Today, the wholesale price for kerosene-type jet fuel is $1.90 per gallon. The US Energy Information Administration (EIA) forecasts the price to be $2.70 in 2013 and $3.52 in 2017. This contrasts with a cost to produce Jatropha oil jet fuel today at about $1.50 per gallon. Thus, unless the forecasts are wildly incorrect, jet fuel made from Jatropha oil should become very competitive in the marketplace. In addition, since pricing will continue to be set or strongly influenced by petroleum prices for many years, the gross margin for Jatropha jet fuel is already attractive and should remain high.

Assuming a wholesale price of $2 per gallon for Jatropha jet fuel, the total addressable market for jet biofuel is $168 billion and the total amenable market (at the 10% blending level) is $16.8 billion. A market share of only 10% at a 10% blending level (20 million barrels per year) thus represents $1.68 billion in value.

The annual global kerosene consumption is 276 million tonnes. To replace 10% of fossil fuel-based kerosene with bio jet fuel, an annual production of biofuels of 28-30 million tonnes is required, which is in line with the annual consumption of soybean oil or palm oil. With the new EU carbon credit scheme in effect in 2012, all airlines will scramble to buy the available biokerosene.

3.3.11