Mon 28 Mar 2011 – Sustainability and economics dominated debate at last week’s World Biofuels Market (WBM) event in Rotterdam as airlines gathered to make the case for aviation biofuels commercialisation to a wider biofuels industry audience. In a keynote speech, KLM Managing Director Jan Ernst de Groot said biofuels were vital to reducing aviation CO2 but reducing the cost of production towards equivalence with fossil-based kerosene was key, although government help could reduce the parity timeframe. He told delegates that airlines would never compromise on sustainability and they could not afford to use the wrong type of feedstocks that did not meet strict criteria. The aviation biofuels lobby has thrown its weight behind the Swiss-based Roundtable on Sustainable Biofuels, which announced it had joined forces with Boeing to help align the various global voluntary standards on biofuel sustainability and bring down the costs of certification.
Airlines currently consume around 250 billion litres of jet fuel annually, costing around $150 billion – and rising. Given that fuel makes up between 25% and 30% of a typical airline’s cost base, together with razor-thin profit margins, airlines face the dilemma of not being to afford to pay the higher premium that biofuels currently enjoy. However, the increasingly volatile price of jet kerosene is making biofuels an attractive economic proposition for the future, not just because of environmental considerations but also in terms of energy security and independence.
Although great strides have been made over the past four years in moving aviation biofuels out of the laboratory and into flight operations, the obstacles facing the full-scale commercialisation of sustainable alternative fuels are immense and the industry is reluctant to commit to setting targets for their use. The Air Transport Action Group (ATAG), the cross-industry lobby group on environment issues, says in a new report called ‘Powering the Future of Flight’ that it is “striving” for a 6% replacement of fossil-based jet kerosene with biofuel by 2020.
The European Commission, in its transport strategy for 2050 published today, expects aviation to be 40% powered by sustainable low carbon fuels by that year.
To meet the demand for aviation biofuels, around 290 biofuel plants will be required over the next 20 to 30 years, which works out at nearly one new plant a month, at a per plant capital cost of $200 million to $500 million, said British Airways’ Head of Environment Jonathon Counsell during a presentation at a day-long WBM session devoted to aviation biofuels.
One of those obstacles facing biofuel commercialisation is the lack of an incentive for the larger biofuel producers to enter the aviation biofuel market, despite having willing airline customers.
Philip New, CEO of BP Biofuels, told GreenAir Online: “There is a real discrepancy between what is desirable and what is possible. If the feedstocks that aviation biofuels are currently being based around, such as camelina and jatropha, which are both expensive and not readily available, it is difficult to see a solution.”
Another key issue is around mandates and regulations in the US and Europe that require a percentage of biofuels to be used in ground transportation that do not apply to aviation. “What has given ground transportation biofuels their traction is mandates,” said New. “It takes a lot of the price differential question out of equation. You have to comply – if you don’t you’re in deep trouble.”
Regulatory intervention and a breakthrough in production costs were therefore necessary for aviation biofuels to become viable, he added.
In Europe, Member States are required under the Renewable Energy Directive (RED) to source 10% of transport energy use from renewable sources, such as biofuels, by 2020. In the United States, the Renewable Fuel Standards, initiated under the Energy Independence & Security Act of 2007, sets volume targets for the use of renewable transportation fuels. Neither applies to aviation and there are discussions as to whether government mandates should be applied to the sector.
BA’s Counsell said a level playing field with ground transportation fuels was important but remains unconvinced that mandates could work within a global sector like aviation as it would through up market distortions. “We need to find a creative solution to this issue and we are working with the UK Department for Transport to see if elements of the RED could be transposed to provide incentives for aviation biofuels development.”
Jan Ernst de Groot of KLM said that reducing aviation CO2 was a business responsibility but as a heavily regulated industry, governments could help to stimulate change and should recognise that economic and regulatory instruments were a means not an end. “Governments could, for example, help with the development of aviation biofuels by earmarking proceeds from the EU Emissions Trading Scheme,” he said.
Clearly, he went on, airlines could not develop biofuels on their own and needed other players to help encourage R&D, investment and the commercial scaling-up process.
“In the meantime, we will make no compromises on sustainability,” he added.
Launching its Sustainable Biomass Consortium at WBM with the École Polytechnique Fédérale de Lausanne (EPFL), which hosts the multi-stakeholder Roundtable on Sustainable Biofuels (RSB), Boeing said sustainable biofuel development was a key element in the strategy for lowering aviation carbon emissions. The aim of the consortium – in which other organizations are being encouraged to join – is to conduct research into how collaboration can be increased between the various voluntary standards and regulatory requirements worldwide for biomass used to create jet fuel and bio-energy for other sectors.
The consortium will conduct collaborative research with environmental organisations, governments and civil society groups to aid alignment, and help provide improved independent verification of the sustainability and traceability of biomass sources. According to Boeing, research projects will commence next month and the scope of the work will include projects in China, Africa, the EU, Latin America, North America and Australasia.
The consortium will use current aviation biofuel initiatives in the regional benchmarking efforts, based on the global sustainability standard of the RSB. Boeing and EPFL are also funding the creation of a fact base for what they describe as transparent analysis of existing sustainability standards and supporting aspects including the construction of verification and tracking systems. Another key aim of the consortium is to reduce the costs of sustainability certification in the biomass production chain.
“With increasing environmental, regulatory and social pressures on aviation, having harmonized standards for sustainable biofuel development is crucial,” said Billy Glover, Boeing Commercial Airplanes’ Vice President of Environmental and Aviation Policy.
Also during WBM, the RSB unveiled its global third-party certification system for sustainable biofuels, which will be operated by RSB Services, a newly-created and separate ‘business arm’. The system includes environmental, social and economic principles and criteria, featuring a set of online tools that is aimed, said RSB, at taking the complexity out of compliance and streamlining certification.
“It’s one thing to say your product is sustainable and another to prove it,” commented US-based Barbara Bramble, Senior Advisor for the International Climate and Energy Program at the National Wildlife Federation, and also Chair of the RSB Steering Board. “This new system makes it easy to differentiate between biofuels that are environmentally destructive and biofuels that deliver on the promise of sustainability.
“All biofuels are not created equal. Bringing accountability, consistency and transparency to the global biofuels market is a giant first step towards stopping those practices that result in tropical deforestation, habitat destruction and increased pollution. The RSB is all about enabling biofuels markets to reward those producers who protect natural resources and avoid negative impacts on local communities.”
The certification system will involve outside approved verifiers and cover the major issues of concern in biofuels’ production, including their contribution to climate change mitigation and rural development; their protection of land and labour rights; and their impacts on biodiversity, soil and water pollution, water availability and food security. As yet, though, the RSB has yet to come up with a suitable methodology to take account of the controversial indirect land use change (ILUC) issue that currently bedevils biofuel sustainability.
Launching its ‘Powering the Future of Flight’ report on biofuels at WBM, ATAG Executive Director Paul Steele said: “The biggest challenge now lies in ensuring a steady, reliable, cost-effective and sustainable supply of this new energy source. The fossil fuel industry has had a century to develop its fuel sources, supply chains and distribution networks. Not to mention its profit margins. The fledgling aviation biofuels industry will need to catch up and this will require capital from the investment community, and start-up incentives and de-risking from governments.”
The report, published in hard copy and online, highlights a number of aviation biofuel case studies from around the world and identifies “six easy steps that governments and policymakers could follow to assist aviation and the biofuels sector in embracing sustainable aviation biofuels”.
The Aviation Biofuels day at WBM featured presentations from a number of airlines, including KLM, British Airways, Cathay Pacific, Lufthansa, SAS and Qatar Airways.
Qatar Airways’ Head of CSR, Environment & Fuel Projects, Capt Chris Schroeder, revealed that airlines serving the new Doha International Airport when it opens in 2012 are likely to find their aircraft refuelled with locally-sourced gas-to-liquid (GTL) synthetic jet fuel blended 50/50 with conventional jet kerosene. In a longer term ‘proof of concept’ initiative, Schroeder said his airline is aiming to fuel its aircraft in Doha with 50% GTL and 50% biomass-to-liquid (BTL) fuel by 2014, subject to ASTM fuel certification approval.
Last year, Qatar Airways launched the Qatar Advanced Biofuels Platform in partnership with Airbus, Rolls-Royce, Qatar Petroleum, Verno Systems and Qatar Science & Technology Park, a three-year, R&D project to find a variety of sustainable biofuel feedstocks that could be grown in the region. Ambitions extend still further, with Qatar aiming eventually to become a net exporter of alternative jet fuels to other Middle East countries, he said.
“We need alternative fuels globally and the more airlines that engage on this the more the producers will be encouraged,” said Schroeder. “We airlines need to push hard if we want to have these fuels available on a global basis. We’re ready to buy.”
Airlines are anxiously awaiting certification of blended jet biofuels (Bio-SPK), which had been expected at the turn of the year. The news at WBM was that a contamination issue with an engine test rig, rather than the biofuel itself, raised doubts with some members of the ASTM committee tasked with approving Bio-SPK. Re-testing is currently in progress although whether it will be completed in time for the next ASTM meeting in June remains unclear, in which case the issue will have to wait until the following meeting in December.
World Biofuels Market 2011
Boeing – Sustainable Aviation Biofuel
Roundtable on Sustainable Biofuels
ATAG report – ‘Powering the Future of Flight (download)
ATAG WBM press briefing
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