New Standards Are Here, But How Will Aviation Biofuel Market Evolve?
July 26, 2011
New Hampshire, USA — Jim Rekoske is a scientist and a businessman, so he doesn’t much care for predictions. His expertise, though, is in a field that’s fueled by predictions.
As vice president and general manager of Honeywell’s UOP renewable energy and chemicals business, Rekoske is helping lead an effort that has a growing demand, yet so far little supply.
To some, his predictions may seem bold, but so is the cause — to create a clean energy market that will supply the fuel that powers the future of aviation.
“The demand is there,” he said. “The ability to grow these oils in a way that does not impact the food chain also exists. There really is no reason [this couldn’t work] other than the normal inertia, which is present at the beginning of any new endeavor. So we need to overcome that normal inertia.”
If the industry can get past that resistance, Rekoske envisions 1 to 1.5 billion gallons a year of plant-based oil being converted to jet fuels and being blended at up to a 50 percent mix with the 65 to 70 billion gallons of conventional jet fuel produced each year.
How To Grow
Established industries,by and large,are not in the business of opening their doors to competition. That’s why the growing aviation biofuels industry is looking at policy and standards as avenues to a growing market.
The effort to create an aviation biofuel market received a major boost earlier this month when ASTM International updated its aviation fuel standard to allow renewable fuels to be blended at up to 50 percent with conventional fuels for commercial travel.
For Honeywell and others banking on demand, the revamped standards were the latest in a string of positive signs for the burgeoning industry.
The European Union is trying to get airlines covered under its Emissions Trading Scheme, which has angered some governments that don’t want their businesses subject to a European cap-and-trade market.
Depending on the outcome, says Rekoske, there could be a substantial boost for biofuels as airlines work to cut their emissions, which account for about 2 percent of the world’s greenhouse gases.
In August, Air China will embark on its first flight with biofuels grown in China through a partnership between Petro China and UOP. The hope for biofuel producers is that the Chinese government will use that event to put stronger emissions programs into place, which could further boost the demand and ultimately the supply.
All these point to the potential for demand now and possibly in the future. But how to build the supply, especially when no one is quite certain how quickly the industry will evolve? That’s where a company like Honeywell comes in. The corporate giant, which engineered a biofuel that’s recently been used in demonstration flights in blends at 15 and 50 percent, sees itself as a connector of industries. Now, they’re busy pairing industries that don’t normally speak to each other — namely companies that will grow biofiel feedstock like camelina and those that refine conventional fuels.
An example of this is a partnership that is bringing together Valero, a refiner, and Darling International, a company focused on agriculture. The result will be a joint-venture refining plant adjacent to an existing refinery in Norco, La.
“There’s no reason for a company like Darling to have to learn how to refine and learn how to distribute those products,” said Rekosko.
Tapping into existing refineries, he says, will not only tap into expertise, but it will also lower the cost of construction and speed up the time of development. Building a facility alongside an existing refinery would take 18 to 24 months to complete while retrofitting an existing facility can be done in a year, he said.
Before you get to the refinery, you need the feedstock. It’s another area in which partnerships are being formed globally to source the natural oils near the refiners, an effort that is expected to cut down on costs compared to crude oil, which is found in relatively few locations. Right now, though, the feedstock are being grown in test quantities. (The 40,000 to 50,000 acres of camelina planted in the U.S. last year is a mere drop compared to the 70 million acres of wheat and the 95 million acres of corn.)
Currently, the refining of natural oils is about 15 cents a gallon, or about 4 or 5 dollars a barrel more than crude oil. The cost of the feedstock, meanwhile, is what needs to come down as the process scales up. When adding the costs of growing, harvesting, extracting, and producing the plant-based oils, it comes to as much as two times the total cost of crude oil.
“Trial prices are what’s being paid,” said Rekoske. “The anticipation is that under current oil prices, bio-derived fuel will become comparable. As conventional oil rises in cost, natural oils would not rise as quickly. There should be some break-even point when fuels will be priced equivalently.”
Entering the Market
Aside from future mandates, it’s currently up to airlines to decide whether they’d tap into a biofuels market. So far, there’s been some movement on that front.
In late June, the Air Transport Association of America announced that a group of airlines had signed letters of intent with Solena Fuels for a future supply of jet fuel derived exclusively from biomass to be produced in northern California.
According to a company press release, Solena’s “GreenSky California” biomass-to-liquids (BTL) facility in Santa Clara County will utilize post-recycled urban and agricultural wastes to produce up to 16 million gallons of neat jet fuel per year by 2015 to support airline operations at Oakland, San Francisco and/or San Jose.
American Airlines and United Continental Holdings led the development of the agreement with Solena and were joined by five additional ATA member airlines – Alaska Airlines, FedEx, JetBlue Airways, Southwest Airlines and US Airways – and ATA associate member Air Canada in signing the letters of intent, as well as Frontier Airlines and Lufthansa German Airlines.