John Morris Berlin

The signing last week of a U.S.-German government bilateral agreement on biofuels, and moves by two major airlines to secure future supplies, mark the latest steps in bringing alternative jet fuels to aviation.

All were announced at the ILA Berlin Air Show, where experts predicted airlines could be using bio- or synthetic fuels as early as 2014. But many obstacles remain, not least the lack of supply. There are no large-scale bio-refineries in production, and none are likely until the chicken-and-egg problem of securing the long-term fuel-supply contracts needed to obtain financing for their construction can be resolved.

Even when facilities are brought on line, the numerous methods of producing alternative fuels from biomass need to be certified before they can be used commercially—which can take two or more years. Only two production pathways are approved to date: Fisher-Tropsch fuel blends from coal, gas or biomass; hydroprocessed esters and fatty acids; or hydrotreated renewable jet fuels, from vegetable oils and animal fats.

Lufthansa has signed a memorandum of understanding with Solena Fuels to work toward “a long-term, bankable offtake agreement” for sustainable biofuel. Solena will locate its first facility in Germany at Schwet/Oder, on the Polish border. The refinery will use the Fischer-Tropsch process to convert 520,000 metric tons a year of waste biomass that would otherwise go to landfills or incinerators into jet fuel, biodiesel and electricity. Lufthansa will jointly develop the supply chain, including delivery to Berlin Brandenburg Airport. Solena earlier signed an agreement with British Airways for a plant near London to produce 50,000 tons of biofuel beginning in 2014-15.

A second, pending biofuel deal with a major U.S. airline was disclosed on the sidelines at ILA. The unnamed airline will take more than 20 million gallons a year of jet fuel made from natural gas. The deal could be signed within weeks, says George Boyajian, vice president for business development at Primus Green Energy, based in Hillsborough, N.J.

The deal will break new ground, not least in the volume of fuel involved. It calls for the airline to assume all the pricing risk up front on 10-20 years' worth of natural gas, and take all the synthetic jet-fuel production, essentially locking in its fuel price for decades.

“Locking in U.S. natural gas prices now for the next 10 years will be the equivalent of $70 a barrel for crude oil,” says Boyajian. Once the deal is signed, Primus will arrange project financing for a $200 million refinery, probably in Louisiana, to begin production in 2015. Primus will complete a demo plant for its catalytic process early next year, and certifying its method of making jet fuel could take up to three years.