Sugar Futures as an Investment Alternative During Market Turmoil: Case Study of 2008 and 2020 Market Drop

The Case for Biojet Fuel from Bioethanol in Brazil: An Optimization-Based Analysis Using Historical Market Data

Biojet fuel is an attractive option to reduce global greenhouse gas (GHG) emissions from the aviation industry. In this paper, we propose a two-stage stochastic linear program to analyze the optimal operation of an integrated sugarcane mill that produces sustainable aviation fuel (SAF) using historical time-series commodities price data from Brazil. We find currently available alcohol-to-jet (ATJ) technologies require premiums between 0.4 $ L-1 (2.07 R$ L-1) and 2 $ L-1 (10.34 R$ L-1) to incentivize biojet fuel production from sugarcane. Similarly, with emerging ATJ technologies, premiums between 0.1 $ L-1 (0.52 R$ L-1) and 1.25 $ L-1 (6.46 R$ L-1) are required. Sensitivity analysis quantifies the impact of ATJ technologies' conversion and operating costs, as well as SAF incentives, on the fraction of weeks biojet fuel production is favorable, which can guide technology and policy development. Currently, sugarcane mills are operated with little flexibility due to the structure of the Brazilian market. We also estimate that a hypothetical, fully flexible sugarcane mill could gain up to 6 million R$ per year in profit; most of this value comes from the flexible operation of the ATJ process, which motivates standalone upgrading facilities. Finally, we show how analyzing the optimality conditions of the integrated sugarcane mill allows for easy communication of optimal behavior in terms of relative product prices. These results provide a basis to guide biojet fuel policy and technology development in the context of Brazil, and these ideas can be extended to develop biojet fuel capacity and supply chains globally.

Safe-haven properties of soft commodities during times of Covid-19☆

We use wavelet coherence analysis on global COVID-19 fear index and, soft commodities’ spot and futures prices to investigate safe-haven properties of soft commodities over the period from January 28, 2020 to April 29, 2021. Our findings show that each of the sampled soft commodities shows safe-haven behavior in one of the spot or futures markets and for one of the short-term or long-term investors during the times of COVID-19. Our results also show that safe-haven properties of soft commodities are contingent upon the nature of the commodity. The findings of our mean-variance portfolio analysis indicate that the portfolios with commodity futures are less risky and efficient compared to the portfolio containing stocks only, thus robustly supporting the safe-haven properties of soft commodities during COVID-19. Our results not only have important implications for individual investors and asset managers in suggesting particular soft commodities to strengthen safe-haven and diversification features of their portfolios but also can assist the policy makers to understand and disentangle health fear dimension of several interlocking dynamics affecting the spot and futures prices of soft commodities during COVID-19.

Impact of Agriculture and Energy on CO2 Emissions in Zambia

The world has experienced increased impacts of anthropogenic global warming due to increased emissions of greenhouse gases (GHGs), which include carbon dioxide (CO2). Anthropogenic activities that contribute to CO2 emissions include deforestation, usage of fertilizers, and activities related to mining and energy production. The main objective of this paper was to assess the impacts of agriculture and energy production on CO2 emissions in Zambia. This research used econometric analysis, specifically the Autoregressive-Distributed Lag (ARDL) Bounds Test, to analyze the relationship between CO2 emissions and GDP, electricity consumption, agricultural production, and industry value added. The results showed the presence of cointegration, where the variables of CO2 emissions, GDP, electricity, and agriculture converge to a long-run equilibrium at the rate of 74%. Further, there was a short-run causality towards CO2 emissions running from agriculture and the consumption of energy as indicated by the Wald test. This is the first study of its kind that empirically shows the impact of agricultural activities and energy consumption on the Zambian environment through their contribution to CO2 emissions at a macro (country) level. This paper also presents recommendations that are pertinent to mitigate these effects. To deescalate environmental degradation, we propose increasing the number of access points for multiple renewable energy sources across the country; discouraging deforestation, the usage of conventional fertilizers, and the burning of vegetation for fertilizers; encouraging afforestation and reforestation, in addition to providing subsidies, training, and financial support to farmers and entrepreneurs who decide to use environmentally friendly agricultural methods and renewable energy. This research highlights the serious impacts of anthropogenic activities on CO2 emissions. The study was intended to assist Zambian policymakers in formulating and implementing environmentally friendly policy measures or systems that will contribute towards environmental protection commitments and sustainable economic development.