KLM biofuel flight to Rio takes off as innovative programme is launched to involve global corporations in aviation biofuels
From left: KLM MD Camiel Eurlings, Dutch Environment Minister Joop Atsma and WWF-NL CEO Johan van de Gronden (photo: KLM)
Wed 20 June 2012 – As a KLM Boeing 777-200 was readied for yesterday’s longest-ever commercial biofuel flight from Amsterdam to Rio de Janeiro, KLM and aviation biofuel supplier SkyNRG announced a new programme that will involve global corporations in participating in the development of sustainable biofuels worldwide. Instead of purchasing carbon credits to offset staff travel, corporations will divert the funds so they can be used by SkyNRG to help drive the use and availability of aviation biofuels and, most importantly, bring down the high-premium cost of the fuels. Prominent companies such as Accenture, Nike, Ahold, Heineken, DSM, Philips and Schiphol Group are the first to join and SkyNRG is undertaking a worldwide roll out of the corporate programme, as well as the creation of ‘BioPorts’ in strategic airport locations. The programme has support from the Dutch government and environmental NGO WWF Netherlands.
Against a backdrop of a world economic crisis and the threat of climate change, “investing in green innovations and strengthening the economy go hand in hand,” said Joop Atsma, Minister of Infrastructure and Environment, at a ceremony before boarding the KLM biofuel flight that would take him to the Rio+20 conference.
“This also applies to the aviation sector. People want to keep on flying so we have to make it as sustainable as possible.”
Despite the progress made by the aviation industry in reducing its environmental impact over the past decades, he said achieving the targets set by the sector to reduce carbon emissions would not “happen by themselves” and would require an enormous effort in which the use of biofuels would play an essential role, but, he added, there was still a long way to go.
“So I welcome this joint programme by KLM and SkyNRG, which I am very enthusiastic about,” said Atsma. “It will allow corporate clients the opportunity to select sustainable fuels that will contribute to CO2 reductions. In my opinion, KLM is a real sustainability pioneer in the aviation sector.
“One of my key policies is to create a breakthrough in biofuels development and I need partners like Schiphol and KLM in moving forward.”
He said government needed to fly greener and also create a platform for using next generation sustainable biofuels that did not compete with food crops. “I will do everything in my power to ensure that from 2013 Dutch officials on government business will travel as much as possible on biofuel flights, including the government’s own aircraft,” he added.
Camiel Eurlings, Managing Director of KLM, said Air France-KLM had a longstanding commitment to sustainable development, citing its leading position in the Dow Jones Sustainability Index for seven consecutive years and KLM becoming the first to carry out a sustainable biofuel demonstration flight in 2009 and the many commercial biofuel flights it has operated to Paris since 2011.
“They are part of our long-term strategy to become greener,” he said. “The development of biofuel will be crucial. Some people are against flying but, as a former minister of transport, I say that is not the way to go. People want to move and people will continue to move, so the real challenge is not to fight planes but to make them greener. We are just at the beginning – planes don’t change that fast, it takes 20, 30 years for a new generation to be launched. To achieve progress in the short and medium term, we will need greener fuel.”
He said there would be those who point out the problems with such fuels but KLM was proud to be a frontrunner. “We think we can create a new market and find new good biofuels so that we have more to choose from and that we will get economies of scale.”
Eurlings said the aim of KLM was to use a percentage of biofuel being mixed with all its jet kerosene.
He commended the airline’s ‘green deal’ partnership signed with the Dutch environment ministry which had led to the signing of the first corporate customers to the new biofuel programme.
The corporate biofuel programme is backed by WWF Netherlands (WWF-NL), which advises SkyNRG on sustainability issues. “Aviation is on the threshold of a small revolution. And at times like these it is best to lead from the front,” said Johan van de Gronden, CEO of WWF-NL. “Those who take the pressure off nature today are the winners of tomorrow. The rapid development of alternative, reliable biofuels is vital.”
Speaking at the launch event of the programme, he said: “Yes, flying does impact the environment negatively and, yes, not flying is cleaner, but flying is also part and parcel of a modern-day economy – I myself can’t do my job properly with projects in over 90 countries without flying. That’s why we seek cooperation with businesses who want to be in the pioneering vanguard.
“We started working with KLM a number of years ago on a CO2 reduction project but usually I don’t find much enthusiasm in company boardrooms when you talk about reductions. Our economy is fuelled by growth and not by how fast you can reduce things.
“Hence, we must develop a responsible biofuels industry quickly. We’re flying with used cooking oil today, we may be flying on something else tomorrow – we don’t have all the answers yet.”
He said WWF-NL had three important sustainability criteria on the use of biofuels: there had to be significant reduction – in the region of 60 to 80% – in well-to-wing greenhouse gas emissions compared to the fossil alternatives, there should be no competition with the food chain and there must be no loss of high-value conservation sites.
The challenge was difficult, said van de Gronden, “but if we see companies as part of the problem and not as part of the solution, we won’t move forward and that’s why we are in this together.”
The corporate biofuels programme has been developed by SkyNRG, which was founded by KLM in 2009 and has already supplied 15 carriers worldwide with its biofuel derived from used cooking oil sourced from the United States. As well as supplying the 20% blend for yesterday’s KLM flight to Rio, the company also supplied fuel for two of the four connecting flights that carried ICAO Secretary-General Raymond Benjamin from Montreal to the Rio+20 conference (see story).
Commenting on the corporate programme, SkyNRG Managing Director Dirk Kronemeijer said: “This has been on our wish list for a long time. Not only do the proceeds of the programme really help to reach critical scale and invest in key projects, these phenomenal brand names will for sure help accelerate the development of sustainable jet fuel that is affordable. We have the ambition to roll this out across the globe, in due time also with other airlines. As an industry, we have so far been in push mode – now I am happy the key end customer starts pulling too.”
The essence of the programme is that major corporations which offset staff travel through buying carbon credits can instead invest those funds with SkyNRG to help build and develop a sustainable aviation biofuels market that through economies of scale can supply such fuels to airlines at an affordable price.
“The first company that got the concept was Accenture here in the Netherlands,” Kronemeijer told GreenAir on the sidelines of yesterday’s launch. “They said they would rather invest in this innovation now and help create this market and a tipping point, despite the fact that in terms of comparing it with CO2 compensation credits at this moment in time it is more expensive.” For non-manufacturing companies like Accenture, travel may form around half of their total carbon footprint.
Rather than carbon credits being used towards, for example, windfarm projects, the funds would be more directly targeted towards reducing the emissions of the travel activity the company staff were engaged with through the lower lifecycle emissions of the biofuels being used, he explained. “We have created our own credits to some extent,” he added. “They are not just offsetting their emissions, they are reducing them.”
The funds invested in the programme would be partly used to buy fuel but also to invest in upstream projects to develop feedstocks and value chains. These could, said Kronemeijer, include projects that are unique to certain corporates or airlines under which a secure and steady supply of biofuel at an affordable price can be locked in.
The total annual income SkyNRG expects to receive from the seven corporate so far signed up to the programme is over one million euros ($1.3m), he said. Each corporate will get an independently audited report at the end of each year to show what its investment has been spent on. The companies will also receive a sustainability report, backed by SkyNRG's sustainability board, which Kronemeijer said was very important as it was essential that sustainability standards met the highest standards to protect the brands participating.
An important factor in the SkyNRG strategy is a three-pronged co-funding approach, he explained, involving governments, airports and now corporates. He said government grants and subsidies, particularly in the EU and United States, were an important source of finance and SkyNRG was in discussions with airports on various initiatives, for example lowering landing fees for aircraft using biofuels.
Another part of the strategy is the creation of ‘BioPorts’ around the world, which would support local aviation biofuel supply chains for SkyNRG’s airline customers. Kronemeijer said five such centres had been identified in Asia, Australia, Brazil and the United States, as well as at the Amsterdam Schiphol home base for KLM, and was in discussions with large carriers in those regions. These carriers would be involved in the global SkyNRG programme and also adopt the model of signing up corporate customers of their own to the programme, as SkyNRG and KLM have done in the Netherlands. He said KLM was offering its corporate customers who joined the biofuel programme further incentives on fares.
The key to driving down the price of sustainable aviation biofuels, said Kronemeijer, is to drive up the critical mass. Because SkyNRG has created the biggest demand so far for aviation biofuels, Kronemeijer says his company is currently much cheaper than other suppliers because of its scale and has been able to reduce the price dramatically over the past year, from a premium of around seven times the price of conventional jet kerosene to around three times currently. His next target is 2.2 times the price of kerosene and eventually to parity.
SkyNRG’s used cooking oil has up till now come from the United States but Kronemeijer is now looking to source such waste oils from other locations, such as China.
“The feedstock is becoming cheaper and so are the logistics,” he said. “This is finally getting to work.”
Despite being offered cheap sources of non-food crops such as jatropha, Kronemeijer is concerned over the sustainability issues surrounding these types of feedstocks. A long-term project in the offing, he revealed, is the setting up of a demonstration-scale alcohol-to-jet facility in Rotterdam.