June 17th, 2016
Victoria Mozo Montemayor, expert in policy development referred to biofuels on aviation and Manuel Sanchez-Blanco, Mining Engineer from SENASA, talks about the current researches on Alternative Fuels, the social impacts and the challenges on convincing Air Carriers to implement them.
Q1: What's the most promising alternative fuel for commercial airliners?
Today, there are 4 renewable jet fuel pathways certified by ASTM[1] for its use as a blending component in standard Jet A-1in commercial aviation .These are Fischer-Tropsch (FT-SPK), HEFA, SIP and ATJ fuels, each of them targeting specific feedstocks, with different conversion ratios (i.e.: feedstock to jet yield) and presenting its own pros and cons. To date, no single technology can be considered as more promising or predominant, but it is agreed that a combination of different technologies and feedstocks would be required to cope with the expected demand.
In early 2014, a new potential source of biofuel for jets was identified: "green diesel", a high quality renewable diesel fuel currently used for road transport (not to be confused with FAME biodiesel)[2]. The first test flights took place on December 2014[3] and its use as blending component as the other 5 pathways mentioned above is currently being assessed by ASTM. The approval for this "aviation grade" green diesel is foreseen in less than one year. Once approved, it is foreseen that green diesel will enter the market as a competitive new player in the aviation biofuels sector. This breakthrough could, in the short-term, lead to a downturn in biojet production potential and market development capabilities although, in the mid-term, its use could foster market demand and stimulate the adoption of other competing technologies.
Further to the currently approved pathways and the mentioned "aviation grade" green diesel, there are other emerging technologies that have the potential to offer significant benefits with regard to GHG reductions or conversion ratios. These, still need to be further developed and are currently working for the ASTM certification, bringing positive perspectives for the next coming years.
Q2: Is there a challenge in getting airlines to use it?
Definitely, the most limiting factor is the price gap compared with the conventional Jet A1. Biojet fuels are known to be 2-8 times[4] more expensive than fossil jet fuels. This is normally attributed to the early stage of conversion technologies together with high operational costs associated with incidental batches and high feedstock costs. Additionally, there are not sufficient supporting policies/incentives to cover the price gap or incentivise their use or production at a larger scale (at least in Europe). Airlines have a great willingness for implementing these new fuels, although they lack the required market power and financial resources to overcome the price gap, since they are extremely sensitive to the fuel's price fluctuations. Single airlines cannot afford to pay a higher price for biojet fuels, because that would impact their competitiveness with other airlines. On average, fuel costs can account for 29% of all airline operating expenses and 27% of the overall industry revenue.
In any case, several airlines (i.e: KLM, Lufthansa, Alaska Airlines, Cathay Pacific, United Airlines and British Airlines, among others) are taking a step forward and have committed to use biofuels both through corporate programs and the so-called off-take agreements. Quantities are relatively small, but these are starting to be used for scheduled flights rather than for demonstration and certification purposes. These actions are, however, contributing to make renewable jet fuels an attractive market that is starting to gain traction with investors.
Q3: Synthetic fuels have been around since World War II. Why has it taken so long for them to be pushed for aviation?
Biofuels have started to play an important role in aviation mainly due to environmental concerns. In 2010, at the 37th Session of the ICAO Assembly, ICAO's Member States adopted the global aspirational goal to stabilize the international civil aviation GHG emissions at their level of 2020. The industry (IATA, ATAG) also committed to achieve carbon neutral growth by 2020 and a 50% reduction by 2050. These objectives could only be met through the combination of various key drivers, of which alternative fuels technologies implementation play a significant role. The use of sustainable alternative fuels will, therefore, provide a reduced carbon foot print compared to conventional jet fuel in a full carbon life-cycle basis. As a consequence of these environmental needs, new technologies started to appear and the ASTM standard for new synthetic fuels was defined, establishing a framework for accepting new, alternative fuels as they are developed and qualified (ASTM D7566 "Standard Specification for Aviation Turbine Fuel Containing Synthesized Hydrocarbons", first published in 2009[5]).
Q4: Oil prices have gone really low over the last few years, does this effects your work?
Following four years of relative stability at around $105 per barrel (bbl), oil prices have declined sharply since June 2014 and are expected to remain low for a considerable period of time. This dramatic fall in the price of Crude oil widens the price gap between fossil kerosene and biojet. This scenario creates situations in which the feedstock costs are higher than the finished petrojet product.
However, the overall feasibility of the biofuels markets (and, consequently, that of biojet) is not dependent on a single factor. Many other factors are affecting the projection of biofuels, such as the food vs fuel debate, indirect land use change regulations, the possibility of carbon outcomes to be incorporated into energy prices, and the proper risk tolerance for government in commercializing alternative energy, to name a few.
Some authors are stating that low oil prices can be beneficial for advanced biofuels. At least in the United States, renewable fuels have Government protections, ensuring market demand and a floor price. In addition, they also claim that high oil prices lead to serious difficulties in obtaining project finance for the development of new biofuels production facilities.
It is however expected that oil prices will rise sooner or later. But then, feedstock prices (especially those of vegetable oils) will rise too given that, since 2007, a high correlation with crude oil price evolution has been detected.
Q5: What will be the societal impacts of a green aviation industry?
The adoption of alternative fuels for aviation will contribute to increase the demand for advanced biofuels in the international market. The amounts of biofuels required for the transition to sustainable transport will accelerate the production of sustainable biomass and the development of key infrastructures, but also the construction of biorefinieries and the development of new conversion technologies. As a result, the production of advanced biofuels will deliver not only significant environmental benefits through the reduction of GHG emissions, but also contribute to rural development and a better management of natural resources. In addition, shifting to a greener aviation industry will strengthen energy security and independence in Europe, which net imports accounted for 53,5% in 2014[6]. These societal transformations will definitely pave the way towards the bioeconomy, which is expected to play an important role in creating a more sustainable future.
On the other hand, and after many years of deadlock at ICAO on this issue, in 2013, the 38th ICAO General Assembly agreed to develop a global Market-based Measures (GMBM) framework for the aviation sector by the next ICAO General Assembly in 2016. The goal is to implement a system by 2020 which would enable the international aviation industry to reach carbon neutrality in their emissions growth from 2020 onwards.
Indeed, significant progresses have been reported as a result of the last talks, although ICAO Council President Dr Olumuyiwa Benard Aliu acknowledged that there was "still work to be done" on key elements before it is presented for consideration at their Assembly in late September 2016[7]. The impact of such a global agreement is expected to be enormous, both at economic, environmental and societal levels, being able to support green aviation practices and curb emissions related to aviation from 2020.
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