Ground Delay: Where are the Sustainable Aviation Fuels?

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When it comes to sustainable aviation fuels, the public is yelling impatiently for take-off, and the airlines are pleading impatiently for off-take. So, where are the gallons?

There are two hold-ups, primarily, and they have nothing to do with the usual suspects in advanced technology – those are the unworkable technology and the unaffordable feedstock, and the airlines and friends like Boeing managed to put a lot of those issues in the rear-view mirror with a decade of hard work on technology and raw materials via groups like CAAFI.

So, why aren’t we celebrating?

Turns out, there’s $1.3 trillion in US student loan debt, which has an 11.3% default rate, so consider that some $130 billion is out there in defaulted loans so that young people can train themselves to get jobs in the advanced manufacturing, technology and clean economy industries — and it turns out that something less than $200 million has been so far positively and affordably earmarked by lenders to revolutionize the entire supply chain of US air transportation fuels.

Which is to say, you can just about get better terms for money from loansharkers to bet on the ponies than for sustainable air transport.

The other problem comes from an on-going misalignment between extremely well-intentioned and farsighted federal and state policies aimed at fostering clean fuels. Which is to say, the Federal Government offers the RFS, which gives support to both ground and air transport fuels, but California’s Low Carbon Fuel Standard only supports ground transport.

Which is to say, if you’re a fuel producer, the only way to produce sustainable aviation fuels is to persuade your investors that you really should forego about $0.80 per gallon in LCFS credits, and take one for the team and do it for the country.

So, if you are wondering where the gallons are, we’ll be covering these hold-ups and others at the Sustainable Aviation Fuels Summit, part of ABLC Week in Washington DC, starting in the middle of next week. Airlines, regulators, investors and producers will be on hand, and today in the Digest we’ll update you on the latest news for each of them.

Appearing on the ABLC stage next week

Bryan Sherbacow, CEO, AltAir

The latest from AltAir comes via United Airlines, which made history by becoming the first U.S. airline to begin use of commercial-scale volumes of sustainable aviation biofuel for regularly scheduled flights with the departure of United Flight 708 from Los Angeles International Airport. The launch marks a significant milestone in the commercial aviation industry by moving beyond demonstration flights and test programs to the use of advanced biofuels for United’s ongoing operations.

United has agreed to purchase up to 15 million gallons of sustainable biofuel from AltAir Paramount over a three-year period. The airline has begun using the biofuel in its daily operations at LAX, storing and delivering it in the same way as traditional fuel. To highlight this achievement, United will operate flights between Los Angeles and San Francisco with the dedicated use of AltAir Paramount renewable fuel for two weeks, while also integrating this fuel into its regular operations at the airport.

Pat Gruber, CEO, Gevo

Most recently, Gevo entered into a heads of agreement with Deutsche Lufthansa AG to supply Gevo’s alcohol-to-jet fuel (ATJ) from its first commercial hydrocarbons facility, intended to be built in Luverne, MN.  The terms of the agreement contemplate Lufthansa purchasing up to 8 million gallons per year of ATJ from Gevo, or up to 40 million gallons over the 5 year life of the off-take agreement.

The heads of agreement establishes a selling price that is expected to allow for an appropriate level of return on the capital required to build-out Gevo’s first commercial scale hydrocarbons facility.  The heads of agreement is non-binding and is subject to completion of a binding off-take agreement and other definitive documentation between Gevo and Lufthansa, expected to be completed in the next few months.

Jim Macias, CEO, Fulcrum BioEnergy

The most recent news from Planet Fulcrum the creation of a strategic partnership between its BP Ventures and Air BP businesses and  Fulcrum BioEnergy, into which BP will invest $30 million.

As an equity investor, BP has secured a 10 year offtake agreement with Fulcrum for 50 million US gallons per year, from their plants under development across North America. In addition, as a preferred supply chain partner, Air BP will distribute and supply biojet into aircraft at key hubs across North America.

Kevin Weiss, CEO, Byogy

At year-end Energy Department announced the selection of six projects for up to $12.9 million in federal funding, entitled, “Project Definition for Pilot- and Demonstration-Scale Manufacturing of Biofuels, Bioproducts, and Biopower.” These projects, required to share the cost at a minimum of 50%, will develop and execute plans for the manufacturing of advanced or cellulosic biofuels, bioproducts, refinery-compatible intermediates, and/or biopower in a domestic pilot- or demonstration-scale integrated biorefinery.

The AVAPCO, LLC ($3.7 million) project will develop a demonstration-scale integrated biorefinery that combines AVAPCO’s biomass-to-ethanol process with project partner Byogy’s alcohol-to-jet process to create an integrated process that produces jet fuel from woody biomass. In addition to the jet fuel primary product, the demonstration facility will also produce cellulosic renewable diesel and other bioproducts with another project partner, Genomatica.

Jim Andersen, Business Director, UOP

The most massive sustainable aviation fuels project ever announced is a project tipped by Petrixo Oil & Gas to produce renewable jet fuel and renewable diesel at a new refinery to be built in Fujairah, United Arab Emirates. Petrixo will use UOP Renewable Jet Fuel process technology to process approximately 500,000 metric tons per year of renewable feedstocks into renewable jet fuel and renewable diesel, also known as Honeywell Green Jet FuelTM and Honeywell Green Diesel The process technology is capable of processing a variety of renewable feedstocks. Petrixo will invest $800 million to build the new refinery, which will have a design capacity of 1 million tons per year of biofuel products, and will be the first commercial-scale renewable jet fuel production facility outside of North America.

Terry Kulesa, CEO, Red Rock Biofuels

Red Rock Biofuels will produce approximately three million gallons of low-carbon, renewable jet fuel per year from 2017 through 2024 for FedEx Express, a subsidiary of FedEx Corp, in an agreement announced by the companies.

FedEx joins Southwest Airlines in purchasing Red Rock’s total available volume of jet fuel from its first commercial plant, which is scheduled to break ground this fall in Lakeview, Ore. and will convert approximately 140,000 dry tons of woody biomass into 15 million gallons per year of renewable jet, diesel and naphtha fuels.

The plant is expected to produce 40% jet fuel, 40% diesel, and 20% naphtha, or 6 million gallons, 6 million and 3 million respectively.

Randy LeTang, CEO, SG Preston

Most recently, JetBlue announced a ten-year renewable jet fuel purchase agreement with SG Preston, a bioenergy company. The airline is partnering with SG Preston to purchase renewable jet fuel made from rapidly renewable, bio-based feedstocks that do not compete with food production. This marks one of the largest renewable jet fuel purchase agreements in aviation history, and the largest, long-term, binding commitment by any airline globally for HEFA (hydro-processed esters and fatty acids) based renewable jet fuel.

Chuck Red, SVP, ARA

Word arrived not long ago that In New Mexico, Applied Research Associates has been working with the Navy to develop and trial renewable jet fuel that can fly without blending into fossil fuel-based JP-5. The test flight of a EA-18 Growler in September on 100% CHCJ-5 performed just as with JP-5, with 80% fewer greenhouse gas emissions. ARA says it believes it can get the costs down to be competitive with petroleum-based fuels thanks to the use of waste feedstocks such as used cooking oil and yellow grease.

On the project front, euglena has teamed with the City of Yokohama, Chiyoda Corporation, Itochu Enex, Isuzu Motors and All Nippon Airways to produce and supply biojet/biodiesel fuels in Japan for practical use (i.e. commercial flight/public road driving) toward 2020.

In order to implement the plan, the company will build Japan’s first demonstration plant of biojet/biodiesel fuels production in Yokohama that is planned to be operational in 2018. In June 2015, the company signed a Technology License Agreement for the Biofuels Isoconversion Process from Chevron Lummus Global LCC and Applied Research Associates.

Steve Csonka, Ex. Dir., CAAFI

Recently the Commercial Aviation Alternative Fuels Initiative turned 10, and is “looking ahead to solving the challenging issues that remain for broad use of alternative jet fuel.”

Highlight from the first 10 years:

• Collaboration with FAA, ASTM and aircraft manufacturers to validate and establish the drop-in jet fuel concept, followed by 5 alternative jet fuel approvals.

• Created and released the ASTM D4054 Users’ Guide, to assist entrepreneurial firms with navigating the fuel qualification process.
• Crafted the Fuel Readiness Level evaluation framework, and receipt of endorsement for the use of this evaluation methodology as a best practice by the International Civil Aviation Organization.
• Created Sustainability Overview and Environmental Progression frameworks to complement CAAFI/USDA Feedstock Readiness Level.
• Issued Guidance for Selling Alternative Fuels to Airlines in cooperation with Airlines for America (A4A), to help producers prepare for airline offtake discussions.
• Formed strategic alliance between airlines (via A4A) and the Defense Logistics Agency, signaling a “single market” for alternative jet fuel.
• Facilitated the signing of the “Farm to Fly 2.0” agreement between USDA, DOE, and CAAFI sponsors to accelerate the development of feedstocks, execute various feasibility assessments, and foster regional development activities in several states.
• Facilitated airline/fuel producer offtake agreements in cooperation with A4A. There are currently 7 publicly communicated agreements to date.
• Expanded cooperation with international counterparts in Australia, Brazil, Spain, Germany, and Indonesia.

Nate Brown, FAA

Not long ago, FAA approved new renewable jet fuel pathways through ASTM International. The FAA’s Continuous Lower Energy, Emissions and Noise (CLEEN) partnership with industry was crucial in completing the necessary steps to support ASTM International approval of this new fuel, known as Alcohol to Jet Synthetic Paraffinic Kerosene (ATJ-SPK). It is created from an alcohol called isobutanol that is derived from renewable feed stocks such as sugar, corn or forest wastes.

In addition to CLEEN, the FAA is working with industry, other government agencies and academia through the Commercial Aviation Alternative Fuels Initiative (CAAFI) and the agency’s Aviation Sustainability Center (ASCENT), a consortium of research universities.

Alex Menotti, Airlines 4 America

Earlier this year, the Port of Seattle, Boeing and Alaska Airlines released a first-of-its-kind study that identifies the best infrastructure options for delivering aviation biofuel to Seattle-Tacoma International Airport. In pursuit of its goal to power every flight at Sea-Tac with sustainable aviation biofuel, Sea-Tac is among the first airports in North America to work with aviation, energy and research partners to systematically evaluate all aspects to developing a commercial-scale program from scratch.

The study evaluated more than 30 sites around Washington State that could potentially support the receipt, blending, storage, and delivery infrastructure required to supply Sea-Tac Airport with up to 50 million gallons per year of sustainable alternative aviation fuel (also referred to as aviation biofuel). Potential sites were evaluated both for the ability to accommodate near-term (12-18 months) supplies of five million gallons per year and long-term (2-10 years) supplies of more than 50 million gallons per year.

In pursuing an integrated aviation biofuels supply chain, sites were selected based on the capacity to accommodate delivery of unblended biofuel by pipe, rail, barge, and/or truck, and were evaluated based on land use, zoning, and environmental considerations. The most-feasible sites were determined based on the construction costs of the needed infrastructure, environmental constraints, permitting and planning, and other contingencies to help determine an overall score and final recommendation.

  • • A small biofuel receiving and blending facility at the Sea-Tac Airport Fuel Farm is the most cost-effective solution in the short term;
  • • The Anacortes-area refineries are the most cost-effective options for large volumes of aviation biofuel over the long term due to their access to marine, rail, truck, and the Olympic Pipeline; and
  • • The Phillips 66/Olympic Pipeline Company sites in Renton also showed potential to accommodate receipt and blending facilities for moderate-to-large biofuel volumes over the long term.

Adam Klauber, Carbon War Room

In Washington state, the Port of Seattle, SkyNRG and Carbon War Room recently announced a groundbreaking partnership to investigate long-term financing mechanisms that could supply all airlines at Seattle-Tacoma International Airport (Sea-Tac) with sustainable aviation fuels. Sea-Tac is the first airport in the world to initiate this step to provide an airport-wide sustainable aviation fuel supply for all routine airline operations.

Currently, biofuel supply agreements in the U.S. are being made through individual, expensive contracts between producers and airlines. This new partnership aims to accelerate the transition of sustainable aviation fuel from an alternative product used by a few select airlines, to a standard product that is used by all airlines at the airport.

CWR and SkyNRG will work with Sea-Tac to evaluate specific funding mechanisms to cover any cost difference between sustainable aviation fuels and conventional fuels. The long-term ambition includes strategizing with decision makers regarding locally sourced fuel and future regional economic investments, identifying supply routes for the sustainable aviation fuel, and ensuring that any alternative fuels used at Sea-Tac are truly sustainable, avoiding both competition with food and impact to habitat.

This is the next step in a process that began late last year by the Port of Seattle with a $250,000 Biofuel Infrastructure Feasibility Study, in partnership with Alaska Airlines and Boeing, that will assess costs and infrastructure necessary to deliver sustainable aviation fuel to aircraft at Sea-Tac. That study is expected to be released in early 2017.