Aviation Biofuels About to Take Off

by Dr. John CK Daly for Oilprice.com

An extraordinary convergence of recent events seems poised shortly to make aviation biofuels the belle of the investor's ball.

The first is that on 8 June the follows the international standards certifying body ASTM International announcing its approval of its BIO SPK Fuel Standard, to be made official later in the year, of the use of hydrotreated renewable jet (HRJ) Jet A-1 fuel in commercial aviation. The potential financial implications are massive, as together the airline industry and the U.S. military use more than 42.25 million gallons (1.5 million barrels) of jet fuel a day.

One of the leading contenders for ramping up production of Jet A-1 HRJ is camelina, which has undergone extensive testing by both civilian airlines and the U.S. military. Camelina HRJ qualifies as a "drop-in" fuel, which can simply be mixed with regular Jet A-1 in a 50-50 ratio, allowing jet engines to function without any modifications.

In March 2010 Biomass Advisors released their 116-page study, Camelina Aviation Biofuels Market Opportunity and Renewable Energy Strategy Report, projecting that by 2025 one billion gallons of camelina biofuel would be produced for the aviation and biodiesel sectors, creating 25,000 new jobs and producing over $5.5 billion in new revenues and $3.5 billion in new agricultural income for U.S. and Canadian farmers. Biofuels Digest is projecting that global advanced biofuels capacity will reach 4.003 billion gallons by 2015, based on company announcements to date, with capacity reaching 718 million gallons in 2011, 1.522 billion by 2012, 2.685 billion by 2013, and 3.579 billion gallons by 2014.

Fuel and oil comprise 25 percent of civilian airlines' operating costs. When the price of jet fuel rises one cent, it increases the global cost of aviation $195 million.

The second development is that the critical mass of HRJ fuels on both civilian and military aircraft has been completed, with various military and civilian aircraft flying with HRJ additives made not only from camelina, but jatpropha, algae, babasu and coconut oil, among others. Production is set to soar from small "designer" batches of HRJ produced up to now for testing.

Quick of the block in playing to the big boys, Neste Oil will showcase its NExBTL HRJ renewable aviation fuel at the Paris Air Show later this month and airlines in the Virgin Group are collaborating to attempt to develop and share aviation biofuels at their common port of Los Angeles International airport. More airlines are sure to follow.

Another unexpected development leveling the playing field for aviation biofuels was the unexpected vote on 16 June by the U.S. Senate to repeal tax credits worth about $6 billion annually for producing ethanol, produced from U.S.-grown corn. With its 73-27 vote, the Senate passed an amendment to end the 45-cent-a-gallon subsidy the government gives oil companies for blending ethanol into gasoline and the 54-cent-per-gallon tariff it places on imported ethanol to protect the domestic market. Other biofuel producers for years have complained about the subsidies, which, contrary to popular imagery, go primarily to the oil companies, not small-time farmers.

Ethanol is the most heavily produced biofuel in the U.S., with nearly one third of U.S. corn production diverted to producing it while Brazil distills its ethanol from sugarcane, as an additive to gasoline. Other biofuel producers have complained that the subsidies both gave an unfair advantage to bioethanol producers but also soaked up much of the investment funding that might have other supported other renewables.

Between receiving formal approval for civilian airline use and the federal government preparing to end its support for U.S. ethanol welfare queens, sharp investors will be looking for potential winners on a playing field that is suddenly becoming much more level. And I haven't even mentioned Pentagon interest in biofuels - yet.

A story for another time.

To read the full story visit The Market Oracle Here

Lowly shrub grows in stature as biofuel

Jatropha seed oil touted for jets
By Mark Kellner - The Washington Times

A plant that some have scorned as a predator might well turn out to be part of the answer to rising fuel bills for consumers.

Jatropha curcas, a poisonous, semi-evergreen shrub that can grow as high as 20 feet, produces seeds laden with oil that backers say is an ideal biofuel. One company that maintains 194,000 acres of the plant under cultivation in India is looking to expand farming, and fuel production, in the United States.

Mission NewEnergy, an Australian-based firm with operations in India and Europe and a recently opened branch in San Antonio, says it can deliver refined Jatropha oil at about $40 to $50 a barrel. The firm’s U.S. entry also included listing its shares on Nasdaq, complementing its Australian Stock Exchange presence.

Mixed with traditional jet fuel, Jatropha oil already has been used on test flights by Continental Airlines, Air New Zealand and other carriers. Once approved for general use, Jatropha could help cut one of the aviation industry’s highest costs.

Jatropha can provide “environmentally responsible fuel without compromising the food supply, so we can help the Earth while helping the public,” said James Garton, president of the firm’s U.S. branch. “That means we can finally reverse the skyrocketing prices at the pump and dependence on traditional sources of oil.”

The race for the next big thing in biofuels is attracting serious investor attention. Jatropha is seen as a leading candidate along with such rivals as algae and camelina, a flowering flaxlike plant that, like Jatropha, can grow in marginal agricultural lands.

Jatropha has been touted as among the most promising biofuel sources, but it is not without problems.

In a study released last month, a team of researchers at the Massachusetts Institute of Technology looked at the efficiency of Jatropha and more than a dozen other proposed biofuel sources. Jatropha scored well as a fuel source and because the plant’s husks, shells and meal could be used as fertilizer and other industrial purposes. Some of that gain, however, is offset by production and refining costs and the need for land to cultivate the plant.

“You can’t say a biofuel is good or bad - it depends on how it is produced and processed, and that’s part of the debate that hasn’t been brought forward,” James Hileman, who teaches in MIT’s Department of Aeronautics and Astronautics, said in a statement accompanying the survey, which was published in the journal Environmental Science and Technology.

Mission NewEnergy said it is linked to its producers via contract farming agreements in more than 15,000 villages across five Indian states. Those operations, the firm said, are providing sustained employment for more than 140,000 previously impoverished farmers. It takes three to four years to get maximum yield from a Jatropha plant, with a 20-year productive life estimated for most plants.

Using a biofuel such as Jatropha in an industry such as aviation has its appeals.

At the end of May, two industry executives briefed congressional staffers on a report about the use of biofuels in the U.S. aviation industry. Speaking with The Washington Times by phone after the event, the executives noted the need for biofuels as a way to help meet the rising cost of jet fuel. A 1-cent increase in the price of jet fuel rings up an extra $175 million in costs for U.S. airlines, reports indicate.

“Fuel is our single biggest cost. Today, fuel costs 47 percent more than it did last year. That’s a pretty big spike for your single largest cost,” said Keith Loveless, vice president of corporate and legal affairs for Seattle-based Alaska Airlines. “We are looking for all sorts of alternatives,” he added.

Added Billy M. Glover, environment and aviation policy vice president at Boeing Commercial Airplanes, “It’s not a matter of one [biofuel] feedstock being better than others. It’s going to take a portfolio of feedstocks, a portfolio of processing methods. … [T]o get to scale and make biofuels viable, you need feedstock options and a variety of processing methods.”

Jatropha is being developed in Ghana, Tanzania, Peru and other nations such as India; a common denominator is the effort to grow the plant in areas where other crops aren’t easily cultivated. Some environmentalists have said Jatropha has been overhyped and that optimal oil production requires initial irrigation and fertilizer that otherwise would be used for food production, a condition supporters say would affect only the short term.

Government officials in the southern African nation of Namibia late last month put the brakes on plans for large-scale Jatropha plantations in the country’s northeast, citing the need for more study on the potential disruptive impact on food cultivation, landownership patterns and a loss of access to communal property.

Patrick M. O’Brien, a retired executive of the U.S. Department of Agriculture’s Economic Research Service who is now consulting for Mission NewEnergy, said Jatropha could find a domestic production base in an area extending “from Texas around the Gulf Coast up to South Carolina,” although not too far north because of frost concerns. The areas where Jatropha could be grown domestically include some where farmers might reap profits.

To read the full story in the Washington Times, click here

Jatropha has great potential to save greenhouse gases

The threshold of 35% greenhouse gas (GHG) savings for biofuels by the European Union is easily met by Jatropha. These are the findings of an independent report by sustainability consultants Partners for Innovation. The study commissioned by the Jatropha Alliance and Sun Biofuels demonstrates that even using very conservative assumptions on yields and other parameters, Sun Biofuels Mozambique is saving 39% of GHG compared to fossil fuels if the Jatropha biodiesel is produced in the UK. The now published GHG report also highlights the potential of Jatropha biodiesel to achieve a GHG saving of up to 73%.

In the context of a sustainability assessment on Jatropha biofuels in Mozambique the Jatropha Alliance commissioned Partners for Innovation to conduct an independent greenhouse gas life cycle calculation for Sun Biofuels Mozambique SA. The outcomes of these calculations have been independently reviewed by Robert Bailis, assistant professor at Yale School of Forestry and Environmental Studies, and Ignacio Pérez Domínguez from LEI Agricultural Economic Research in the Netherlands.

The amount of GHG savings achieved by Jatropha mainly depend on three factors: seed yield, oil yield and nitrogen fertilizer. A conservative base case scenario for locally produced Jatropha biodiesel assuming a seed yield of 3 tons of seeds per hectare, an oil yield of 0.24 tons of oil per ton of seed, and 44 kg of nitrogen fertilizer per ha per year already allows for 39% of GHG savings compared to fossil fuels. In case the biodiesel is used locally, this value goes up to 48%. Sun Biofuels Mozambique is targeting seed yield of 6t/ha/year, this raises the GHG savings to 65%. However the most influencing factor is nitrogen fertilizer. If Sun Biofuels Mozambique achieves to completely substitute nitrogen fertilizers by organic fertilizer (e.g. Jatropha seed cake) the GHG saving balance could go up to 73%.

The authors have also calculated the impact of land use change on GHG savings by using the default values from the European Commission. Sun Biofuels Mozambique cultivates perennial Jatropha on former annual cropland, thereby realizing significant GHG saving potential of 380%. This is due to the fact that trees are planted in place of idle land or perennial crops ‘fixing’ carbon in an additional CO2 sink.

The encouraging GHG savings of Jatropha make it an ideal source for biofuels for the aviation industry, who are pushing hard to reduce their greenhouse gas emissions.

For further information please see the original press release here