Uy J.G., Go R.K., Aviso K.B., Juan J.L.S., 2024, A Bilevel Integer Programming Approach for a Stackelberg Game on Sustainable Aviation Fuel Production Optimization, Chemical Engineering Transactions, 113, 205-210.
Along with the encouragement of government sectors to utilize sustainable aviation fuel, production firms must ensure that environmental sustainability is gained together with economic sustainability. Sustainable aviation fuel has been proven effective by multiple studies to alleviate the carbon emissions that the aviation industry brings to the environment. The biggest hindrance of its full adoption is its high cost. Governments need to develop strategies which will encourage industries to adopt the use of sustainable aviation fuel. This government-industry interaction when considered, can facilitate the development of optimal environmental policies from government which can influence industry to align its decisions towards the government’s goals. This work uses a bilevel integer programming approach to develop a Stackelberg or leader-follower game model for the production of sustainable aviation fuel. The model considers different production pathways while taking into account environmental (government’s goal) and economic (industry’s goal) sustainability. To implement and test the optimization model, an illustrative case study is used. Results show that incentives are useful in encouraging the follower to compromise and choose the Alcohol to Jet (ATJ) pathway even though they do not fully benefit to the decision. The optimal solution mix from the illustrative case study resulted in a reduction of 20,109 M t CO2 reduction and an increase in cost of 906,014 M EUR over a period of ten years.
