A sudden rush to harness sustainable aviation fuel

A wave of investments, policy changes and technological breakthroughs are giving energy to the emerging market for sustainable aviation fuel, a low-carbon alternative to traditional jet fuel made from crude oil.

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

Boeing said last week that it was Double use it of sustainable fuels this year. New laws in Europe and the United States are designed to stimulate investment in the market. And after years of false starts, a handful of startups are receiving influxes of funding and expanding operations.

Sustainable jet fuel is made from used cooking oil and agricultural waste. By some estimates, it produces up to 80 percent less planet-warming emissions than conventional jet fuel. It is currently blended with fossil jet fuels, but the hope is that aircraft can eventually run on alternative fuels exclusively.

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

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

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

“I am really obsessed with climate change,” he said. “The repercussions are very tragic, and there are all these tipping points that once you hit it’s effectively irreversible.”

Making sustainable aviation fuels mainstream will be difficult and expensive. Sustainable aviation fuel “is currently in various stages of technological readiness, and scaling up production and deployment faces significant technological and economic obstacles,” according to Modern report by the Rhodium Group, a consulting group in the energy sector.

Only two companies make a sustainable aviation fuel that is widely used by major airlines. World Energy, an American company, has a plant in Los Angeles where it supplies United and other airlines Building a new factory in Houston. Neste, a Finnish oil company, produces sustainable jet fuel in Europe.

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

Gevo, a Denver-based startup that also makes sustainable aviation fuel from ethanol, started last year at a plant in South Dakota.

“I’ve been doing renewables for 25 years, and I’m one of the most pessimistic people in the space,” said Patrick Gruber, CEO of Gifu. “But I think there has been a shift in the last few years. Airlines think they will be held accountable, and their customers say they have to change.”

New laws and policy efforts are also giving impetus to the industry.

The European Commission has suggested that by 2025, at least 2 percent of jet fuel used will be made from sustainable sources. By 2050, that number will increase to more than 60 percent.

The Reducing Inflation Act — President Biden’s signature climate legislation, which Congress passed last year — includes tax breaks for cleaner jet fuel.

United Fund announced Tuesday that it is backed by seed investments from JP Morgan Chase, Honeywell, Air Canada and Boeing. United expects the fund to grow to as much as $500 million and to make about two dozen investments over the next three years, with the goal of rapidly expanding supply and bringing cost down.

“The challenge we now face in aviation is we know the solution is a sustainable aviation fuel,” said Lauren Riley, United’s chief sustainability officer. “We don’t have a market.”

Like many major companies, United Airlines has said it will stop adding more carbon emissions to the environment by 2050. But United has distinguished itself by pledging to meet this goal without using carbon offsets, which allow companies to claim credit on actions others have taken to reduce their emissions. carbon, without actually cleaning up their process.

“Carbon offsets have been contentious to me because almost all of them are fraudulent,” Mr. Kirby said.

United has already invested, through its internal venture capital fund, United Airlines Ventures, in several sustainable fuel companies, including Blue Blade Energy, which makes sustainable fuel from ethanol; dimensional energy, which works on methods for producing fuels from carbon dioxide and water; and Fulcrum Bioenergy, which is developing a process to produce fuel from landfill waste. These investments will be transferred to the new fund, which is called the Sustainable Aviation Fund.