British Airways in talks with potential partners as it plans to re-launch sustainable jet fuels project
Fri 25 Nov 2016 – British Airways is making significant progress in finding a company to partner with on a new initiative to produce sustainable jet fuel for the airline, says Willie Walsh, Chief Executive of parent International Airlines Group. Blamed on a steep fall in the oil price and lack of government support, plans were shelved exactly a year ago to build a facility in a partnership with Solena Fuels on the site of a former oil refinery by the Thames estuary east of London. Walsh told the annual UK Airport Operators Association conference this week that an announcement would be made in the coming months on a new project. He also welcomed the ICAO global agreement to manage damaging CO2 emissions from the aviation sector, in contrast to fellow Irish airline chief Michael O’Leary of Ryanair, who described climate change as “completely bogus”.
The BA/Solena Green Sky project involved converting municipal solid waste (MSW) to renewable jet fuel and other by-products, with the airline pledging to use the fuel under a long-term offtake agreement at London City Airport. When it was first announced in 2010, the facility was expected to be up and running by 2014, producing around 16 million gallons of jet biofuel annually through the conversion of 500,000 tonnes of locally-sourced MSW when fully operational.
The pioneering MSW-to-biojet project did though attract the interest of other airlines. In 2014, Cathay Pacific made an equity investment and offtake agreement with US biofuel company Fulcrum BioEnergy, which uses its own patented gasification process to convert MSW to jet fuel. United Airlines followed in 2015 with a similar agreement with Fulcrum and earlier this month, BP announced it too would make an equity investment in the company and purchase sustainable aviation fuel over 10 years for use at key airline hubs in the United States. Fulcrum has already started construction of its first commercial-scale plant in Nevada, with plans for further facilities.
Airlines are loath to pay a hefty premium for regular supplies of sustainable jet fuel but Fulcrum claims its fuel will be cost competitive with conventional jet kerosene. Alternative jet fuel producers in the US enjoy a level of government support that has not been forthcoming in the UK and so are better placed to attract the large long-term investment required to start commercial-scale operations. Fulcrum has also already built a demonstration facility to prove its technology works, which Solena had failed to do.
Walsh said the unsuccessful project with Solena Fuels, which has since gone out of business, suffered from an inability to attract the required level of investment, which he blamed on the UK government’s Renewable Transport Fuels Obligation (RTFO) policy of incentivising the production of sustainable fuels for road transport but not air transport. “I think they have acknowledged this was a mistake,” he told the conference.
Despite the Green Sky setback, Walsh said he was confident there were other biofuel companies with the right technology in place.
“It is challenging – we knew it would be – but we are prepared to put our money where our mouth is to make this venture a commercial success,” he promised. “We have identified a number of potential partners and are making significant progress. It will be next year but we are very close to making an announcement and by this time next year you will a significant development.”
Walsh, the current Chairman of IATA’s Board of Governors, has long been a strong advocate for the airline sector to act on its carbon emissions and welcomed the progress at the ICAO Assembly last month on a market-based measure. He considered the common position of the industry had played an important role in ICAO reaching its decision.
“I am not someone who questions climate change,” he told the AOA conference, responding to earlier remarks by Ryanair’s Michael O’Leary. “I fully accept that CO2 has had a damaging impact and going forward we need to manage our CO2 emissions. I am pleased we have been able to demonstrate a commitment that we can do that.
“It’s not without a significant challenge and it’s not going to be easy to do from a technology point of view. Therefore, we have to accept that there is a price to pay through some form of offsetting under a global scheme.”
O’Leary said the climate had always changed. “I’m not a scientist but what I do know for certain is that taxing carbon isn’t going to make a blind bit of difference either to climate change or global warming,” he said. “My response to the politicians and the bleeding-heart environmentalists is that we need to continue to develop economic growth. We have high youth unemployment in Europe and tourism is one of those industries that can create entry-level jobs for young people.”
By operating one of the industry’s newest fleet of aircraft, soon to be joined by the more fuel efficient new Boeing 737 MAX, he said Ryanair customers were already flying on Europe’s “greenest, cleanest” airline.
“If you are concerned about the environment, you are doing your bit by flying on Ryanair and shouldn’t feel in any way guilty about it,” he said. “As an industry, oil is our single largest cost and there is no one more committed to reducing fuel consumption than me.
“We are not going to pander to the environmental nimbys by having voluntary contributions or such like. I am not an apologist for the environmental or global warming mob. Whenever I hear about climate change, I tune out.”