JetBlue Makes Biofuels Deal to Curtail Greenhouse Gases

Source: By DIANE CALDWELL, New York Times • Posted: Tuesday, September 20, 2016

An airport worker fuels a JetBlue plane on the tarmac of Kennedy International Airport. Lucas Jackson/Reuters 

JetBlue, seeking to get ahead of looming restrictions on airliners’ greenhouse gas pollution, has agreed to buy more than 330 million gallons of renewable fuel over 10 years, the company said on Monday.

It is one of the largest such purchase agreements yet.

Under the agreement with the bioenergy company SG Preston, JetBlue would cover about 20 percent of its annual fuel use at Kennedy International Airport, its home base, with a biofuel blend. That is equivalent to 4 percent of the fuel used throughout its network, the airline said.

“It’s thinking long term about our biggest cost, but its primary motivation is to reduce our greenhouse gases,” said Sophia Mendelsohn, JetBlue’s head of sustainability. “What we really want to do is jump-start the industry and quite frankly enable all airlines, very much ourselves included, to diversify our fuel supply.”

Biofuels, made from various sorts of organic matter — whether from agriculture, wood scraps or even municipal waste — have long been considered important to reducing greenhouse gas emissions in transportation. United States rules for gasoline, for example, require at least 10 percent ethanol, which typically comes from corn.

Airlines represent potentially easy-to-serve customers for biofuels, given the carriers’ concentration around airports and their voracious energy needs. But with heavy pressure on the companies’ bottom lines, the advent of more efficient planes and a period of low oil prices, the airlines — with a few exceptions — have been slow to adopt the novel and more expensive fuels.

“At the end of the day, the vibe that we’ve heard from the industry is, ‘We’ll use it once it’s cost-competitive, we’ll use it once there’s enough volume,’” said Yuan-Sheng Yu, who leads alternative fuels research at Lux Research. “This is not an industry with the amounts of cash on hand to invest in these emerging, nonproven technologies.”

But there are signs that may be changing. Last year, United began using a biofuel blend on some of its flights from Los Angeles. In recent weeks, Lufthansa said it would buy as many as eight million gallons of fuel a year over five years from Gevo, a Colorado-based biofuel developer. And Virgin Atlantic announced a successful test of a jet fuel from LanzaTech derived from waste gases from steel mills.

Given the industry’s global reach, devising rules to control greenhouse gas emissions has proved contentious and given rise to a regulatory patchwork that companies say could be costly, lead to safety risks and create disadvantages for airlines from different jurisdictions. An effort by the European Union to require United States planes landing in European airports to reduce emissions or pay a fee, for example, encountered so much resistance that regulators approved a partial exemption that expires next year.

In recent months, the International Civil Aviation Organization, the aviation agency of the United Nations, approved one set of standards while the Obama administration began the process of writing its own last year. Environmentalists say the international restrictions, written with strong industry input, are too weak, and are pushing for more stringent standards from the Environmental Protection Agency.

At the same time, the aviation industry has been looking to reduce its greenhouse gas emissions though a number of approaches, including building more efficient aircraft and supporting the development and approval of new fuels.

That has been challenging, said Sean Newsum, director of environmental strategy at Boeing Commercial Airplanes, which is active around the world in helping to develop and certify biofuels for commercial use. In one of the projects this summer, with South African Airways and its Mango affiliate, 300 passengers flew from Johannesburg to Cape Town on fuel derived from tobacco grown for the purpose.

“There’s many different moving pieces to get this into real commercial use, all the way from the growing of the feedstock to the processing of the fuel to delivering that fuel to the airplane,” Mr. Newsum said. “It takes a while for all of those processes to become stitched together in a standard way,” he added, and to bring down their costs.

A long-term customer agreement like JetBlue’s, energy experts say, is an important step for a developer to attract financing to build a new facility — much as energy-purchase agreements by companies like Amazon, Apple and Google have allowed for the construction of solar or wind farms to help meet their electricity needs.

“Brands like JetBlue have recognized that sustainability and the environment need to be part of the overall brand story,” said Randy Delbert LeTang, chief executive of SG Preston, which is based in Philadelphia. “JetBlue and contracts like JetBlue’s offer us a completion to our overall credit profile for building these facilities.”

Mr. Preston said interest in buying biofuel was growing within the industry. Still, that is no guarantee that a project will pan out.

A five-year agreement by British Airways to purchase all of the output from a facility that Solena Fuels planned to build outside London, to convert municipal solid waste to jet fuel, collapsed after Solena failed to raise enough money. It could not compete with cheap oil.

At JetBlue, Ms. Mendelsohn said she worked for the better part of a year to bring the deal to fruition. She would not say how much the fuel would cost, but that, with subsidies available for biofuels, it would be competitive with conventional jet fuel.

Under the agreement, JetBlue will purchase more than 33 million gallons a year of a fuel made from plant oils for at least 10 years; that fuel will be blended with 70 percent traditional jet fuel. SG Preston plans to build a refinery in Ohio to produce mainly renewable diesel and jet fuel, the first of many it hopes to develop.