Changing off-take to achieve take-off: Sea-Tac, SkyNRG, Carbon War Room partner to shake up renewable jet fuel supply chain

November 1, 2016 |

bd-110216-seatac-sm-finalIn Washington state, the Port of Seattle, SkyNRG and Carbon War Room have signed a partnership to investigate long-term financing mechanisms that could supply all airlines at Seattle-Tacoma International Airport with sustainable aviation fuels. Sea-Tac is the first airport in the world to initiate this step to provide an airport-wide sustainable aviation fuel supply for all routine airline operations.

This is the next step in a process that began late last year by the Port of Seattle with a $250,000 Biofuel Infrastructure Feasibility Study, in partnership with Alaska Airlines and Boeing, that will assess costs and infrastructure necessary to deliver sustainable aviation fuel to aircraft at Sea-Tac. That study is expected to be released in early 2017.

Shaking up the aviation sector’s carbon strategy

To date, we’ve seen boatloads of producers and airlines wigwagging frantically to each other of their earnest desire to produce and consume, but there’s a canyon between the price producers can afford to make fuels for, and the price that airlines can afford to pay.

In some ways, this is about splitting the energy and carbon attribute, As CWR’s Adam Klauber explained to The Digest, “first we have to define how an airport can legally buy the fuel, and how the airport as the initiator pays any premium for the fuel, so that no premium is passed through to the airport. But, now we have to create also a carbon assurance credit, so that the airport can retain the carbon benefits. Then, we’ll identify different places where those carbon attributes have value, for example carbon offset markets or through external corporations agreeing to to support the Fly Green fund.” Meanwhile, Carbon War Room would also seek to partner with a carbon registry “to create chain of custody, avoid double counting, retire credits when used,” as Klauber explained,  “a new framework that is much less cumbersome than offsets.”

A step in the low-carbon direction

Under programs like these, blending rates could be low, but broad — lots of airlines getting a 1-2 percent blend instead of one airline aiming for a higher blend and taking on the perils of a green premium, all by its onesey, in a highly-competitive airline market.

“We see this as an area of opportunity for additional funding to cover the premium that is there right now,” said Klauber. “To help create new demand centers, provide assurance to investors so that new refinery capacity is built. We do have a challenge to address and that is that biofuels feedstock is more expensive than petroleum right now, and with $500B in global petroleum subsidies, biofuels subsidies are necessary to compete and and we think an airport is an ideal partner.”

“The UNFCCC Paris Agreement’s ambition of well-below 2 degrees temperature rise cannot be achieved without the participation of the aviation industry, with its emissions projected to consume approximately a quarter of the world’s remaining carbon budget by 2050,” said Jules Kortenhorst, CEO of Rocky Mountain Institute-Carbon War Room. “The emissions trajectory provides a huge opportunity for market actors to accelerate aviation’s decarbonization, and in the process, enhance their energy supply chains. These kinds of efforts, alongside ICAO’s global market-based measure, can help the industry reach the goals defined by the Paris Agreement.”

Currently, biofuel supply agreements in the U.S. are being made through individual, expensive contracts between producers and airlines. This new partnership aims to accelerate the transition of sustainable aviation fuel from an alternative product used by a few select airlines, to a standard product that is used by all airlines at the airport.

A new level of airport activity

The partnership puts Sea-Tac at the forefront among airports in driving towards adoption of sustainable aviation fuels.

Carbon War Room and SkyNRG are engaging airports to act as the key orchestrator of the procurement and delivery of sustainable aviation fuels, aggregating funds and demand for all stakeholders. By integrating the fuel directly into the on-airport fueling infrastructure, at an airport-wide blend ratio, this standardization will send a strong and consistent demand signal to the sustainable aviation fuel industry, which will boost investor confidence and catalyze industry growth.

Seattle-Tacoma International Airport is ranked as the 13th busiest U.S. airport, serving nearly 42.3 million passengers and more than 332,000 metric tons of air cargo in 2015. Thirty-six airlines serve 81 non-stop domestic and 21 international destinations.

Specifically, CWR and SkyNRG will work with Sea-Tac to evaluate specific funding mechanisms to cover any cost difference between sustainable aviation fuels and conventional fuels. The long-term ambition includes strategizing with decision makers regarding locally sourced fuel and future regional economic investments, identifying supply routes for the sustainable aviation fuel, and ensuring that any alternative fuels used at Sea-Tac are truly sustainable, avoiding both competition with food and impact to habitat.

“Airports are in a unique position, operating at the intersection between airlines, fuel suppliers, governments, passengers and local communities. They are perfectly positioned to support sustainable aviation fuels’ transition from isolated transactions to regular operations,” said Theye Veen, CFO of SkyNRG. “The Port of Seattle is looking forward for the benefit of all airports in the future.”

“The demand for sustainable aviation fuel is there, but right now it is more expensive and complicated to source,” said Port of Seattle Commission President John Creighton. “We want to make it simple and cost-effective for all airlines to access sustainable aviation fuels and ideally create a model that can work for airports around the United States.”

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