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The sudden rush to make sustainable jet fuel mainstream

by SuperiorInvest

A flurry of investment, policy change and technological breakthroughs are fueling the emerging market for sustainable jet fuel, a low-carbon alternative to traditional jet fuel made from crude oil.

United Airlines and other companies on Tuesday launched a $100 million venture capital fund to invest in the technology.

Boeing said last week that it did doubling its use of sustainable fuel this year. New laws in Europe and the United States are designed to spur investment in the market. And after years of false starts, a handful of start-ups are receiving an influx of funding and expanding operations.

Sustainable jet fuel is produced from used cooking oil and agricultural waste. By some estimates, it produces up to 80 percent fewer planet-warming emissions than conventional jet fuel. It is currently mixed with fossil jet fuel, but the hope is that the planes could eventually be powered entirely by the alternative fuel.

While progress has been made in electric aircraft, battery weight remains an issue for large aircraft. Sustainable jet fuel is seen by many as the most promising way to reduce greenhouse gas emissions in the aviation sector, which contributes more than 2 percent of global emissions each year. according to to the International Energy Agency.

But today almost no flights are powered by sustainable fuel due to inventory and cost. Sustainable fuel can be up to three times more expensive than conventional fuel. Even at United, the largest consumer of sustainable fuels in the United States, it accounted for less than one percent of total fuel consumption last year.

Scott Kirby, United’s CEO, said in an interview that he wants his airline to be a leader in sustainable fuels. His reasons, he says, are twofold: He believes that’s where the industry is headed, and he wants to play a role in reducing global emissions as the planet warms rapidly.

“I’m really a climate change nerd,” he said. “The consequences are so dramatic and there are all these tipping points that once you hit them, they’re practically irreversible.”

Bringing sustainable jet fuel into the mainstream will be difficult and expensive. Sustainable aviation fuels “are currently at various stages of technological readiness, and scale-up production and deployment face major technological and economic hurdles,” it says recent news from Rhodium Group, an energy sector consulting group.

Only two companies produce sustainable jet fuel that is used on a large scale by major airlines. World Energy, an American company, has a plant in Los Angeles that supplies United and other airlines and is building a new factory in Houston. Neste, a Finnish oil company, produces sustainable jet fuel in Europe.

Other companies are racing to catch up. Chicago-based LanzaTech went public on the Nasdaq this month and is valued at nearly $1 billion. The company is building a factory in Georgia where it plans to produce sustainable fuel using ethanol.

Gevo, a Denver-based startup that also makes sustainable jet fuel from ethanol, broke ground on a plant in South Dakota last year.

“I’ve been doing renewables for 25 years and I’m one of the more cynical people in the space,” said Patrick Gruber, CEO of Gevo. “But I think there’s been a shift in the last couple of years. Airlines believe they will be held accountable and their customers say they have to change.”

New laws and political efforts are also giving the industry a boost.

The European Commission has proposed that by 2025 at least 2 percent of used aviation fuel should be produced from sustainable sources. By 2050, that number would rise to more than 60 percent.

The Inflation Reduction Act — President Biden’s signature climate legislation passed by Congress last year — includes tax credits for cleaner jet fuel.

United’s fund, announced Tuesday, is seeded with seed investments from JP Morgan Chase, Honeywell, Air Canada and Boeing. United expects the fund to grow to $500 million and make about two dozen investments over the next three years to rapidly expand offerings and reduce costs.

“Our challenge in aviation today is that we know the solution is sustainable jet fuel,” said Lauren Riley, United’s chief sustainability officer. “We just don’t have a marketplace.”

Like many large companies, United Airlines has said it will stop adding more carbon emissions to the environment by 2050. But United is different in that it has committed to meeting this goal without using carbon offsets, which allow companies to claim credit for actions taken by others. reduce carbon emissions without actually cleaning up their own operations.

“Carbon offsets have been a bone of contention for me because they are almost all fraudulent,” Mr Kirby said.

United, through its own venture capital fund, United Airlines Ventures, has already invested in several sustainable fuel companies, including Blue Blade Energy, which produces sustainable fuel from ethanol; Dimensional Energy, which is working on ways to make fuel from carbon dioxide and water; and Fulcrum Bioenergy, which is developing a process to make fuel from landfill waste. These investments will be transferred to a new fund called the Sustainable Aviation Fund.

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