As airlines launch the first commercial biofuel flights in the U.S., the government is working with industry to scale up production of biomass-derived jet fuel to commercial quantities beginning in 2012.

Following the lead set by carriers in Europe and Mexico, United Airlines on Nov. 7 completed a revenue flight from Houston to Chicago on a blend of 40% biofuel from algal oil and 60% conventional jet fuel. On Nov. 9, Alaska Airlines began a series of 75 flights from Seattle to Washington and Portland, Ore., on a 20% blend of biofuel from waste cooking oil.

The flights are intended to show producers there is demand for biofuel, and they come as negotiations are at a critical stage between feedstock providers, fuel producers and private investors to scale up bio-jet production to commercial quantities. “Biofuel production is not at a scale to make it price-competitive [with conventional jet fuel], but we believe it is important to highlight our interest—to show the biofuel industry there is demand,” says Megan Lawrence, Alaska Airlines' managing director of government and community relations.

Alaska's campaign comprises 11 Boeing 737 flights between Seattle and Washington and three daily roundtrips—64 flights in total—between Seattle and Portland with a Bombardier Q400 turboprop operated by regional arm Horizon Air. “Demonstrating transcontinental with the 737 was a no-brainer, but we also want to show short-haul with the Q400 on a route where there is a lot of competition from vehicles,” she says. Biofuel for the flights was supplied by Dynamic Fuels, through aviation biofuels broker SkyNRG.

A joint venture between Tyson Foods and Syntroleum, Dynamic Fuels has already supplied biofuel from cooking oil to KLM, Finnair and Thomson Airways for commercial flights in Europe. The company's biorefinery in Geismar, La., “is the first commercial-scale renewable biodiesel/bio-jet plant in the U.S.,” says Bob Ames, Tyson vice president for renewable energy. The plant can produce 75 million gal. per year of fuel from animal fats, but it is producing mostly biodiesel for road transport. “The lion's share is biodiesel. We are making jet fuel in batches because there is not consistent demand,” Ames says.

Fuel for United's flight was produced by Honeywell company UOP with renewable oil produced by Solazyme, which used microalgae to covert domestically sourced sugar cane into oil in a fermentation process. San Francisco-based Solazyme, which is ramping up production capacity to produce 500,000 metric tons of renewable oil annually by 2015, has also signed a letter of intent with United to supply up to 20 million gal. per year (approximately 70,000 metric tons) of bio-jet fuel starting in 2014.

While other airlines have used blends as high as 50% biofuel, Alaska was limited to 20% by the price and availability of fuel, Lawrence says. Using the 20% biofuel blend on 75 flights will result in a reduction in CO2 emissions of 10% over conventional jet fuel, she says. But while Alaska highlights the environmental benefits, its main interest is in biofuel as a way to put competitive pressure on the cost of conventional jet fuel. “We view biofuel as an alternative that can help with fuel-price volatility,” she says. “Competitive pricing is important, as fuel is our single largest cost.”

Crucial to the airlines is that the biofuel is produced sustainably, without impacting the food supply, as happened with the rapid growth in ethanol production from corn for road transport. This is pushing demand for bio-jet from non-food sources such a camelina and woody biomass, which will require significant investment to reach commercial levels. Government assistance for feedstock providers and biofuel producers will play a key role in achieving that.

“The U.S. Department of Agriculture [USDA] is working with the Department of Energy and the Navy to put together a package to commercialize drop-in biofuels,” Agriculture Secretary Tom Vilsack tells Aviation Week. Under a $510 million program announced in September, the Navy will purchase the biofuels, while the USDA will provide financial assistance for feedstock production and biorefinery construction with the goal of scaling up capacity and bringing down cost.

The program aims to jump-start the U.S. bio-jet supply chain, initially to meet the Navy's desire to reduce its dependence on foreign oil but also to begin driving down the cost to help airlines with fuel-price volatility and carbon emissions charges. “The focus is on working with industry to figure out how best in 2012 to push the construction of biorefineries,” Vilsack says. “The Defense Department is in a position to purchase the fuel, and the USDA is trying to ensure the cost is competitive.”

Vilsack believes there is ample feedstock available in the U.S. to meet demand from aviation and other forms of transportation without competing with food for land and water. “It's about the better utilization of resources,” he says. “There are millions of acres of dead trees that have to be cleared out and replanted to preserve water. That creates millions of tons of biomass. Perennial grasses help retain water. We are also talking about better utilization of agricultural and landfill waste.”

Although alternative fuels were almost unheard of just five years ago, commercial aviation is on a path to meet 1% of jet-fuel demand from biofuel by 2015, says Billy Glover, Boeing's managing director for environmental strategy. “We are seeing enough progress, but we would like to see it move faster,” he says. The key next step will be signing large-scale, long-term fuel offtake agreements that will enable producers to secure investment to scale up production. “We are in the midst of the negotiation phase. It's anyone's guess when and how it will close,” Glover says.

Airlines are pushing for prices competitive with conventional jet fuel. Ames says Dynamic Fuels is pleased with its progress down the cost curve, but he argues its cleaner fuel “has properties that make it more valuable.” While airlines can expect to pay more at first, “they can't pay a premium forever—that's not a sustainable business model,” Glover says.

To address the challenge of competition with road transport for feedstock and biorefinery capacity, industry has asked the Environmental Protection Agency to include bio-jet fuel under its Renewable Identification Number (RIN) system for biodiesel, which allows the trading of renewable-fuel credits. “This would allow producers to claim bio-jet as a renewable fuel and help equalize the effective cost of production,” Glover says.

As commercial availability draws closer, the aviation industry is assessing how to handle biofuels within the existing jet-fuel supply chain, perhaps through a “book and claim” method that would allow an airline to book the purchase of green fuel that would then go into the general jet-fuel distribution system. Later, the airline would be able to claim indirect use of that biofuel because it had reduced the overall carbon footprint of fuel in the distribution system, Glover says.