Biofuel a step closer to lift off as Virgin and Air NZ make shortlist

Virgin Australia and Air New Zealand’s ambitions for a thriving jet biofuel industry are a step closer to reality.

A NASA DC-8 in a test flight burning a blend of biofuel and aviation fuel. Picture: NASA/SSAI Edward Winstead

Virgin Australia and Air New Zealand’s ambitions to create a thriving jet biofuel industry have been taken a step closer to reality after the two airlines whittled down a shortlist of companies to kickstart the local operation.

The two airlines and their shortlist of companies will now work on a feasibility study to source feedstock for the biofuel, determine five possible refinery locations needed to meet the fuel demands of Virgin and Air New Zealand and the investment required to fund them.

Sources close to the companies say each refinery would cost as much as $200 million, meaning the five production facilities would require an initial investment of about $1 billion.

Virgin and Air New Zealand have pledged to buy substantial stocks of the fuel — as much as 200 million litres a year or about 5 per cent of their projected fuel consumption — if investors and industry work together to build production facilities to meet demand.

As well as working on their feasibility study, the airlines and the shortlist of five biofuel production companies will also go to the government to see how co-funding for the biofuel facilities, which would create hundreds of local jobs, could be achieved.

“Biofuel is an emerging sector globally and like all new industries there remain challenges associated with the cost of production and scale up of these new technologies,” said a spokeswoman for Virgin Australia.

“In our region there are a number of infrastructure and logistics challenges associated with the production and supply of fuel into the aircraft that require further work to be undertaken. We remain committed to working with industry and government to ­address these constraints.”

The two airlines issued a request for proposal last year to look into whether environmentally friendly aviation fuel could be produced locally to supply 200 million litres of biofuel a year for at least 10 years, beginning in 2020.

More than 30 submissions from organisations in Australia, New Zealand, the US, Canada and Europe were made to the two ­airlines, which have now been compressed into a shortlist as the companies work towards making the commercial case for investment.

Qantas and its low-cost carrier Jetstar ran biofuel trials in 2012 but did not pursue a formal use of the fuel — derived from used cooking oil — because of cost and a scarcity of supply in Australia.

But Air New Zealand and Virgin hope to change that by committing to buying a large supply should producers be able to manufacture and sell biofuel at competitive prices.

“The RFI has helped stimulate industry dialogue on the production of sustainable aviation fuel in the Australasian region,” said Air New Zealand head of sustainability Lisa Daniell.

“Importantly, the process has also greatly expanded our understanding of the technologies and processes involved and the potential time frames to scale up to the volumes required.”

Unlike non-renewable oil-based jet fuels, biofuel is derived from organic matter contained in plants, trees, algae and waste.

Biofuels are seen as an attractive alternative for oil-based jet fuel as they not only promise long-term, sustainable supply but also promise to reduce carbon emissions from fossil-based fuels.

Commercial aviation accounts for about 2 per cent of the world’s carbon dioxide emitted by human activities, which is on par with the whole of Germany’s output, but the international airline community is committed to reducing that. The search for biofuel suppliers comes as NASA yesterday released new research showing that the use of aviation biofuels reduces particle emissions in aeroplane exhaust by as much as 50 to 70 per cent.

The findings are the result of a co-operative international research program led by NASA and involving agencies from Germany and Canada, and are detailed in a study published in the journal ­Nature.

The research was based on a series of tests flights in 2013 and 2014 using a DC-8 near NASA’s Armstrong Flight Research Centre in Edwards, California

The tests involved flying NASA’s DC-8 as high as 40,000 feet while its four engines burned a 50-50 blend of aviation fuel and a renewable alternative fuel of hydro-processed esters and fatty acids produced from camelina plant oil.

The biofuel blend produced notably lower aerosol emissions than did conventional fuel, although the reduction was less pronounced at high-thrust settings.