Environmental externalities assessment of a palm hydrotreated vegetable oil

When environmental impacts are expressed in terms of loss of welfare, using a monetary unit, external costs are obtained that can be easily used in a cost–benefit analysis or be internalized through the appropriate environmental policy instruments. The objective of this study was to assess, from an economic perspective, the environmental consequences of a palm biofuel obtained by means of oil hydrotreatment (HVO, hydrotreated vegetable oil) in Spanish refineries. Results were compared to two counterparts: a low-sulphur fossil diesel (<10 ppm) and another palm biofuel obtained in transesterification units (FAME, fatty acid methyl ester). The evaluation concluded that FAME and HVO would have a worse environmental performance when compared to diesel due to the increased emissions of nitrogen oxides, small particles (PM_2.5) and ammonium. They cannot be offset by emission reductions than other pollutants present, such as sulphur dioxides and greenhouse gases. Nevertheless, results are highly dependent on the approach used to quantify the external costs of GHG emissions.