Biofuels will fly high, U.S. officials predict

Source: Jon Hilkevitch • Chicago Tribune  • Posted: Wednesday, January 18, 2012

Agriculture secretary outlines plan for American production, including building refineries and growing feedstocks

The Obama administration is committed to “help buy down the cost” of building refineries and growing feedstocks for use in producing clean, renewable aviation fuels, even though the current price of such biofuels is at least three times higher than regular jet fuel, U.S. Agriculture Secretary Tom Vilsack said Monday in Chicago.

The plan for American-produced biofuels that Vilsack outlined before business and airline industry officials is aimed at creating thousands of jobs, especially in the rural economy; establishing energy security by reducing dependence on foreign oil; and slowing global warming, he said.

“The beauty of this is that it stimulates what America does best: innovation,” Vilsack told a business round table held at Boeing Co.headquarters in the Loop.

“It makes a lot more sense to buy (energy) from the farmer down the road” than rely on overseas markets, he added

The administration’s strategy mirrors longtime government policies that subsidize farmers. It relies heavily on providing grants, loan guarantees and tax breaks to build biofuel refineries and research centers; paying farmers to switch from growing traditional feedstocks to nonfood biofuel-related production; and providing funding for biofuel producers to purchase the feedstock, Vilsack said.

Even with all that help, it hasn’t been proven whether biofuels can become economically viable for the airline industry, which consumes 17 billion to 19 billion gallons of jet fuel a year, according to theU.S. Department of Transportation. Jet fuel currently costs about $3.15 a gallon, while aviation biofuel runs $16 a gallon and up, experts said.

Vilsack said he envisioned Florida biofuel refineries using citrus waste, Pacific Northwest units processing woody biomass waste from forestry and facilities in the Northeast processing native grasses “and other things that grow in abundance and have little value.”

The effort is backed by more than $1 billion in U.S. government investments and, if biofuel levels ever reach large-scale production, the promise of a ready customer: theU.S. Navy.

Airlines would be next in line to purchase excess biofuel at competitive prices, Vilsack said.

Continental Airlines operated the first revenue passenger biofuel flight in the U.S. in November from Houston toO’Hare International Airport. The flight used fuel derived from microbial algae. Alaska Airlines and Horizon Air soon followed using a biofuel blend made from recycled cooking oil.

It’s unclear when the next biofuel flights will occur. The industry has set a goal of using biofuels for 1 percent of its fuel needs by 2015

Billy Glover, Boeing’s vice president of environment and aviation policy, said it’s difficult to make predictions, but the key to lowering the price rests with increasing production.

“We are just at the beginning of a very exciting biofuel industry,” Glover said.