Low oil price and current lack of government support stalls British Airways' waste to jet biofuel project
Thu 26 Nov 2015 – A pioneering industry partnership between British Airways and Solena Fuels to build a facility to the east of London that would convert municipal solid waste (MSW) to around 16 million gallons of sustainable jet fuel annually has ended. Solena had struggled to raise the necessary finance for the GreenSky project, which was dealt a final blow by the current low price of oil of around $50 per barrel, when a price of $70 was needed by the US company to make the jet biofuel produced cost competitive with conventional fuel. When first announced in 2010, the $500 million facility was due to start production this year and a site was selected last year on the Thames Estuary. British Airways says it remains committed to pursuing the MSW to jet fuel pathway and is talking to other companies in the field but believes a current lack of government support has contributed to the delay of the project.
“British Airways is fully committed to supporting sustainable alternative fuels production in the UK. However, its partnership with Solena Fuels has ended,” said a spokesman for the airline. “We’re very disappointed that despite BA’s commitment to the project, Solena was unable to progress it through to construction.”
Jonathon Counsell, Group Head of Sustainability at BA’s parent company IAG, told GreenAir the five-year contract with Solena Fuels that included an offtake agreement to purchase all the jet fuel produced at the facility at a cost competitive with the fossil equivalent ended earlier this year but was not renewed. Last year, the airline had announced it was also to become a minority shareholder in the venture and provide capital investment, but only once construction had started (see article).
Some biofuel conversion technologies could be commercially viable at $50 per barrel but Solena’s could not, he said. MSW technology had progressed since BA first got involved with Solena, he added, and other companies were more advanced in both financing projects and in competing with conventional jet fuel prices.
The experience the airline had gained over the five years was not lost, he stressed. “The project lives on, just with another potential supplier.”
The industrial site by the Thames Estuary at Thurrock, Essex, that was to be the location for the GreenSky facility, remains available, he said.
Another reason for the delay, says British Airways, is down to a lack of government support to incentivise sustainable jet fuels in the same way as other renewable transport fuels such as biodiesel. Speaking at the UK Airport Operators Association annual conference on Monday, IAG CEO Willie Walsh said the slow progress on the GreenSky project had been frustrating, which had been mainly caused by external reasons.
“Government makes it more attractive for fuel suppliers to supply biodiesel rather than biofuels for air transport,” he said. “We don’t have an alternative to using carbon-based liquid fuels for the foreseeable future, unlike road transport, and I find it very strange that governments would support one form of transport where there are alternatives but not another where there are not.”
He said “it was a sad truth” that there was more interest from government in the United States in developing sustainable aviation fuels than was the case in the UK.
However, Counsell reported the UK’s Aviation Minister, Robert Goodwill, had recently pledged a Department for Transport task force reviewing the Renewable Transport Fuel Obligation, the UK scheme similar to the Renewable Fuel Standard in the US, would look at including aviation biofuels.
Walsh remains upbeat on the commercialisation of jet biofuels and finding a replacement partner. “I am very confident we will see a development in the very near future,” he said. “We’ve developed a lot of expertise and knowledge around this area, and we are very pleased to see there are more and more potential suppliers interested in coming into this industry and partnering with us.
“Biofuels will be part of the long-term solution to the sustainability of our industry. I recognise it will take some time but finding a sustainable fuel source for the airline industry will make a big difference and to get there will require taking good technology and translating it into something commercially realistic, although the fall in the oil price makes it more difficult.”
Meanwhile, Solena Fuels Corporation (SFC), with whom British Airways had the contract, has filed for bankruptcy in the United States, according to a statement from its holding company Solena Group. The CEO and founder of Solena, Dr Robert Do, parted company with SFC earlier this year but remains as Chairman and CEO of Solena Group. The Group said it continues to develop, build, own and operate waste-to-biofuels and bio-power projects globally through various special purpose entities (SFC was such a legal company vehicle) and subsidiaries.
Solena’s ongoing presence in the jet biofuel sector is unclear, although Do said in the statement: “In anticipation of new legislative mandates for more sustainable fuels and renewable energy from the coming COP in Paris and the ICAO meetings, Solena Group is well positioned as one of the leading companies in the development of waste to biofuels and green energy sector.”