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In race to develop aviation biofuels, Midwest wants to win

(Photo by Martin Naroznik via Creative Commons)

In the not-so-distant future, jets could be traversing the sky powered not by petroleum but by fuel derived from crops, agricultural waste, trees, algae, even municipal solid waste and sewage.

In the U.S. and other countries, research is ramping up into aviation biofuels, which can be used in standard jet engines with no conversions needed. Biofuels promise much lower emissions of carbon dioxide and other harmful compounds as well as price stability and geopolitical security.

Commercial-scale development of aviation biofuels is still in the early stages, and as experts explained at the Airports Going Green conference in Chicago earlier in November, viable aviation biofuel industries would look significantly different in different regions of the country. With growing competition for government research dollars and investment between regions, Midwestern players from the industry, academic and investor realms are trying to position the region as the national leader.

Why the Midwest?

The Midwest Aviation Sustainable Biofuels Initiative (MASBI) is a partnership between different players with an interest in aviation biofuel development, led by airline companies, the Chicago Department of Aviation and the Chicago business incubator Clean Energy Trust.

They say there are numerous reasons why the Midwest is particularly qualified to be the country’s aviation biofuel capitol. The region has no shortage of agricultural waste that could be tapped as a fuel feedstock, and it also has the physical space, infrastructure, manpower and expertise to develop other potential feedstock crops.

A map produced by the National Renewable Energy Laboratory shows the Midwest offers by far the greatest biofuel feedstock potential, especially central and northern Illinois – including the Chicago area – and northern Iowa. Backers, hoping to avoid the controversies surrounding corn-based ethanol, emphasize they will only use feedstocks that don’t create “food or fuel” dilemmas.

Also, aviation biofuels must be refined close to where they are going to be used, since transporting them long distances would torpedo chances for being cost-competitive with petroleum — giving the Midwest, with many major airports located near rail hubs like Chicago and Kansas City, another advantage.

The Midwest has a significant number of scientists and engineers with expertise in the biological and technological fields relevant to aviation biofuel development. For example, Purdue University associate professor Richard Meilan, who is studying the potential of genetically modified fast-growing poplars as an aviation biofuel feedstock. And at the National Center for Agricultural Utilization Research in Peoria, Illinois, scientists are developing new oil seed plant strains that could offer cheaper and more efficient aviation biofuel feedstocks.

The airline industry also has a major presence in the Midwest, including corporate headquarters of Boeing and United Airlines in Chicago and the fuel and refining company Honeywell UOP headquartered in the Chicago suburbs. The U.S. Department of Energy, the U.S. Department of Agriculture and the U.S. Navy are all investing heavily in biofuel development to fuel ships and planes, including by partnering with private companies to build biofuel refineries.

“It’s a very short amount of time to create a brand new industry,” said United Airlines global sustainability director Jimmy Samartzis, noting that the federal government, airlines and manufacturers officially formed a partnership on aviation biofuels in 2006. “At the same time we’re cautious about the steps we take and how we get there – it’s not a sprint.”

The cost equation

Currently aviation biofuels would be priced at about $5 to $7 a gallon, according to experts at the Chicago conference, compared to petroleum-based aviation fuel at just over $3 a gallon. That gap will need to be eliminated if biofuel is ever to really take off as a jet fuel.

But oil prices are expected to rise, and a federal price on carbon emissions could make biofuels more competitive. Industry backers are also calling for aviation fuel to be covered under the federal Renewable Fuel Standard, which mandates a certain amount of renewable fuel to be blended into gasoline and diesel.

“We need to build better planes and operate them more efficiently, and being able to switch fuel to sustainable, low-carbon fuel is really important,” said Samartzis. He said the aviation sector currently has “very limited” options when trying to reduce carbon emissions.

Clean Energy Trust executive director Amy Francetic says states can also give regional biofuel development efforts a boost. Washington state has passed a bonding authority meant to help airports invest in biofuel infrastructure and development, and Kentucky supports biofuels through their alternative fuels tax break. Ohio is supporting an algae biofuels research program in conjunction with the Defense Department, she said, and North Carolina has devoted $5 million a year in state funding to aviation biofuel efforts. In Illinois, the University of Illinois’s biosciences institute is working with BP with funding from an  Illinois Department of Commerce and Economic Opportunity (DCEO) grant.

“We need to leverage ways airports can work with their cities and states; help universities and young companies compete for research funding; look for state, municipal and federal incentives and bonding mechanisms; and establish Midwest regional partnerships, including with airports,” Francetic said. She added that airlines stand to benefit long-term from using biofuels since they create less wear and tear on engines.

Stephen Emmert, environmental strategy-regional director for Boeing Commercial Airlines, boiled the aviation biofuels cost equation down to three crucial trends that he thinks all point toward future viability.

“There is the price of oil increasing, the price of environmental attributes of biofuels increasing, the technology is improving – the cost of conversion, the cost of processing have decreased,” he said. “When those three overlap and the price point for biofuels and conventional fuels crosses is a hard question to answer,” but he thinks it will happen eventually.

A complicated supply chain

James Rekoske, Honeywell UOP vice president and general manager, says coordinating the supply chain for an aviation biofuel industry is especially challenging given that it involves transport routes and players who haven’t necessarily worked together before. Whereas there are long-established markets and processes for selling petroleum products and transporting them between sources, refineries and end users, no such network exists for aviation biofuels.

“This value chain starts with someone who grows something, continues to someone who can convert it to something usable, then to someone who can distribute it to others, selling it to consumers who want it,” said Rekoske. “That value chain is long, distributed and unique in many ways … what’s familiar in agriculture is not familiar in the oil industry.”

For example, he explained, oil contracts are usually settled on 30-day timetables, whereas agricultural producers are typically paid within three days. He said the company converting the feedstock to fuel will typically be the lynchpin, bearing the main responsibility for brokering deals and raising capital and depending on reliable suppliers and distributors on either side of the equation to make it all work.

Aviation biofuel research projects aimed at commercial deployment have been carried out in Australia and New Zealand and in the U.S. Pacific Northwest, and a similar project is currently underway in Mexico.

Diversity in job creation and feedstocks

In December, according to Francetic, MASBI members will report on initial conclusions about the viability of different feedstocks. Until then, she said, members do not want to speculate on which feedstocks might be most appropriate for a Midwestern industry.

“A portfolio approach is necessary because you don’t want to have the risk of one feedstock being the key one,” she said. “If airlines are going to purchase quantities long-term, they want diversity – a lot of different small companies with different technology solutions.”

In an interview after the conference, Francetic noted that MASBI participants are “also very focused on the metrics of job creation, economic impact.”

“We’re very excited about the fact this could spur job growth and a new industry, draw revenues into the region for our small companies and research labs,” she said. “We have the opportunity to have a great impact.”

Comments (5)

I am pleased the Midwest is leading in the Biofuel race. The Midwest in general is very much a diamond when considering where to place a business. I have an aircraft that would be perfect for one of the fuel developer’s to use as a testbed. They are feel free to contact me regarding this.

By harry littleton on Nov 27, 2012

Backers, hoping to avoid the controversies surrounding corn-based ethanol, emphasize they will only use feedstocks that don’t create “food or fuel” dilemmas.

And at the National Center for Agricultural Utilization Research in Peoria, Illinois, scientists are developing new oil seed plant strains that could offer cheaper and more efficient aviation biofuel feedstocks.

The second quote suggests that the “backers” — i.e., the people making the first statement — and Ms. Lydersen don’t understand some basic principles here. Say the scientists come up with a new variety of oilseed that yields an inedible oil (or meal, or both). Does that avoid the “food or fuel” dilemma? Not at all, at least not for the Midwest! Those oilseed plants are bound to be planted on arable land, displacing food crops that otherwise would have been planted on that land.

@Kari Lydersen: you seem to have bought into the argument that biofuels promise much lower emissions of carbon dioxide … as well as price stability. Regarding lower emissions of CO2, they only are when true waste is used. Purpose-grown oilseeds on arable land do not. And as for price stability, have you compared price charts for plant oils with price charts for petroleum products? Plant oil prices are at least if not more volatile than those of jet fuel!

These types of stories fall prey to a belief that might be called a reverse Murphy’s law: if anything can go right it will.

By Subsidy Eye on Nov 28, 2012

Another problem is who is going to pay for it? Airlines spend hundreds of millions of dollars hedging on oil prices. In order for an airline to be truly self-sustainable they need to invest in commercial algae farms. Algae is renewable, has no affect on the food channel and consumes CO2. The problem is not one airline capable of investing in their future due to the deep recession over the last four years. They expect the algae producer to take all the risk. If all the airlines got together and each made a investment to spread the risk, algae farms could be built at strategic places throughout the midwest. “No feedstock, no fuel, no fly”

Algae has been proven. We have flown airlines with passengers on algae-based jet fuel. The airlines know it works. Better lubricity, better gas mileage. The problem is that the majority of the airlines have financial problems and cannot afford to invest in their own future. “No fuel, No Fly”

By anonymous on Nov 28, 2012

@Anonymous,

Sorry to be so cynical, but dream on. Algae farms in the midwest will not use saltwater, but freshwater. Lots of it. They also (unless the sky is the limit on cost and they build vertical) still need land. And they need nutrients. The only “commercial” producer dedicated to producing (expensive) biofuels from single-celled organisms at the moment feeds them with sugar.

By Subsidy Eye on Nov 28, 2012

You have all identified issues that are relevant to transitioning from fossil-based fuel and products to bio-based ones. The question is food and fuel; rather than food vs. fuel. For example, algae may have greater benefit for its nutritional (food and feed), pharmaceutical and cosmetics value in the short and long term. The real issue is land use. And we can expect that higher prices will be paid for food crops; thus relegating fuel crops to marginal land, winter cover crops and aquatic cultivation. In addition, waste from agriculture, food processing and forestry plus sorted municipal solid waste and effluent will provide feedstock for renewable fuels for transportation and power/heat.
For more depth on all of these issues, visit http://www.AdvancedBiofuelsUSA.org, a 501(c)3 educational organization website. Click on categories along the right margin or search by words.

By Joanne Ivancic on Nov 30, 2012