Cleantech Market Intelligence
Bioports Emerge as Runway for Aviation Biofuels
In spite of a mountain of uncertainty facing the biofuels industry, aviation biofuels continue to gain momentum. Unlike the incumbent conventional biofuels industry, the entirety of the aviation value chain is readying for takeoff as the industry marches toward broad-scale commercialization.
Recent industry headlines demonstrate a high-level of coordination among stakeholders.
In sugarcane-rich Brazil, for example, bargain airline GOL Linhas Aereas Intelligentes recently announced a partnership with Boeing and Amyris, an emerging player in the advanced bio-based economy, to use sustainable aviation biofuel on 200 flights during the World Cup in 2014 and in 20% of flights during the Rio Olympics in 2016. The partnership aims to speed the research, development, and approval of sustainable aviation biofuels using sugarcane as a primary feedstock.
GE Aviation, meanwhile, has signed an agreement to purchase synthetic biofuel derived from cellulosic biomass, natural gas, and water electrolysis-generated feedstock from the Washington, D.C.-based D’Arcinoff Group, for testing jet engines.
Fast-growing LanzaTech has moved aggressively to secure front-end partnerships with industrial producers in China and India, using flue gas from heavily polluting facilities like steel mills and fermenting it into chemicals and fuels. Building on an aviation biofuels supply agreement with Virgin Atlantic, LanzaTech recently announced that it is ‘the first’ to have its jet biofuel certified by the independent Roundtable on Sustainable Biomass (RSB).
Strategic partnerships across the aviation biofuels value chain highlight the range of pathways to commercialization that are being explored globally, but emerging business models seek to go one step further.
Aviation biofuel supply chain integrator companies like SkyNRG seek to condense the upstream, midstream, and downstream components of liquid fuel production into bioports, or regional production hubs. The company pairs available feedstocks with appropriate conversion technology solutions at sites like Schiphol Airport and the Port of Rotterdam in the Netherlands and Brisbane Airport in Australia.
Similar to the microgrid model, which combines the generation, transmission, and distribution components of the electric power industry into a single site, bioports can operate independent of the broader petroleum market and supply dynamics. This model has many advantages despite aviation biofuel contracts being astoundingly complex. Solena Fuels, which has inked deals with 14 separate airlines, racked up nearly $1 million in legal fees to develop a first-of-kind contract to supply British Airways with aviation biofuel derived from municipal solid waste (MSW) at London Heathrow. However, once such agreements are in place, they can be replicated with airlines around the world. As one industry stakeholder commented, “Once you’ve worked with one airline, you’ve worked with them all.”
Corporations On Board
The current cost of aviation biofuels remains a further challenge. Complementing its bioport approach, SkyNRG is leveraging corporate partnerships with Nike, Heineken, Philips, and others to help co-fund the development of sustainable jet fuel. The corporate sponsors deliver much needed revenue for SkyNRG projects with airline partners while helping corporations achieve sustainability goals. SkyNRG aims to enlist more than 100 corporations into its corporate travel program by the end of 2014.
This model takes advantage of concentrated demand and expanding integration of cleantech at airports worldwide. Unlike ground transportation, there is no Tesla for the commercial aviation industry at the moment. Higher oil prices and declining quality of aviation fuels due to a higher percentage of heavy oils point to increasing interest from commercial airlines and the airport operators serving them. The emergence of supply chain integrators is a sign of a maturing industry poised for rapid growth.