At an August meeting in Washington, 17 countries, including the U.S., reaffirmed the aviation industry’s goal of achieving carbon-neutral growth by 2020. It was the most ambitious effort yet to address the issue of carbon emissions in air travel. To meet that goal, energy-efficient planes won’t be enough. The industry will need new, cheaper sources of biofuel for jets and much more of it.
United Airlines displayed its commitment in November when it debuted its first commercial flight using biofuel, on a Continental-operated Boeing 737-800 from Houston to Chicago. “As a company using over 4 billion gallons of jet fuel per year, we are a leading consumer, and we are interested in getting the biofuel market off the ground,” says Jimmy Samartzis, United’s head of sustainability. “If they can produce it, we can use it. As long as it is cost-competitive.”
Cost, not technology, is the rub. Biofuels have the potential to reduce the industry’s carbon footprint by 80%, according to the International Air Transport Association, but that works only if the biofuel industry can scale up to commercial production and scale down prices. U.S. airlines guzzle 18 billion gal. of jet fuel annually—just shy of 10% of the U.S.’s total fossil-fuel use—at a cost of $50 billion, or 25% to 35% of their operating costs. Switching to biofuels would increase jet-fuel costs substantially. When Alaska Airlines debuted its first commercial biofuel-powered flight late last year, it paid six times the cost of traditional jet fuel. United’s biofuel was four times as costly.
While the major airlines may compete for passengers, they have a common interest in developing the biofuel industry: they share a fuel supply chain. The Federal Aviation Administration’s acting administrator, Michael Huerta, notes that U.S. airlines purchase 90% of their fuel at only 40 airports. No matter what material is used to create jet biofuel—the camelina plant, lab-grown algae, cooking oil or other biofeedstock—the finished product has to be used in the same 50-50 mix with petroleum-based fuel. That centralized infrastructure, Huerta says, “should lead aviation to be a first mover in the deployment of alternative fuels.” He hopes the industry will have 1 billion gal. of sustainable fuel in use by 2018.
In the meantime, individual airlines are hammering out deals with promising biofuel producers. United, which spent $10 billion in 2010 on jet fuel—30% of its operating costs—has an agreement guaranteeing a large order with Solazyme, a San Francisco manufacturer of algae-based jet biofuel, and it is negotiating contracts with other producers. Solazyme operates facilities in Peoria, Ill., and Moema, Brazil, and it expects to produce as much as 30 million gal. by late 2013. “We had to scale up to get costs down,” says Jonathan Wolfson, Solazyme’s CEO and founder. “Airlines really push their suppliers, and that is what guys like United have been doing. They aren’t just sitting back and waiting for someone else. They understand their role.”
Such deals may be the quickest way to achieve scale, says Suzanne Hunt, an aviation expert at the Carbon War Room, an advocacy group backed by Virgin Atlantic founder Richard Branson. When biofuel companies have a big customer in place, it’s easier for them to secure investment to develop the products. Airlines, meanwhile, get an assured price even as biofuel demand increases. “Being the first brave flyer to buy technologies at the early stage, when [they are] expensive, is important, so [producers] can go to banks and say, ‘We have demand for this,'” Hunt says.
Airlines aren’t the only ones hoping to get biofuel on board. Boeing, for example, has become a major player, figuring that if it can help reduce fuel cost, airlines will have more cash to spend on—you guessed it—more aircraft. Billy Glover, vice president of environment and aviation policy at Boeing, says the company has invested in research on biofuel feedstocks around the world with the goal of replacing 1% of regular jet fuel with biofuel by 2015. Boeing also launched an ecoDemonstrator plane, which allows airlines to test out new biofuel sources. American Airlines participated in a test this summer and has plans for biofuel flights soon.
Planes running on plant-based fuel are great publicity for an industry trying to improve its green image. But airlines’ demand for biofuel is real. Their bottom lines depend on it.