September 14, 2012 / 3:10 PM / 7 years ago

Airlines grapple with food vs. biofuel debate

BERLIN (Reuters) - Airlines battling to cut costs and pollution may not find a quick fix in biofuels, as concerns grow that using feedstocks to create an alternative to kerosene will push food prices higher.

The European Union plans to impose a limit on the use of crop-based biofuels, in a major shift in the region’s much-criticized biofuel policy, according to draft legislation seen by Reuters.

The policy U-turn comes after studies cast doubt on the carbon dioxide emissions savings from using crop-based fuels, and following a poor harvest in key grain growing regions that pushed up prices and revived fears of food shortages.

This week France said it would push for a pause in the global development of biofuels and the creation of strategic food stocks in response to the third global food price spike in four years.

Airlines, keen to cut pollution from jet fuel ahead of EU penalties from next year, and biofuel associations at the Berlin ILA air show this week said their research focused on how best to avoid taking land and crops needed for food.

“We are looking at second generation (fuels). In many cases we are talking about land on which food crop will not grow at all,” Richard Altman, executive director of the Commercial Aviation Alternative Fuel Initiative (CAAFI), said.

The amount of land available worldwide that is not suitable for agricultural use is currently estimated at anywhere between 600 million and 3.5 billion hectares, according to the Aviation Initiative for Renewable Energy in Germany (AIREG).

Planemaker Airbus is funding research into a range of sources for biofuels, including algae, cooking oil and non-food crops such as camelina and jatropha.

“The main challenge is the feedstock. The technology is available, the issue is how to get the right feedstock,” Etienne Cabare, an Airbus biofuels project manager said at the group’s stand in the renewable fuels section of the air show.

German airline Lufthansa ended a six-month trial using a biofuel mix made from jatropha, camelina and animal fats for short-haul flights because it had used up stocks of certified biofuel and no other reliable supplies were available.

It said a flight from Frankfurt to Washington using a 50:50 mix of regular fuel and biofuel in one engine would cut emissions by 38 metric tons of carbon dioxide, equivalent to the CO2 emissions of six scheduled flights between Frankfurt and Berlin.

The German airline has now signed a deal with U.S.-based Algae-Tec, which says 515 hectares is needed to produce 100,000 metric tons of oil from algae per year, compared with 715,000 hectares for corn and 53,000 for jatropha.

While algae may be a more promising alternative in terms of food security and land concerns, crop-based oils are still the nearest to mass production. But even then the amounts involved are a drop in the ocean.

U.S-based Primus Energy, backed by Israel Corp and which plans to build a plant producing up to 20 million gallons of jet fuel annually from wood pellets and natural gas, said that would not cover 1 percent of an airline’s fuel needs.

Along with the issue of producing at volume, cost is also prohibitive at the moment, especially with large levels of investment needed for technologies that have not yet received widespread regulatory backing.

It currently costs around $2,100 to produce one metric ton of biokerosene, more than twice that of regular jet fuel, according to AIREG. Even though kerosene is so much cheaper, it still accounts for 20 percent of an airline’s operating costs.

Biofuels have not met investors’ expectations so far and that means that while the technology is there, getting the investment for large volumes is tricky, according to Primus CEO Bob Johnson.

“The market is enormous, but it is all down to volume and price. If you were making enough certified jet fuel at the right price, the airlines would take all of it,” he said.

Editing by Rosalind Russell

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