Method used for the economic evaluation
The purpose of the economic evaluation presented here is to illustrate under which circumstances wood gas operation of a vehicle may compete with straight diesel operation.
This will be done by a comparison between the marginal costs for the gasifier system and the savings on fuel costs for two applications, a farm tractor and a truck, of the same size as those described in section 3.2.
Three cost levels for the gasifier system will be analyzed, a high level representative of conversion of single vehicles in Sweden and two lower levels assumed to represent conversion of single vehicles in countries with much lower labour costs.
A range of labour costs and a range of fuel costs believed to represent the present situation in Sweden as well as in the Third World will be analyzed. Capital costs will be calculated by the annuity method assuming a fixed real interest rate 1/. All costs will be evaluated in US dollars at a mid-1984 rate.
V The real interest rate is equal to the actual interest rate minus the inflation rate.