Aviation is one of the very few industries that has collectively committed to long-term global targets to cut emissions. The industry uses several types of alternative jet fuels—mostly biofuels—but three years of low oil prices amid rising demand for international travel are discouraging the business case for investing more in alternative fuels, given the fact that conventional jet fuel prices are low.
The International Air Transport Association (IATA), whose member airlines represent around 85 percent of all global commercial flight operations, has committed to reach a 1.5-percent annual fuel efficiency improvement between 2009 and 2020, carbon-neutral growth from 2020, and a 50-percent reduction in carbon emissions by 2050 relative to a 2005 baseline.
Some airlines and airports are using sustainable fuels in jet fuel mixes, and research into alternatives is progressing, but the economics of a larger-scale adoption of alternative fuels remain a challenging barrier, especially in the lower-for-longer oil price world, the aviation industry admits.
Currently, around 2 percent of jet fuels is comprised of alternative fuels, Jane Hupe, Deputy Director for Environmental Protection at the International Civil Aviation Organisation (ICAO), wrote in a piece in June. This year, 25 airlines will operate on a trial basis more than 5,000 flights using jet fuel mixed with sustainable alternative fuels, Hupe said.
However, she admitted that "With prices for conventional jet fuel remaining low, energy companies have little incentive to invest in new technologies."
Profitable production of alternative aviation fuel also needs strict production quality and safety standards, and storage at low temperatures.
"And the 'food versus fuel' debate often complicates government incentives support," Hupe said.
Alternative jet fuels are already in use as drop-in fuels in mixes, even if on a tiny scale compared to the entire aviation industry.
At present, United Airlines and KLM flights departing from Los Angeles International Airport use aviation alternative fuels. So do some airlines operating flights departing from airports in Oslo in Norway, and Stockholm and Gothenburg in Sweden. Singapore Airlines (SIA) started in May using biofuel in aircraft on its San Francisco-Singapore route.
Oil supermajor BP pledged in November 2016 a US$30-million investment in California-based low-carbon jet fuel producer Fulcrum.
Still, the oil price crash has made the business case for investing in sustainable jet fuels less convincing, IATA said in its December 2015 report on alternative fuels.
Commenting on the 2014 oil price plunge that sent the Brent price to below US$40 for the first time in many years, IATA noted that "it has made alternative jet fuel business cases more difficult to gain economic approval and obtain necessary finance."
"Despite a number of significant achievements, economics remains a challenging barrier to overcome for initial deployment, particularly in the face of current weak oil prices," according to the association.
Research is progressing, Paul Smith, professor of bioproducts at Penn State's College of Agricultural Sciences, said in June. Smith's lab is part of a national U.S. project that evaluates regional supply chains that could be used for alternative jet fuel production.
"As oil prices plummet, it becomes more and more difficult to introduce any kind of biofuel into the marketplace," Smith said.
According to the researcher, in order for alternative jet fuel economics to work, production needs to be taken on a huge scale to bring the cost of biojet down to "something reasonable", and oil prices need to be higher for this to work.
The feedstock for alternative fuels—mostly plants for biofuels—is also an issue in the production costs.
"Different methods use different ingredients, often sourced from a variety of geographical locations," John Pitts, head of aviation fuel specialist e-Jet, told Petroleum Economist. "It's an extremely complicated process and requires significant investment," Pitts noted.
As far as new fuels and energy sources different from biofuels are concerned, IATA's Sustainable Aviation Fuel Roadmap sees in 2040-2050 "solar jet fuel", produced from CO2 and water using solar energy, and aircraft using electric energy for propulsion, as likely to play an increasing role in cutting emissions.
"However, considerable development efforts will have to be deployed before these technologies, which are today at lab scale, reach maturity. Drop-in fuels will therefore remain the only sustainable alternative to fossil jet fuels for at least two to three decades," IATA says.
By Tsvetana Paraskova for Oilprice.com