Navigant Research Blog

Boeing Bets on Green Diesel

— January 31, 2014

The race for aviation biofuels has accelerated in the last couple of years.  More than 1,500 individual flights at least partially powered by biofuels have occurred since Virgin Atlantic powered the first commercial jumbo jet in 2008 with a blend of conventional jet fuel and biofuel derived from babassu and coconut oil.  More than 30 commercial carriers have flown with a blend of biofuels over this period.  Most recently, Boeing announced it would pursue ASTM certification for use of renewable green diesel for use in commercial aviation.

Despite aviation biofuels’ broad appeal among key commercial and military stakeholders, limited production and high costs have remained challenging barriers to the 3% to 6% share of global jet fuel consumption that the International Air Transport Association (IATA) believes is achievable by 2020.

Derived from diverse resources like algae, camelina, jatropha, and used cooking oil, the current pool of aviation biofuels is shallow due in part to a lack of production capacity – at least as measured against prevailing expectations just half a decade ago.  This is why Boeing’s recent announcement to pursue green diesel certification could change the game.  For the aviation industry, certification would enable green diesel to be integrated into existing supply chains at a cost that is competitive with petroleum-based jet fuel.

Plenty of Capacity

More chemically similar to fossil-based diesel than conventional biodiesel, green (or renewable) diesel’s advantage over incumbent biofuels is its compatibility with existing infrastructure.  This means that it can be dropped into existing pipelines, storage tanks, and most importantly, existing engine hardware.  This avoids the substantial costs associated with building out additional infrastructure, which conventional biodiesel and ethanol require – a bottleneck that has stymied conventional biofuels’ penetration into the global fuels supply chain.

Another advantage of green diesel relative to other advanced biofuels is availability.  In 2013, though green diesel contributed to just 2.7% of the total gallons of biofuels produced worldwide, it made up more than 95% of the advanced biofuels pool.  A recent International Energy Agency (IEA) report called green diesel the most successful advanced biofuels pathway with respect to scaling up production capacity.  According to estimates compiled for Navigant Research’s Industrial Biorefineries report, there is currently more than 900 million gallons of green diesel production capacity deployed across the United States, Europe, and Singapore.

Just two pathways – Bio-SPK and FT-SPK – have achieved ASTM certification for use as jet fuel.  At their current stage of development, both pathways have proven to be prohibitively expensive to use on a commercial basis.  Alaska Air and Horizon paid $17 per gallon in 2011; the U.S. Navy, meanwhile, has paid between $20 and $65 per gallon for advanced biofuels used in various non-combat operations.  While it is important to note that these prices are for relatively small quantities used primarily for testing, with green diesel’s wholesale cost in the range of $3 per gallon, it is currently available at price parity with petroleum-based jet fuel.  Jet-A wholesale costs are currently just under $3 per gallon.

Flight Path

Although ASTM approval for green diesel would be a boon for advanced biofuels and the aviation industry in the near term, the availability of sustainable feedstock to support a mature industry remains a hotly debated issue.

At best, green diesel certification provides a bridge to more scalable thermochemical conversion pathways for aviation biofuels: fuels derived from large-scale algae production, or more likely, the realization of industrial-scale non-food oil production from promising feedstocks like jatropha or camelina.  At worst, it buys the aviation industry a few more years to build on the difficult progress that has already been achieved.

While Boeing and commercial airlines are among the winners if green diesel certification goes through in the near term, refining stalwarts like Finland-based Neste Oil, Honeywell’s UOP, and Valero are also well-positioned to ride a surge in investor activity.


Bioports Emerge as Runway for Aviation Biofuels

— December 6, 2013

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.


Airlines, Governments Repel EU Aviation Emissions Plan

— January 16, 2013

Source: AirnationThe worldwide commercial aviation industry uses an estimated 70 billion gallons of fuel annually, producing roughly 2% of global greenhouse gas emissions.  Business-as-usual estimates for CO2 emissions from the global aviation industry projected by the International Energy Agency show increases of 3.1% per year over the next 40 years – resulting in a 300% increase in emissions by 2050.  However, the industry has taken significant strides in recent years to stabilize, and ultimately reduce, its contribution to global emissions.

Led by the International Civil Aviation Organization (ICAO), the commercial aviation industry has set two aspirational goals to guide policy: carbon-neutral growth by 2020 and a 50% reduction in industry emissions by 2050.  The integration of aviation biofuels derived from sustainable feedstocks like jatropha, camelina, municipal solid waste (MSW), and algae is a key component of achieving both goals.  Yet, national sovereignty and international agreements on the freedom of the skies are hampering efforts to impose a carbon tax that would encourage the integration of such fuels.

In an effort to compel airlines to implement emissions reduction measures, the EU rolled airline emissions into its Emission Trading Scheme (ETS) in 2008.  Originally scheduled to take effect in 2012, the market-based effort triggered direct opposition from the ICAO, which sought a global solution.  It also led the United States, China, India, Russia, Japan, and some Persian Gulf nations to threaten retaliatory trade measures.

In the United States, the aviation industry spent nearly $5 million in 2012 to support fierce political opposition, culminating in President Obama signing into law the European Union Emissions Trading Scheme Prohibition Act on November 27.  The bill gives the U.S. Transportation Secretary the power to shield U.S.-based carriers from the tax.  This effectively allows U.S. airlines to ignore the EU-imposed tax.

Blackmail, Black Market

Chinese and Indian airlines, meanwhile, refused to submit emissions data as part of the EU scheme.  China also threatened to withhold aircraft orders in excess of $3.8 billion from Airbus if the EU proceeded with the trading scheme.  The Indian government has been a staunch critic of the scheme, arguing that the EU plan would result in the formation of a black market for airline emissions credits.

Facing international pressure from major powers and key trade partners, the EU’s three most powerful members – Germany, the United Kingdom, and France – forced a 1-year postponement of the Airline Amendments to the ETS pending an anticipated agreement on a multilateral global alternative program.   The latter program is scheduled to be negotiated in the ICAO Assembly in 2013.

Although aviation’s contribution to global emissions is not overwhelming, the suspension of the ETS creates an environment of uncertainty around aviation biofuels, potentially stifling investment in drop-in conversion technologies that have yet to cross the commercial threshold.  Lack of long-term policy certainty has routinely been cited by industry sources as a key barrier to biorefinery construction and advanced biofuels scale-up.

Despite opposition to the EU plan, the U.S. government still strongly supports the development of aviation biofuels.  The Federal Aviation Administration (FAA) has called for the aviation industry to use 1 billion gallons of alternative jet fuel per year by 2018.  Moreover, the U.S. Department of Defense remains one of the most enthusiastic proponents of aviation biofuels.  Recent legislation passed by the U.S. Congress has signaled a commitment to public-private partnerships to build out domestic infrastructure for the production of advanced biofuels, including drop-in fuels compatible with existing commercial and military aircraft.


Aviation Biofuels Start to Take Off

— December 18, 2012

In November the U.S.  Senate voted 62-37 to strike language from the annual defense appropriations bill that would have prohibited the Department of Defense (DOD) from buying alternative fuels if they cost more than conventional petroleum-based fuels.  Estimates of commercial aviation biofuel prices are around $5 to $7 a gallon, while conventional petroleum-based fuel is around $3 per gallon.  The DOD is the largest consumer of oil in the world and in recent years has been a leading advocate and investor in advanced biofuel development.  Had the restrictive language been permitted, it would have been a crippling blow to the domestic and international aviation biofuel industries, grounding their encouraging recent advances globally.

Unlike petroleum-based fuels, biofuels have many feedstocks that can originate from almost anywhere.  The costs of distributing a specific biofuel over a wide area, however, make any specific biofuel less competitive against petroleum-based competitors that have better price points and distribution networks.  Therefore, the standardization of one biofuel from one feedstock across the globe is unlikely.  Rather, many biofuels from varying feedstocks will emerge in regional markets.

Aviation biofuels add another variable in that the purpose of aviation is to travel to different regions of the world where departure point and destination may not have the same biofuel supply originating from the same feedstock.  The present issue, though, is finding the most sustainable feedstock at the most competitive price, something many are trying to do across the globe.  Below, a roundup of aviation biofuel initiatives in selected countries.

United States

In late May, United Airlines, Boeing, the Chicago Department of Aviation, the Clean Energy Trust, and Honeywell UOP created the Midwest Aviation Sustainable Biofuels Initiative (MASBI).  The Midwest offers the largest potential feedstock for biofuel development in the country.  The initiative is meant to evaluate challenges in biofuel development as well as potential Midwestern feedstocks.  A report on initial conclusions of varying feedstock viability is due later this month.


In late August, the Commercial Aircraft Corporation of China announced that it will collaborate with Boeing on refining waste cooking oil into jet fuel.  China produces 29 million tons of the waste oil while consuming 20 million tons of petroleum-based jet fuel annually.  Boeing claims price parity can be achieved within 10 years.  In addition, by 2020, the Chinese Civil Aviation Authority expects 30% of the country’s jet fuel consumption to be met by biofuels.


The long-time leading producer and consumer of sugarcane-based biofuels for the automotive market, Brazil is now taking steps to enter the aviation market.  In mid-2011 Boeing announced a partnership with Brazilian aircraft manufacturer Embraer to assess potential jet biofuels.  In April 2012, Boeing expanded its depth in the region by establishing Boeing Research & Technology-Brazil.  The center will be an innovation hub for public organizations, private sector companies, and universities to collaborate on an assortment of aerospace technologies including biofuels.


The National Research Council of Canada flew the first civil jet on 100% unblended biofuel in early November.  The jet was powered by biofuel created from a genetically engineered Ethiopian mustard seed produced by Agrisoma.  The seed will now be grown on 6,000 western Canadian acres on behalf of 40 commercial farmers.

Other significant advances in aviation biofuels are occurring in 18 other countries using a variety of feedstocks, from Camelina in Spain to woody biomass in New Zealand.  Most of these developments are in their initial research phases, and any significant penetration of biofuel into the aviation fuel supply chain is still distant.  The future of aviation biofuels is not a sure thing; however, it is conceivable to consider that airplanes will eventually fly around the world using sugarcane grown in Brazil, Ethiopian mustard seed grown in Canada, or waste cooking oil produced in China.


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