Major airlines sign groundbreaking agreement with two producers on the purchase of alternative jet fuel
Tue 15 Dec 2009 – A group of 15 major airlines, led by the Air Transport Association of America (ATA), has signed memoranda of understanding (MoUs) with AltAir Fuels and Rentech for future supplies of alternative aviation jet fuel. Under the agreement with Seattle-based AltAir Fuels, 14 airlines from the United States, Mexico, Canada and Germany will negotiate a future purchase of up to 750 million gallons of camelina-derived renewable jet fuel and diesel. The fuel is to be produced at a new facility in Anacortes, Washington State, from camelina sourced from Sustainable Oils and refined using technology from Honeywell’s UOP. Operations are slated to begin in 2012, with the potential for Seattle-Tacoma International Airport becoming the world’s first major airport to supply its airline customers with drop-in renewable jet fuel.
Twelve airlines – Air Canada, American Airlines, Atlas Air, Delta Air Lines, FedEx Express, JetBlue, Lufthansa, Mexicana, Polar Air Cargo, United, UPS and US Airways – have signed MoUs with both AltAir Fuels and Rentech. In addition, Alaska Airlines and Hawaiian Airlines have signed MoUs with AltAir Fuels, and AirTran Airways has signed an MoU with Rentech.
The Rentech Natchez Project in Adams County, Miss., is looking to produce around 250 million gallons of RenJet synthetic jet fuel derived from coal or petroleum coke, with the resultant carbon dioxide sequestered, says the company, and the carbon footprint potentially further reduced by integrating biomass as a feedstock.
Fuel based on the Fischer-Tropsch process, such as Rentech’s, is the only alternative jet fuel currently certified for use in commercial aviation at up to a 50/50 blend with traditional jet fuel. Approval of bio-derived fuels for aviation is expected in 2010.
Although no firm commitments are likely to be made at this early stage on pricing and quantities, the MoUs are seen as an important first step in the process of reaching future purchase agreements and providing the suppliers with the bedrock on which to build their alternative jet fuel businesses.
“Although the MoU contains no binding obligations to purchase fuel, we and our airline partners consider this agreement to work together to be a significant step forward, establishing a framework for a large group of airlines to come together to negotiate a definitive fuel purchase agreement,” Julie Dawoodjee, Rentech’s Vice President, Investor Relations and Communications, told GreenAir Online. “A demonstration of serious intent by the airlines to negotiate a firm agreement to purchase all of the fuel to be produced by the project is important in bringing together all of the many other parties who need to participate in making this project a reality.”
The renewable fuel to be produced by AltAir Fuels from camelina is predicted to replace about 10% of the petroleum fuel consumed annually at Seattle-Tacoma International, reducing carbon emissions by about 14 billion pounds (6.35 million tonnes) over 10 years. A lifecycle analysis of camelina by Michigan Tech University has shown the feedstock reduces carbon emissions by about 80% compared to petroleum fuel.
Bill Ayer, Chairman and CEO of Alaska Air Group, which is based at Sea-Tac, said: “Our intent to negotiate a potential purchase with AltAir is an important step on the path to reducing emissions through an affordable and sustainable alternative aviation fuel. Alaska Airlines looks forward to further exploring this promising regional project, which could bring significant environmental benefits and economic opportunities.”
Sea-Tac Airport Managing Director Mark Reis commented: “As an airport committed to environmental stewardship, we are pleased to be in a position to support our airline partners in advancing the goal of using biojet fuel and reducing CO2 emissions. We are striving to be an aviation leader for providing commercial biojet delivery.”
Camelina oil will be converted into both blended renewable jet fuel and diesel at the new facility, which will be located at the existing Tesoro oil refinery in Anacortes, with a capacity of 100 million gallons per year. Depending on future negotiations and requirements, around three-quarters of the fuel produced will be biojet with the remaining green diesel being used by trucks and vehicles at the airport.
The camelina oil will be sourced from Montana-based Sustainable Oils, which has the largest camelina research programme in North America and production contracts with numerous farmers and grower cooperatives. AltAir has chosen refining technology developed by UOP, which has already produced camelina-sourced biojet fuel for test flights by Japan Airlines and KLM in 2009.
“It is efforts like this one that will guarantee that biofuels made from sustainable, second generation sources can make an impact in the near term,” said Jennifer Holmgren, UOP’s Vice President and General Manager of Renewable Energy & Chemicals.
The biojet fuel and green diesel will be transported to Sea-Tac and other locations through an existing pipeline system and as it will be fully compatible with the current transportation fuel infrastructure it will require no special handling. The biojet fuel will be consumed by aircraft belonging to airlines who have signed the MoU.
“We commend the ATA and its member airlines’ commitment to reducing carbon emissions and the leadership role they have taken in the airline industry,” said Tom Todaro, CEO of AltAir. “Our camelina-based fuels will reduce emissions, provide American farmers additional revenue sources, while creating hundreds of new jobs and reducing our dependency on imported oil. We look forward to replicating this model in other parts of the country and the world in the coming years.”
Glenn Tilton, ATA Board Chairman and Chairman, President and CEO of United Airlines, said: “Today’s announcement reinforces the proactive steps that airlines are taking to stimulate competition in the aviation fuel supply chain, contribute to the creation of green jobs and promote energy security through economically viable alternatives that also demonstrate environmental benefits. Our intention as an airline industry is to continue to do our part by supporting the use of alternative fuels. We urge the US government and the investment community also to do their part to further support this critical energy opportunity.”
Tilton also noted that discussions with a number of additional alternative fuel producers about other projects are underway, as are talks with the US military regarding other cooperative opportunities.