The Airline Industry’s Biggest Climate Challenge: A Lack of Clean Fuel

April 15, 2024

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by Ben Elgin (BNN Bloomberg) ... The $200 million plant from LanzaJet Inc. will be the first to turn ethanol into a fuel compatible with jet engines. The facility is one of many efforts around the globe attempting to crack one of the biggest problems facing greener air travel: finding and developing cleaner feedstocks that can generate enormous quantities of fuel without triggering ripple effects that end up worsening the climate and biodiversity crises.

Progress thus far has been very limited. Efforts to produce new types of cleaner fuels require hundreds of millions of dollars. But investors have remained wary with would-be plants routinely suffering lengthy delays and struggling to become operational.

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Most SAF today is derived from animal fats and waste oils, which are relatively scarce. Used cooking oil is already widely collected for road transportation with only modest room for growth, while a robust market has long converted animal fats into ingredients for pet food and detergents. Strong demand from aviation could push these other industries to switch to climate-harming ingredients, like palm oil, warn environmental groups.

This has left aviation giants scouring the world for alternatives to meet their climate commitments.

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But that could soon change. Three years ago, British Airways partnered with LanzaJet, investing in Freedom Pines’ construction and teaming up on a clean fuels facility in the UK, which they hope will come online by 2028. Both plants will deploy technology known as alcohol-to-jet, which uses chemical reactions to upgrade ethanol into a potent fuel capable of powering jet turbines. IAG hopes to consume its first SAF from the Georgia plant later this year.

“Diversification matters,” says IAG’s Robinson. “That’s why alcohol-to-jet is an area that is quite attractive to us.”

It could sidestep a thorny issue facing some of the industry’s other clean fuel efforts. In the US, airlines are advocating for rules that could allow corn ethanol to qualify for SAF tax credits. It’s contentious because renewable fuels policies enacted in the US nearly two decades ago have led to about 40% of the country’s crop being turned into fuel.

This spiked demand for corn and other crops, spurring land-use changes not just in the US but globally. Those changes included clearing carbon-rich grasslands and forests to plant more crops, which negated most of the climate benefits of corn-based ethanol. Airlines are convinced this can be done with far fewer climate impacts, but doubters abound.

“This industry needs an absolutely huge amount of fuel,” says Alethea Warrington, a senior campaigner at Possible, a UK-based climate charity that is skeptical of SAF and encourages less air travel. “Wherever you try to get this from, it throws up huge systemic problems.”

Freedom Pines will initially deliver scant climate benefits because it will use corn ethanol from the US Midwest to “work the kinks out,” says Jimmy Samartzis, chief executive officer of LanzaJet. As it becomes operational over three to six months, it will transition to using sugarcane ethanol from Brazil, which has fewer land-use impacts. Doing so would reduce heat-trapping emissions by at least half compared to fossil jet fuel, according to the US Environmental Protection Agency.

Samartzis says they’ll also soon use ethanol derived from waste products, like corn stalks and other agricultural residues. That should deliver even bigger carbon savings because they do little to spur land-use changes that could harm the climate.

L.E.K. Consulting, in a report on the SAF market last year, predicted alcohol-to-jet will surpass today’s clean fuels to become the world’s biggest source of SAF by the middle of next decade. “It’s a proven technology and there are abundant agricultural and forestry residues, which work very well with it,” says John Goddard, L.E.K.'s senior partner and vice chair of sustainability.

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All told, power-to-liquids would cost nearly seven times more than traditional jet fuel, according to L.E.K.

The difficulties are showcased by Transport & Environment, a nonprofit in Brussels, which has tracked proposed power-to-liquids plants across much of Europe. Although the number of announced facilities climbed to 45 as of January — part of a “largely positive” trend, it noted — all of the major projects remain “hypothetical” as they’ve yet to clear the crucial final investment decision, where money begins to flow and the construction truly commences. READ MORE

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Excerpt from Canary Media: The Biden administration will allow ethanol producers to access tax credits for sustainable aviation fuel. Farmers and climate groups have mixed reactions.

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The White House has set a goal of increasing U.S. production of SAF to at least 3 billion gallons per year by 2030. That’s more than 100 times the amount of alternative jet fuels that airlines consumed last year.

To hit that target, U.S. fuel producers will have to gather significantly more fast-food grease and beef tallow for fuel processing. They’ll need to accelerate development of next-generation “e-fuels,” such as synthetic kerosene, which is made from clean hydrogen and captured carbon. And, most likely, producers will turn to using ethanol — a biofuel that’s most commonly made from corn in the United States, though it also comes from sugarcane, soybeans, and crop residues.

Many industry observers agree that, in terms of volume, some ethanol is needed to reach the 3-billion-gallon goal, given the limited supply of other alternatives. Ethanol can be transformed into plane fuel through an “alcohol-to-jet” process that uses grid electricity, fossil gas, and hydrogen. LanzaJet’s new Freedom Pines Fuels facility in Georgia is the first to deploy the process at commercial scale worldwide.

However, there’s far less consensus among experts when it comes to assessing the climate impacts of crop-based fuels — and whether they do, in fact, result in fewer carbon dioxide emissions than those made with fossil fuels. The answer largely depends on whom you ask, and on how you do the math.

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Under the Inflation Reduction Act, the landmark U.S. climate law, SAF producers can receive $1.25 per gallon for fuels that are 50 percent lower in life-cycle emissions than standard jet fuel. The greater the emissions reduction, the more money companies can earn, up to $1.75 per gallon.

When Congress initially passed the law, in August 2022, it wasn’t immediately clear how ethanol would fit into this scheme, or which CO2-accounting methodology Treasury officials would use to calculate each fuel’s life-cycle emissions.

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But ethanol producers say it’s possible to produce “low-carbon-intensity biofuels,” particularly when the corn or soy is grown using so-called climate-smart agriculture practices. The new tax-credit guidelines support this line of thinking. Producers can now subtract from their total life-cycle emissions if they source crops from farmers who use no-till techniques, plant cover crops, and apply “enhanced efficiency” fertilizers.

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For example, corn ethanol producers can now subtract 10 grams of CO2 per megajoule of energy — a measure of carbon intensity — if they source corn produced using no-till, cover cropping, and efficient fertilizers.

But that uniform number can mask the fact that, in reality, the actual benefits of such practices vary widely depending on location, season, and myriad other factors. Measuring the true climate impact of, say, no-till methods can require frequent on-site sampling of soil cores — a step that’s often prohibitively expensive and logistically complex for many farmers.

“We need a lot more information about how these practices work, and what their net impact on the carbon cycle is,” said Freya Chay, a program lead at CarbonPlan, a nonprofit that analyzes climate solutions. She pointed to a 2022 study that found CO2 reductions from no-till methods can diminish quickly, reaching zero in 14 years, though she noted other benefits of the practice, including reducing erosion and improving soil health.

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Despite the controversy stirred up by the new tax-credit guidance, the SAF incentives aren’t expected to drive an immediate surge in U.S. ethanol production for jet fuel.

That’s because Treasury’s guidance is specific to the 40B credit, which is only in effect for 2023 and 2024. Given that it typically takes fuel producers around three years to build a new biorefinery, the tax credit hardly moves the needle for SAF producers. Nevertheless, the decision signals to the broader industry that the Biden administration supports the use of crop-based fuels — a source of concern for environmental groups, and an encouraging sign for airlines and fuel producers.

What’s next for SAF after 2027 is still TBD

Once 40B expires, a new incentive called the Clean Fuel Production Credit (45Z) will take effect from 2025 to 2027. Federal officials said they’ll develop yet another CO2-accounting framework for the 45Z tax credit and will do “further work” on modeling, data, and assumptions used to credit agricultural practices.

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“As public support begins to come into clearer focus, more capital can move more quickly to a cleaner aviation future,” he said by email.

Global SAF production capacity is expected to increase 10-fold by the end of the decade — and much of it will still come from animal fats and used cooking oil ("hydroprocessing" in this chart.) Ethanol-based fuels ("alcohol-to-jet") accounts for a smaller share. (BloombergNEF)

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