Socioeconomic assessment of producing biogas from fish waste : a cost benefit analysis applied on the fish farming industry on Åland

University essay from SLU/Dept. of Economics

Abstract: One of the present-days largest challenges are the increased climate change and the scarcity of nonrenewable resources. From both global, national and local levels comes exhortations concerning lowering energy use from fossil fuels and streamlining resources more efficiently. An important solution to attack this problem is to increase the use of biofuels that leave a lower carbon footprint and that is not threatened by scarcity (if consumed in a responsible way). Developing more advanced biofuels, biofuels that are made from residues or waste, could create multiple environmental advantages and make exploitation of resources more effective and sustainable. Åland, the self-governing island between Sweden and Finland, is a small economy with an essential fish industry. Every year this island, with less than 30 000 inhabitants, produce fish for more than 300 000 human’s consumption in their fish farms every year. With that production comes a lot of waste that currently is mostly sold to animal farms in mainland Finland. This thesis will investigate whether Åland have a better use for the waste residual from their fish farming. The intent is to compare the current applications for fish waste to a biogas scenario where the fish waste is used for anaerobic digestion to make biogas upgraded to vehicle gas. The first objective is to identify theoretical impacts from the biogas scenario on society’s utility in relation to status quo. Both internal and external effects are recognized. The second objective is to value this scenario using a Cost Benefit Analysis where the impacts are monetized and evaluated over time to find whether it is socio economically profitable to applicate biogas production of fish waste. The result showed a negative Net Present Value for biogas production from fish waste of EUR 2 552 853 over a studied 40-year period. In the sensitivity analysis, the robustness of this result was tested and showed that the result stayed below zero regardless of whether the time frame was increased or whether the benefit for reducing environmental degradation was increased with time. The sensitivity analysis did however find that the result is significantly sensitive to different assumptions regarding the estimated benefit of reduced greenhouse emissions and to the production costs of biogas. If the total production of biogas could increase the production cost per kWh (kilowatt-hours) would reduce to the extent where biogas production from fish waste would break even with the status quo. Further research is recommended to include more impacts that were recognized but not monetized within this study and to develop customized economic instruments that would adjust for the external effects of producing biogas from waste products such as fish waste.

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