Abstract
Conventional jet fuel derived from oil is universally available and relatively cheap, particularly given current crude oil prices. It has been in use since the early 1940s and provides high energy content per unit weight and volume and high thermal stability. Each year, the aviation industry burns about 10% of the oil consumed globally in the form of 300 billion liters of jet fuel.
Over many decades, aircraft design, engines, and fuel distribution infrastructure have been finely tuned to the supply and use of large volumes of jet fuel. Energy sources other than liquid fuel will not be available for commercial aviation for decades, and certainly not for the long-range flights on which Australia and New Zealand depend. Because of the long travel distances, Australia's consumption of jet fuel relative to population is high. In 2015, jet fuel costs for Qantas Airways and Virgin Australia totaled about A$5.0 billion (USD3.8 billion). Airlines have high operating costs, a large fraction of which is accounted for by jet fuel, so fuel price point matters.
Yet, in an unusual step in March of this year, Air New Zealand and Virgin Australia signaled their intention to begin their exit from the sole use of petroleum jet fuel. They issued a Request for Information (RFI) related to the procurement of biojet fuel for both domestic and international operations from industrial-scale refineries in Australia and New Zealand. They took this step in partnership to strengthen the demand signal, and they did so now because aviation in Australasia and around the world has an emissions problem related directly to burning jet fuel. Aviation currently contributes about 3% of man-made CO2 emissions per year.
Unless something is done to decouple rising jet fuel consumption from rising carbon emissions, the problem will escalate into the foreseeable future in line with the projected 4–5% per year growth of the aviation industry. This growth will continue because of the significant contribution that aviation makes to economic activity of nation states and to the lifestyles of their citizens.
Reducing Emissions While Ensuring Energy Security
Recognizing that aviation cannot be an ever-growing contributor to global warming, in relative or absolute terms, airlines are seeking to drive emissions reductions in order to retain their social license to operate and grow. They are also looking to assure the diversity, security, and price stability of energy supply. This would increase business resilience by mitigating risks associated with oil price, currency volatility, and carbon price.
Through the International Air Transport Association (IATA), global aviation has committed to an annual average increase in fuel efficiency each year from 2009 to 2020 of 1.5%, to a target of carbon-neutral growth by 2020 and a reduction in emissions by 50% of the 2005 figures by 2050. These 2020 and beyond targets will not be achieved easily. The approach must be multidimensional, spanning improved technology, operations, and infrastructure. Market-based measures are essential, with at-scale production of competitively priced biojet fuel a direct result. The plans must also be long term, given the decades-long life cycles of aircraft and infrastructure.
The UN's International Civil Aviation Organization (ICAO) has similar ambitions for decreasing CO2 emissions by the aviation industry. To meet the target of capping global net CO2 emissions from international aviation by 2020, the ICAO Assembly, through its 2013 Resolution A38-18, moved to develop a global market-based scheme. The draft text formed the basis of a recommendation by the 39th Session of the ICAO Assembly in September of this year. The UNFCCC COP21 meeting in Paris, in December 2015, did not include any reference to international aviation. ICAO instruments will be used to cover this sector. The September 2016 Assembly was an important next step.
The 2020 target requires a consequential change in supply of biojet fuel from around the world, including from our region. Australian airlines are cognizant of mechanisms such as the Australian Government's Emissions Reduction Fund Safeguard Mechanism, which requires the largest emitters, including airlines, to constrain emissions compared to baseline levels beginning July 1, 2016.
In their RFI, Air New Zealand and Virgin Australia requested 200 million liters of biojet fuel a year for 10 years, beginning in 2020. This is about 5% of annual projected jet fuel consumption by these airlines. They would like this supply to come from domestic sources, from 4–5 industrial biorefineries located across Australia and New Zealand. None of these currently exists.
Biojet Fuel: Progress and Barriers to Development
Biojet fuel means a “drop in” fuel – compatible with existing aircraft, supply lines, storage, and blending facilities without the need for expensive retrofitting. It means fuel produced from carbon that has already been emitted, not from new fossil carbon. Biojet also means fuel produced with no or minimal impact on food security, water security, and biodiversity. In addition to meeting these sustainability criteria, biojet fuel must meet the same suite of stringent technical specifications as conventional jet fuel, as certified by the American Society of Testing and Materials (ASTM) or an international equivalent.
ASTM has already certified several alternatives to conventional jet fuel under the international standard, ASTM D7566, Specification for Aviation Turbine Fuels Containing Synthesized Hydrocarbons. These alternatives include the Hydroprocessed Esters and Fatty Acids (HEFA) pathway, which produces biojet from oilseed crops, animal fat, or microalgae. HEFA biojet can be used in up to a 50:50 blend with petroleum jet fuel.
In March 2016, United Airlines began regularly scheduled commercial flights powered by blended biojet. AltAir Fuels is producing this biojet using the HEFA process from inedible agricultural waste fats and oils in the Paramount refinery in Los Angeles. The airline will purchase up to 15 million gallons of biojet, stored and delivered in the same way as petroleum jet fuel, in its daily operations at Los Angeles International Airport.
These are relatively small volumes of fuel but they signal that the first steps to commercial-scale biojet production have been taken into a market that is huge. Notably, for the Altair Fuels HEFA biojet production facility in Los Angeles, price parity for this first-of-a-kind plant is possible because of subsidies afforded by the US Federal Renewable Fuel Standard (RFS) program and California's Low Carbon Fuel Standard.
The fifth and most recent addition under the D7566 specification is alcohol-to-jet renewable fuel (ATJ) produced by Gevo from feedstocks such as corn, sugar, or forestry waste. Their airline customer, Alaska Airlines, began operating commercial flights using a 20% blend of ATL with jet fuel in June 2016.
Despite strong signals from the global market, IATA, and ICAO, policy incentives from some governments, and the ASTM certifications, the biojet industry has been slow to emerge. We have long known how to convert various kinds of organic material such as crops and crop waste, trees, grasses, algae, animal fats, and waste gases into jet fuel We are learning far to slowly how to produce biojet on a large scale, conveniently, and cheaply enough to compete with oil.
The bioject industry faces several barriers to more rapid progress: • Securing feedstock in sufficient quantities, year-round, and at affordable prices • Access to capital to finance projects • Public acceptance of biobased products • Strategic demand side policies, including uniform standards for biobased products • Workforce skills • Collaborative, operational alliances along the new value chains.
Also, many questions remain to be addressed related to the actual reduction in carbon emissions of biojet on a well-to-wing basis, and to combustion and full emissions profiles of these new fuels. Finally, policies must be aligned so that the emerging biojet fuel industry is not at a competitive disadvantage to incumbent players or other modes of transport.
A Promising Future
There is light on the horizon. In January 2016, the US Navy launched the Great Green Fleet in San Diego by deploying the John C. Stennis Carrier Strike Group. Each of the ships is using a range of energy efficiency measures as well as being powered by blended renewable diesel and biojet produced by AltAir. This is the culmination of a 7-year market pull by the US Department of Defense, which has been using its procurement power to accelerate development of new supply chains for energy, to increase energy efficiency and security.
Although currently under review, the position of the US Federal Aviation Administration at present is that 5% of the jet fuel consumed each year in the US beginning in 2018 should be biojet. By volume, this represents 1 billion gallons of biojet. By cost, it represents US$2.5 billion of the US$50 billion that airlines in the US spend on jet fuel each year.
Emerging biojet companies in the Americas, Europe, and China are knocking on the door. When the ASTM process has been completed to certify a 5% blend of “green” diesel and petroleum jet fuel, a large volume of biojet could be ready for market. Green diesel is already being produced at commercial scale around the world.
It is not too late for Australia and New Zealand to enter the field. Initiatives such as the Virgin Australia–Air New Zealand RFI are intended to kick-start the local biojet market. The response to the RFI has been positive. During the RFI Conference in April 2016, potential respondents were given the opportunity to ask questions. By the due date in May, local, regional, and international proponents had submitted more than 30 responses. These are currently under review against the airlines' performance criteria, after which a selected few will be invited to progress their proposals.
In 2012, Qantas and Jetstar demonstrated that use of biojet in their commercial flights is operationally feasible. They are now focused on building relationships with companies that could potentially supply fuel on a commercial scale. Qantas also has one of the world's largest airline carbon offset programs, which continues to increase its penetration into the market. The company has recently developed a corporate sustainability leadership program called the Future Planet Partnership. This enables corporate partners to responsibly and actively offset their travel and operational emissions and boost their sustainability credentials.
Several studies during the last five years supported the feasibility and opportunities associated with development of the sustainable aviation fuel industry in Australia 1 –4 . The Report by the Academy of Technological Sciences and Engineering in 2013 concluded that, “if price-point competitiveness and reliable high volume supply can be achieved, sustainable aviation fuel production represents a tangible and major green growth industry opportunity for Australia.” 4 These barriers of price point competitiveness and reliable supply are common to production of any renewable bioproducts in Australia or elsewhere.
The Australian government's Australian Renewable Energy Agency (ARENA) regards bioenergy, and biojet in particular, as having investment potential. In June 2016, ARENA provided A$2.4 million (USD1.8 million) in funding toward Southern Oil Corporation's feasibility study and design of a commercial-scale biorefinery in Queensland. The plant could produce one million liters of fuel annually from waste lube oil and renewable feedstocks for use in field trials by the Australian Navy and the Great Green Fleet. The A$1 billion (USD0.77 billion) Clean Energy Finance Corporation (CEFC) is also open to supporting biofuels projects moving from demonstration to commercial deployment.
Strategic Planning
The biojet fuel industry will not develop in isolation. A biorefinery will have the capacity to convert agricultural waste streams and other carbon-based feedstocks into a myriad of valuable, renewable molecules. The HEFA process currently results in approximately 40% biojet, 40% “green” diesel, and 20% naptha. Parallels to the current petroleum refining industry are evident. The difference lies in the feedstocks that the refinery process utilizes. Creating these value chains will not only have an impact on aviation carbon emissions, but will also create economic growth, new manufacturing jobs, and new sources of income, helping to revitalize rural communities.
The 2014 Deloitte Access Economics study of the economic impact of a future tropical biorefinery industry in Queensland concluded that it could be a “viable source of economic growth and diversification,” have an estimated annual economic impact of $1.8 billion (USD1.4 billion) and, by 2035, “support over 6,640 FTE employees, many of which are in regional Queensland.” 5 Potential agricultural feedstocks included sugarcane, sugarcane bagasse, sweet sorghum, and sorghum stover.
The Australian company, Licella, is based on a novel Catalytic Hydrothermal Reactor (Cat-HTR) technology. This converts renewable biomass into stable bio-crude oil that can be refined into biofuels and other bioproducts. The company has just announced a joint venture with Canada's Canfor Pulp, one of the world's largest logging companies. Together, they will work to explore the economics of large-scale production of renewable crude at a new facility in Prince George, British Columbia.
These are the drivers for the Queensland government's just-released Biofutures Roadmap and 10-year action plan, which seeks to establish the State as a leader in the biorefinery industry. Actions include the appointment of a Biofutures Industry Envoy and a Research Chair for Advanced Biofuels, and the allocation of $5 million (USD3.8 million) Biofutures Industry Development and Commercialisation Funds. The State has introduced a biofuels mandate for road transport, but at the moment this has not been extended to aviation. The opportunities for stronger commercial activity in Australia and New Zealand are there to be taken if industry consortia can present the attractive feedstock and investment conditions necessary to compete in the global biojet market.