benefits Assessment
• Assessment of Costs
• Cost Benefit Results

13
Assessment of Costs

• Two types of cost of a new NOx certification
  standard
• Non-Recurring manufacturer technology
  acquisition and
• engine development costs
• Recurring incremental manufacturing and
  airline
• operational costs
• Methodology used ensured no double counting
• No projection of how costs might be translated
  into engine or fare prices

14
Assessment of Manufacturer Non-Recurring Costs

• Total non-recurring manufacturer cost
• TL1 10 million
• TL2 50 million
• TL5A 75 to 150 million
• TL5B 500 to 1,000 million
• __________________________________________________
  ___

Manufacturer Work Content Associated with Each
Technology Level Category
Technology Level (TL)____
1 2 5A 5B ________________________________________
_____________ Product design X X X X Certificat
ion analysis/ground test X X X X Product
development X X X Certification flight
test X X X Post certification product
improvement X X X Applied technology
development X X Post certification
redesign X X New Technology research X Pote
ntial engine architecture change X
15
Assessment of Recurring Operator Manufacturing
Costs

• Incremental recurring manufacturing cost per
  engine
• TL1 No increase
• TL2 20 thousand
• TL5A 40 thousand
• TL5B 150 thousand
• __________________________________________________
  ______
• Combustor is approximately 5 of total engine
  cost. Additional cost of technology enhancement
  per engine based on
• TL1 No incremental cost
• TL2 Incremental combustor cost 0.25
• TL5A Incremental combustor cost 0.50
• TL5B Incremental combustor cost 2.50

16
Assessment of Recurring Operator Costs

• Maintenance
• up to 2 per engine flight hour
• Spare engine inventory associated with split
  fleets
• Inventory for unaffected engine fleet
• Inventory for technology enhanced engine fleet
• Costs associated with TL5B
• Additional fuel
• Additional MTOGW to carry the incremental fuel
• Landing fees due to additional weight
• Diminution of value of existing fleet
• TL1 No decrease
• TL2 - 250 thousand
• TL5A - 500 thousand
• TL5B - 1,000 thousand

17
FESG Economic Analysis of NOx Stringency Options

• Models, Databases and Methods
• Assumptions
• LTO NOx Benefits Assessment
• Assessment of Costs
• Cost-Benefit Results

18
Ranking of Cost per Tonne of NOx Central Analysis
19
Qualifies to Economic Analysis

• Assessment of recent events places results two
  years out
• 2020 and 2030 absolute values would be 2 lower
• Relative ranking unchanged
• Assessment of longer-term benefits
• Effect of ICAO times in mode and aircraft
  performance
• Actual values of central estimates 20 lower
• Relative ranking unchanged
• Effect of no increased ticket price on demand
• FESG review of CAEP/5 CBA indicates demand effect
  0.3-0.35
• Relative ranking unchanged

20
Qualifies to Economic Analysis (continued)

• Effect of time period used
• Uncertainty of results increases rapidly for
  projections beyond 2020
• Relative cost-benefit ranking for 2030 did not
  change
• Effect of no further stringency increase on
  benefits results
• Long-term benefits of CAEP/6 options are reduced
  by future stringency
• Effect on ranking not studied
• Effect of Discounting
• Relative ranking unchanged

21
Qualifies to Economic Analysis (continued)

• Effect of the lead time for 2008 TL5B changes
• Cost-benefit results would be lower but would not
  meet levels for options implemented in 2012 due
  to earlier introduction of TL1, TL2 and TL5A
  enhanced engines under 2008 options
• Relative ranking unchanged
• Non-recurring high and low cost estimates
• Relative ranking unchanged
• Residual values
• Relative ranking unchanged

22
Summary of Results of Central Analysis

• -10 option has the lowest cost per tonne of NOx
  for a given implementation date ( 2008, 2012)
• The relative ranking amongst the NOx stringency
  options does not change under any of the major
  assumptions tested
• The relative ranking amongst the NOx stringency
  options does not change for the duration of the
  forecast period under study
• A lesser NOx stringency increase implemented in
  2008 could provide a similar NOx benefit to a
  much higher stringency implemented in 2012, and
  at lower cost, e.g.
• - 10 in 2008 - 25 in 2012 - 15 in 2008
  
• LTO NOx Benefit 146,413 tonnes 156,880
  tonnes 196,900 tonnes
• Cost (low estimate) 24,709/tonne 247,545/tonne
  49,966/tonne

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Backup Slides
24
Cost-Benefit Results of NOx Stringency Options
Central Analysis
Cumulative 2002-2020 Results 2008 Implementation
25
Relative Ranking of NOx Stringency Options Do Not
Change with Adjustments to Some of FESG
Assumptions for Operator Costs
2008 Implementation, Discount Rate 0
A

• Without Loss Fleet Value (As shown
• in FESG report, WP19)
• Case A Plus Reducing Spares Inventory cost by 90
  (Factor of 10 reduction)
• Case A Plus Reducing fuel burn penalty assumption
  of 2 for TL5B engines to 0

B
C
26
Relative Ranking of NOx Stringency Options Do Not
Change with Adjustments to Some of FESG
Assumptions for Operator Costs
2008 Implementation, Discount Rate 0
A

• Without Loss Fleet Value (As shown
• in FESG report, WP19)
• D Case A Plus Reducing Spares Inventory cost by
  90 (Factor of 10 reduction) Plus Reducing fuel
  burn penalty assumption of 2 for TL5B engines to
  0

D
27
Cost-Benefit Results of NOx Stringency Options
Central Analysis
Cumulative 2002-2020 Results 2012 Implementation
28
Relative Ranking of NOx Stringency Options Do Not
Change with Adjustments to Some of FESG
Assumptions for Operator Costs
2012 Implementation, Discount Rate 0
A

• Without Loss Fleet Value (As shown
• in FESG report, WP19)
• Case A Plus Reducing Spares Inventory cost by 90
  (Factor of 10 reduction)
• Case A Plus Reducing fuel burn penalty assumption
  of 2 for TL5B engines to 0

B
C
29
Relative Ranking of NOx Stringency Options Do Not
Change with Adjustments to Some of FESG
Assumptions for Operator Costs
2012 Implementation, Discount Rate 0
A

• Without Loss Fleet Value (As shown
• in FESG report, WP19)
• D Case A Plus Reducing Spares Inventory cost by
  90 (Factor of 10 reduction) Plus Reducing fuel
  burn penalty assumption of 2 for TL5B engines to
  0

D
30
LTO NOx Benefits Assessment Central Analysis
Base Case Results
Total and Percentage Departures and NOx Emissions
by Aircraft Category
31
Percentage New Engine Deliveries Affect by NOx
Stringency Options
Engine Deliveries from Implementation Date to
2020 Aircraft greater than 100 seats
32
LTO NOx Benefits Assessment Central Analysis
2030 Estimate Results
Cumulative Change in NOx and CO2 Engine Emissions
33
Assessment of Total Costs of NOx Stringency
Increase
Incremental Cost Impacts of NOx Stringency
Options 2002-2020
34
Cost-Benefit Ranking of NOx Stringency Options
Central Analysis
35
Cost-Benefit Ranking of NOx Stringency Options
2002-2030
36
Introduction

• Options Studied -5, -10, -15, -20, -25,
  -30 below the ICAO CAEP/4 Standard
• Implementation dates 2008 and 2012
• Costs are in 2002 U.S. dollars
• A base case in which ICAO does not implement any
  of the options is established
• The costs and benefits of each option are then
  estimated and the results compared against the
  base case

37
Introduction

• Quantity of CO2 and the relationship between CO2
  and NOx are reported
• Relationship between noise and emissions
  certification standards is discussed but not
  addressed in the analysis