The collapse of oil prices has killed what little serious interest airlines ever had in biofuels
The aviation industry has tried to persuade itself and others that it can continue increasing its annual jet fuel consumption, but by using biofuels, this can (magically) all be low carbon in future. But biofuels have proved not to be much more than wishful thinking. A long article in Forbes shows just how unlikely biofuels are to be the “get out of jail” card the industry hoped for. The airline industry has so far managed some PR successes in nurturing the perception among the public that biofuels are the solution for “green” aviation, while they have done little more than play around the edges of biofuel experimentation. Forbes says there are main reasons why biofuels won’t help. (1). Biofuels are now, and may always be, too expensive. Even before the collapse of oil prices over the last 8 months it had become quite obvious that aviation biofuels aren’t likely to be price-competitive with carbon-based fuels any time in the foreseeable future. (2). Biofuel production is not now, and likely never will be, produced in sufficient volumes. The enormity of the demand makes it practical impossibility. (3) Biofuels are not now, and likely never will be, widely accessible. It concludes: “…airline executives’ legal and practical obligation to their shareholders will prevent them from making any biofuel purchase commitments of significant size.”
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The Collapse Of Oil Prices Has Killed What Little Serious Interest Airlines Ever Had In Biofuels
By Dan Reed (Forbes contributor)
27.1.2016
Just as bologna sandwiches don’t taste nearly as good when hamburger meat sells for 99 cents a pound, airlines are losing their taste for biofuels now that they can buy a gallon of conventional jet fuel for less than a buck.
Over the past 15 years there have been waves of interest in biofuels as industry leaders grew concerned about oil prices, global terrorism, economic weakness, environmental issues, sustainability and other big picture issues.
Additionally, airlines – which always are sensitive to the rising and falling of public and political sentiments – have sought to position themselves as environmentally-concerned corporate citizens eager to make the jump to burning greener, cleaner biofuels rather than nasty-old carbon fuels.
For the most part, they successfully have nurtured that perception among the public even though in reality they have done little more than play around the edges of biofuel experimentation.
Now, though, with jet fuel – essentially kerosene – refined and sold on the U.S. Gulf Coast selling for as little as 85 cents a gallon, airlines no longer have any serious interest in biofuels. So don’t believe whatever biofuel-boosting statements they may continue to put up on their websites and into their news releases.
Here are three interrelated reasons why:
Biofuels Are Now, And May Always Be Too Expensive
When jet fuel cost more than $3 a gallon, and oil was over $100 a barrel and appeared to be headed ever-higher, it made sense for airlines to look into both their technical ability to burn biofuels in their planes’ jet engines as an alternative fuel and ways to improve the currently very limited supply of biofuels. There probably never has been an airline executive who would prefer burning carbon-based fuels over a cleaner, greener fuel – so long as prices are comparable. And over the last decade there’s been growing public and regulatory pressure on airlines to reduce their carbon and other emissions, further heightening airline executives’ interest in the development of biofuels. So there was some, albeit limited, natural desire in the industry to find an affordable alternative to conventional, carbon-based jet fuel.
Unfortunately, biofuels have not come anywhere close to being cost-competitive with jet fuel.
When in 2010 the U.S. Air Force famously flew a Navy F/A-18 fighter jet on a mixture of jet fuel and biofuel derived from the camelina plant, it was trumpeted as the dawn of a new day in aviation. But the glaring truth behind that stunt was that the Navy paid a staggering $67-a-gallon for that 50-50 blend of biofuel and conventional jet fuel.
But it was just a technical demonstration flight, so no one paid much attention to the price problem. And many expected that the price of biofuels would fall to more reasonable levels as technology improved and production volumes increased. Indeed, in one 2012 demonstration project, the Navy paid “just” $27 a gallon for biofuels in used to power several ships dubbed “The Great Green Fleet.” So everyone assumed the price was moving in the right direction.
But later in 2012 the Navy paid a jaw-dropping $424 a gallon for a batch of algae-based biofuels. That highlighted how far from the truth such assumptions really had been. Additionally, a politically-connected company named Solazyme got a military contract that year to deliver an algae-based biofuel to a motor fuel test program at a cost equivalent to $149 a gallon.
Biofuel Production Is Not Now, And Likely Never Will Be Produced in Sufficient Volumes
The production of carbon-based fuels involves only a tiny fraction of the Earth’s surface area (the huge lakes of oil, after all, are beneath the surface and can be brought up to the surface through what amounts to a few straws poked through the Earth’s crust). However, to produce enough cellulosic plant materials to meet the demand – not only for aviation biofuels but also for cars, trucks, ships and trains – would require that unfathomable amounts of the Earth’s surface be turned over to the production of energy feedstock crops. Camelina, switch grass, and other land crops suitable for biofuel refining processes would have to be planted on just about every remaining bit of available land to meet the global demand. Alternatively, investors could establish enormous floating sea farms in which they would cultivate algae, or huge high-tech farms featuring rows and rows (and miles and miles) of giant racks supporting stacks of containers full of algae-laden water. Every few weeks, the algae would be “harvested” for refining and the process re-started.
Simply put, the enormity of the demand for biofuel as a replacement for even half of the conventional fuels we burn today makes “growing our own” fuels a practical impossibility. We cannot, in any practical scenario, grow enough of energy feed stocks to make a noticeable dent in the world’s consumption of conventional transportation fuels.
Doubt that’s true? Just look at Iowa, where politicians from both major parties are in the last week of pandering to that state’s powerful corn lobby in order to win votes.
About 40% of the nation’s entire corn production (Iowa is a leading corn production state) currently goes to ethanol refineries. But before we even consider ethanol’s dubious ability reduce total carbon emissions, that diversion of agricultural resources from a world where hunger remains a major issue makes no financial sense absent massive government subsidies to corn farmers. That’s because all that corn being turned into ethanol equals gets refined into just 600,000 barrels of oil per day. That’s a mere 3% of the 19 million barrels of oil consumed each day in the United States.
So, even if 100% of all U.S.-grown corn were to be converted into ethanol it would meet less than 10% of the nation’s daily fuel needs. So how much of the world’s surface would need to be devoted to the growth of energy feed stocks to meet even half of the global demand or transportation biofuels? And how much fresh water would be required to support farming on such a massive scale – and does the Earth have enough available fresh water to do that? There also are serious questions related to the negative environmental impacts associated with farming on such a large scale and the use of fertilizers and other chemicals.
Even if we somehow could put that much of the Earth’s surface into energy feed stock production, the cost of developing and operating such breathtakingly large farming operations would render the crops produced by such farms either unaffordable or unprofitable – and likely both. Perhaps an argument could be made that the long-term environmental improvements would be worth it. But what investors would be willing to absorb staggering losses for 40, 50 or even more years until those giant biofuels farms begin to turn profits?
Beyond that question, lies the third reason why airlines no longer can be expected to seriously pursue biofuel solutions to their energy needs:
Biofuels Are Not Now, And Likely Never Will Be Widely Accessible
Airlines are network businesses. Their principal assets – airplanes – are not stationary factories. They move all around the country and around the globe every day. Therefore they need to have access to fuel and other supplies wherever they might go. If an airport lacks the ability to refill an airplane’s fuel tanks, airlines simply won’t send its planes there. Hence all airports of any size have ample supplies of Jet A – as jet fuel is called – available.
Only one – in Oslo, Norway – now has biofuel available via its on-site storage tanks and integrated refueling system. And it just turned that biofuel refueling system on last week.
And as much as some European carriers – and European political leaders – had been talking loudly about the need to make biofuel available at every airport in Europe by 2017 in order to reach the European Commission’s aggressive targets for reducing aircraft emissions, the backsliding has begun in light of the very unfavorable economic realities of biofuel production.
British Airways waste to fuel project
[In October] British Airways cancelled its ambitious $488 million corporate green fuels initiative. BA officials conveniently blamed the British Government for its failure to include in its budget funding to incentivize the construction of a biofuels refinery on which BA’s plan hinged. Link
Called “The Green Sky Project,” the plan had been to greatly subsidize the construction of a new biofuel refinery in Essex that would have turned 575,000 tons a year of household waste into liquid fuels. That would have been enough to fuel all of BA’s flights at London’s City Airport (smallest of London’s three commercial airports) for a year. Given the collapse of oil prices, the project – for which no company or investor was willing to sign up without huge subsidies from Her Majesty’s Government – became too costly for No. 10 Downing Street to support.
Furthermore, it now is unlikely that those US cities – most notably Seattle – where there are plans to build biofuel refueling infrastructure now will be willing to risk big investments in that infrastructure without purchase guarantees from airlines. And given the price gap that exists today – and that likely will continue to exist for decades – between jet fuel and aviation biofuels it is hard to see airline executives making such commitments.
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Alaska Airlines and the Port of Seattle announced on Wednesday that they are partnering on a $250,000 study to explore how to bring more aviation biofuel to airplanes at Seattle-Tacoma International Airport. Executives for the companies and port signed an agreement, saying the study will help stimulate production of alternatives to conventional jet fuel. They say the longer term plan is to incorporate more biofuel into the airport’s fuel farm, which is used by all 26 airlines.
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The industry’s unrealistic hopes for future biofuel use:
The industry backed group, “Sustainable Aviation” has a lot of optimistic forecasts about how “green” the industry will become. Most are unrealistic.
It states:
“SA estimated that by 2050 sustainable fuels will offer between 15% and 24% reduction in CO2 emissions attributable to UK aviation. This assumption was based on a 25-40% penetration of sustainable fuels in to the global aviation fuel market, coupled with a 60% life-cycle CO2 saving per litre of fossil fuel displaced. For the purposes of our Road-Map, we assumed an 18% reduction in CO2 emissions from UK aviation through the use of sustainable fuels.”
Page 13 on
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“Boeing’s goal is that by 2016, sustainable biofuel will meet 1 percent (600 million gallons) of global jet fuel demand, and we believe this goal can be met.”
“GreenSky London is British Airways flagship project to construct an advanced fuels facility that will convert around 500,000 tonnes of waste p.a. into a number of sustainable low-carbon fuels, including jet fuel. ”
“The British Airways and Solena partnership project represents a significant investment in new green technology in the UK. It will provide an innovative sustainable green energy and low-carbon fuel solution for the UK’s aviation sector. GreenSky London has signed an exclusive option on a site for the facility, and consent work for the site has begun. The facility will create over 150 operational jobs, and 1,000 construction positions. ”
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“Boeing are working closely with their customers and stakeholders to meet their goal of sustainable biofuel serving at least 1% of global aviation fuel demand by 2016.”
” ….we now estimate that significant deployment of aviation biofuels in commercial flights will commence around 2015 rather than around 2020 as previously assumed.”
In a chart (Page 56 of their “Sustainable Aviation CO2 Road Map 2012” athttp://www.sustainableaviation.co.uk/wp-content/uploads/2015/09/SA-Carbon-Roadmap-full-report.pdf
they presume that biofuels will lead to cuts in global aviation emissions of 18% compared to 2000 by 2050.
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Many more stories on aviation biofuels over the years at
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