FAA awards 8 key grants to catalyze renewable jet fuel

December 2, 2011 |

The FAA hands out eight key grants to advance renewable jet fuels, to LanzaTech, Imperium, Virent, Honeywell’s UOP, Velocys, among others.

Why the shift over to alcohol-to-jet fuels? Will ATJ avoid the cost problems plaguing oilseed-based fuels?

In Washington, the monster event of the year for aviation biofuels, the CAAFI annual meeting, concluded yesterday with $7.7 million in new grants announced by the FAA, going to eight companies to assist in the development of sustainable, affordable, available renewable jet fuels.

The FAA funds are being distributed by the Department of Transportations (DOT) John A. Volpe Center. The contracts address a recommendation issued by the Future of Aviation Advisory Committee, which was commissioned by Secretary LaHood last year.

The committee, comprised of experts from industry, academia, labor and government, specifically recommended that DOT exercise strong national leadership to promote and display U.S. aviation as a first user of sustainable alternative fuels.

And the winners are…

– $1.1 million for Honeywell UOP of Des Plaines, Ill.
– $3 million for LanzaTech, Inc. of Roselle, Ill.
– $1.5 million for Virent Energy Systems of Madison, Wisc.
– $1.5 million for Velocys, Inc. of Plain City, Ohio
– $280,000 for Honeywell Aerospace of Phoenix, Ariz.
– $250,000 for Metron Aviation, Inc. of Dulles, Va.
– $50,000 for Futurepast: Inc. of Arlington, Va.
– $25,000 for Life Cycle Associates, LLC of Portola Valley, Calif.

As part of that work, the companies will develop these biofuels from sources such as alcohols, sugars, biomass, and organic materials known as pyrolysis oils. In addition, the contracts call for research into alternative jet fuel quality control, examination of how jet biofuels affect engine durability, and provide guidance to jet biofuel users about factors that affect sustainability.

The contracts build on alternative fuel development investments by the Departments of Defense, Energy, Agriculture, the National Aeronautics and Space Administration and the Environmental Protection Agency, as well as by FAA.

Today’s contracts stem from work the FAA is doing through the agency’s Commercial Aviation Alternative Fuel Initiative (CAAFI) and the agency’s Continuous Lower Emissions, Energy and Noise (CLEEN) program. These public, academic and private-sector partnerships include approximately 300 stakeholders from the airline, aerospace, energy, research, state and federal governments.

The contracts in depth: Looking at the LanzaTech consortium

The largest of the eight contracts was a $3 million grant to a consortium led by LanzaTech, which will use heavy industry gases and synthesis gas derived from lignin, a byproduct of cellulosic ethanol. The use of lignin opens up a new biomass waste stream for making economic jet fuel.

A key goal of the project is to produce 100+ gallons of alternative jet fuel for testing by the US Air Force Research Laboratory. Test data will be used as part the certification process for alcohol to jet (ATJ) fuels.

The partners? The alcohols are then converted to jet fuel, using technology from Swedish Biofuels. Michigan Technological University will assess the life cycle benefits of the integration process.

LanzaTech will be joined by both Imperium  and Battelle in Richland, Washington, which will assess potential US commercial production sites and resources.

And, it all means what?

Government, as both a customer and a catalyst for alternative jet fuels, gets it, when it comes to the problem of jet fuel from oil seeds. There’s a shortage of affordable feedstock.

It’s the same problem that has plagued biodiesel for several years. What was once an affordable fuel that had a grassroots movement behind it, is significantly more expensive today than conventional diesel fuel. Despite the fact that processing costs have been driven down, and capital expenditure is generally well under $2 per gallon of capacity.

Consequently, US biodiesel depends on mandates to provide a market. Mandates which, in the end, do as much to support crop prices as generate fuels for the street.

Global oil seed supply is tight. Now, there are some significant new non-food feedstocks, key ones being camelina and jatropha, coming along to add production capacity for oilseed conversion into renewable fuels.

But to make affordable jet fuel, say at a $4.00 cost per gallon to the airline, you really need to get feedstock at under 30 cents per pound, or less than $600 per ton. Otherwise, its impossible to get acceptable payback on the advanced technologies that upgrade veggie oils to jet fuels (essentially, by taking out the oxygen). First, there’s the capital expense, and the margin, but there’s also the loss of mass because you are blowing off the oxygen.

Now, Soybean oil is trading at $1200 per ton. There hasn’t been $600 per ton soybean oil since 2006.

Back in 2001, when soybean oil was trading at $325 per ton and you could get yellow grease for the cost of collecting it, you can see why a lot of people thought that fuels made from veggie oils were a license to print money.

But now, there’s enough concern that there will never be enough affordable oilseeds, that people are looking to upgrade alcohols to jet fuel. Now, losing 60 percent of the mass, when converting from sugar to the hydrocarbons in the jet fuel range, even with sugar in the $460 per tonne range, you don’t get feasible economics there, either.

Converting commodities to commodities

Now, if you want to control feedstocks costs, you simply can’t buy on the spot market, or for prices tied in any way to the spot market for the underlying commodity – say, sugar or soybean oil. To control costs, feedstock prices have to be pegged to the spot market for the overlying commodity – in this case, fuel. High price fuel, lots for the farmer. Fuel prices go down, farmer has to share the pain.

Something that farmers have been, historically, reluctant to do.

Now, it’s not all bad news.

There’s a business in making fuels from industrial off-gases, and it can be available for very low cost, or no cost.  Gasified lignin is another low cost source.

But they are important for another reason. No one has any illusion that there’s a market for making appetizing foods from carbon monoxide gas. Hence, strategic partners are looking directly and specifically to the fuels markets to monetize their waste streams. Streams they control, end-to-end, and have already paid for in the production of, say, steel.

Now, the path to jet fuel from industrial off-gases runs, currently, straight through the alcohol molecule side. That’s one reason everyone is working so hard on the problem, and part of why this announcement from the FAA is very, very good news.

Expect alcohol to jet (ATJ) fuels, to be certified for flights starting as soon as 2014. And this time, there’s good reason to believe that the feedstock market won’t simply respond to the presence of fuel-side demand by yawing, and selling to the food-side markets for the higher prices that can be obtained there.

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