Qantas, Solena Group to partner in aviation biofuels effort

In Australia, Qantas and Solena Group have announced that they expect to finalize a partnership in the next two weeks to determine the feasibility of a Fischer-Tropsch based biofuels plant in Australia that will produce aviation biofuels from waste.

Early last year, Solena inked a $309 million partnership with British Airways to construct a 16 million gallon aviation biofuels demonstration plant in East London. The London project would utilize up to 500,000 tonnes of waste as feedstock for the project.

According to Qantas and Solena, the partners expect to complete a business case by year-end – as airlines struggle to determine the most cost-effective means of coping with new EU regulations on aviation carbon emissions that will take effect in 2012 under the Emissions Trading Scheme.

According to a report in the Guardian, Solena is also negotiating at an early stage with Lufthansa, and for a Dublin-based project with a coalition of airlines including easyJet, Ryanair and Aer Lingus – with a prospective price tag of $309 million per project.

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The Digest’s Take: A breathtaking expansion of the potential investment and user base for aviation biofuels. It also confirms that carbon regulations drive investment interest from obligated parties, and provides a boost for the supporters of Fischer-Tropsch technologies, which have struggled for years with a reputation of being too capital-intensive in order to manufacture biofuels at commercially feasible per-gallon costs – with costs of $600-$1 billion per commercial-scale project previously touted as target construction costs.

The move by Solena and Qantas has also broadened the geography of aviation biofuels, which had primarily been confined to interest in Europe and the US, although Air China, PetroChina and Boeing had made strong preliminary moves towards opening up Eats Asia for aviation biofuels, and Air New Zealand had successfully tested aviation biofuels though announcing no commercial-scale biofuels purchases.