Private Sector Allies with Military on Alternative Fuels
In a bid to bolster the market for alternative fuels, two of the world's largest consumers of jet-A have formed a strategic alliance: the U.S. Air Transport Association and the U.S. Department of Defense. According to ATA president James May, environmental considerations and rising prices for petroleum-based fuel motivated the agreement signed last month. The partners plan to pursue work to ensure that authorities can certify alternative fuels (including biofuels) in a timely and cost-effective way and suppliers have in place widespread delivery and refueling infrastructure.
The need is massive. Daily demand for jet-A among the ATA members and the armed forces represented by the DoD amounts to about one and a half million barrels. But the market appears willing to respond. At the end of last year, potential large-scale alternative fuel providers Rentech and AltAir Fuels announced they had signed non-binding agreements with numerous airlines to supply hundreds of millions of gallons of renewable jet fuels starting in 2012.
With petroleum production set to peak by as early as 2014, there seems little doubt that the world needs alternative fuels. However, how to fund the start-up costs associated with establishing a supply chain remains a key issue. One estimate by a biofuel supply integrator pegged the associated costs for building the needed facilities and infrastructure at $20 billion, while the funds needed to establish and grow feedstock required for such an enormous amount of fuel could easily total another $20 billion.
As part of the new ATA/DoD alliance, an environmental team will assess sustainability and the life cycle greenhouse gas emissions for alternative aviation fuels. Under the plan, a deployment and logistics team will identify regions suitable for feedstock growth and alternative fuels production and distribution, while the contracting and finance team focus on developing pricing and financing mechanisms along with publicizing supply opportunities. The alliance will represent the two groups for the first time at the Advanced Biofuels Leadership Conference next week in Washington, D.C.