Qantas to sign LOI for algae-based aviation biofuel

January 20, 2011 |

At a series of public and private meetings this week on the Rodeo Drive of algae, North Torrey Pines Road in La Jolla, California, Qantas confirmed that it is in advanced talks with an unnamed algal biofuels producer (“with strong ties to Australia”) that are expected to result in a letter of intent for an offtake agreement for algal jet fuel, with the potential that Qantas may take a financial stake in the venture.

Qantas’ Peter Broschofsky, who is coordinating the initiative for Qantas as well as chairing the environment committee of the International Air Transport Association (IATA), also confirmed that the company, hopes to complete  feasibility work on its first biofuels project within six months. Qantas signed LOI with Solena earlier this year, and launched what was described at the time as a 12-month investigation of the potential to develop a 19 million gallon waste-to-jet fuel plant in Australia.

Possible Qantas equity stake?

Qantas CEO Alan Joyce is reported to be “putting on the pressure, for the team to get on with it,” and Broschofsky said that Qantas has not ruled out taking an investment stake in a biofuels enterprise, though he suggested that any decisions would be taken after completion of feasibility work. He said that there continued to be some uneasiness at the Qantas board level on the wisdom of entering the biofuels sphere as an equity partner.

“Three or four years ago at IATA,” Broschofsky said, “biofuels weren’t even on the radar; it was in the “too hard” category. But $180 per gallon fuel at the wing (in 2008) got everyone’s attention – it was a real crisis.” He described how Boeing galvanized the industry behind the development of the Bio-SPK jet fuel specification, which most observers are predicting will be approved in the first half of 2011 and possibly late in the first quarter.

“Watch the flood,” Broschofsky predicted, “after the fuel is certified, interest will be at a fever pitch, and we want to get in ahead.” He detailed how it was Boeing’s interest that brought Qantas into the biofuels arena, and Qantas in turn galvanized broader support within IATA.

“The difficulties are in the economics”

“We’d like to get to 5 percent biofuels content by 2020,” Broschofsky said (or around 50 million gallons per year), “but that’s a highly aspirational goal, and I don’t think we’ll quite get there. The difficulty is in the economics, as we’ve seen a range that are marginal at best to completely uneconomic.”

Qantas, he related, is adopting a portfolio strategy with LOIs and offtake agreements, and said that the company is looking to add a third partner in the future, in addition to Solena and the unnamed algal fuels partner.

Who’s the Qantas algae dance partner – Sapphire, Aurora, other?

The “strong tie to Australia” tip points attention to Sapphire Energy or the Aurora Algae project in Kurratha, Western Australia.

(Readers have rightly suggested earlier-stage companies MBD Energy and Algae.Tec, and there’s one cryptic suggestion of an Israeli/Argentine company working in macroalgae).

Sapphire Energy CEO Jason Pyle joined Broschofsky and other Australian and US algal fuel experts at a G’Day USA event organized this week by the Australian Trade Commission at the Scripps complex at UCSD. The focus? The Algal Biofuels Revolution.

AusTrade chose a good location, for if there’s Silicon Valley, North Torrey Pines Road is Algae Avenue. Among the district’s inhabitants are the University of California at San Diego, the San Diego Center for Algal Biofuels (SD-CAB), the Scripps Institute for Oceanography, Synthetic Genomics, the Crain Venter Institute, and Sapphire Energy, Nearby, there’s SAIC and General Atomics. It’s pond scum paradise.

At Scripps this week, other speakers included UCSD vice-chancellor Tony Haymet, UCSD professor Steve Mayfield, Michael Lakeman – regional director fo

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