A survey by the International Renewable Energy Agency (IRENA) of leading biofuel investors and producers worldwide reveals that they are still struggling to get governments to deliver the right regulatory framework – and carbon pricing – to ensure biojet fuel’s rapid growth. Scaled up, the fuel also needs to come down in price to compete with jet fuel’s 50 eurocents per litre. Technological progress is being made. But biofuel investment has declined from $20bn in 2006 to $3bn last year, reflecting these uncertainties. Dolf Gielen (Director of the Innovation and Technology Center in Bonn, IRENA) and Sakari Oksanen (former Deputy Director-General, IRENA) look at the current status and multiple pathways for biojet, including HEFA, ethanol-to-jet and gasification, along with other technologies such as electric and hydrogen planes.
A large passenger jet uses approximately 4 litres of fuel every second. That translates into approximately 25 km passenger travel per litre. This is better than the average car, but the distances traveled are much longer. Global jet fuel consumption amounted to 430 billion litres in 2017, around 8% of total oil production. It may double or triple by 2050.
Jet fuel use is a growing source of greenhouse gas emissions. Its use emits about 850 Mt of CO2 per year, 2-3% of global emissions. The number is higher if upsteam emissions in fuel production and non-CO2 greenhouse effects are considered.
Global biofuel production
Total global biofuel production amounted to 150 billion litres in 2018. Just 17 million litres of advanced biofuels for aviation were produced from a single plant in California, equal to 0.004% of total aviation fuel consumption. Clearly rapid upscaling is needed of biofuel for aviation and the share of aviation fuel in total biofuel must leap forward for a meaningful contribution.
The International Air Transport Association (IATA) has called for a transition where additional technologies and biofuels account for half of total CO2 emission reduction effort by 2050. The start between now and 2030 is modest with a huge projected rampup shortly after. The ambition is to halve CO2 emissions between 2010 and 2050, a four-fold reduction compared to a no-action scenario. The emission reduction with additional technologies and biofuels is larger than total emissions and fuel use today. So, the equivalent of around 400 billion litres of jet fuel will be needed by 2050.
Figure 1: Aviation industry roadmap for emissions mitigation / Source: Air Transport Action Group IATA
“Additional technologies”
“Additional technologies and biofuels” can in principle encompass more than biofuel. There is talk of electric planes and hybrid solutions for short range flights. Today, e-fuels made from hydrogen and CO2 that is captured from air cost about 5 Euros per litre, but this could drop to around 0.9 Euros per litre longer term. This option is currently not applied on a commercial scale. Hydrogen planes are technically feasible but they require a total re-design. Therefore, it is likely that a lot of aviation biofuel will be needed from 2030, up to twice today’s total global biofuel production.
HEFA: hydrotreated esters and fatty acids
Today, hydrotreated esters and fatty acids (HEFA) are the easiest solution. SkyNRG just announced plans for a new 100 kt/yr facility in the Netherlands (which equals around 120 million litres/yr). The scale indicates the challenge: upscaling is difficult. While residue oils and fats are scarce, dedicated oil feedstock is land intensive. Palm oil is controversial and is excluded in Europe. Efforts are therefore ongoing to develop new feedstocks based on oil crops on marginal lands. HEFA capacity is at present around 6 billion litres per year, Neste being the largest producer.
Other solutions are gasification and Fischer-Tropsch synthesis, ethanol-to-jet, iso-Paraffins. These biojet alternatives have already received permission for use in airplanes.
Costs per litre
It should be noted that jet fuel and diesel are similar products and producers have some flexibility to adjust their product mix. Today diesel prices are higher than jet fuel prices: Jet fuel sells only at about 50 eurocents per litre.
Given the small volumes today, there is no market for biojet and price information is limited. A price that’s 60% higher than regular jet fuel translates into a ticket price that’s about 20% higher. However, consumers have shown limited willingness to pay higher prices. Therefore, governments need to create binding share standards or introduce carbon pricing. Also, captive fleets such as military can create demand.
Biofuel investment has declined
But biofuels are faced with a paradox: whereas an investment volume of USD 20 billion per year would be needed to meet the 2050 demand, actual investments have declined from such level in 2006 and 2007 to less than USD 3 billion per year in 2018. Still the vast majority of investments is for first generation, second generation advanced biofuels investments are lagging.
Today HEFA constitutes the cheapest advanced biofuel. However, the volumes and the potential for cost reduction is limited. The International Renewable Energy Agency (IRENA) review of recent literature indicates at the lower end future fuel cost of 0.9 Euros per litre. While ethanol-to-jet and gasification are more costly today, the potential for cost reductions is more significant with cost that may ultimately drop below 0.5 Euros per litre. However, these cost projections are uncertain. As with all bioenergy feedstock cost can go up once popularity rises.
Survey: where will we get our biojet
IRENA has conducted a survey of leading advanced biofuel investors from Europe, Brazil, China and North-America on industry development perspectives and main barriers for deployment. The sample covers nearly half of all companies worldwide that have assets in this sector. Major aviation biofuel producers were included, and totally half of the respondents anticipated producing aviation biofuels by 2030. Questions spanned a broad range of topics from feedstock, technology and financing to policies, consumer demand and environmental and social issues.
A high-level overview of the findings is provided in Figure 2. It shows that concerns regarding the stability of regulation are markedly dominant, including level of blending mandates and subsidies. However economic concerns are also key, including feedstock cost, conversion efficiency and Capex. It is interesting to note that public perception features low on the ranking of concerns.
Figure 2: Barriers to advanced biofuels deployment according to respondents. Area is in relation to perceived importance; based on an IRENA survey of barriers to investment
A higher level of disaggregation shows distinct answers from HEFA and other producers. For HEFA producers, access to feedstock and feedstock pricing are important concerns. For other pathways that are based on ligno-cellulosic feedstock, the main concerns were on the technology side.
A majority of executives see fewer problems with technology and costs than a decade ago. Lignocellulosic ethanol and thermo-chemical producers encounter still more unresolved technical challenges and financing issues than HEFA producers.
Investors send a clear message to policy makers calling for a more stable and predictable investment environment for advanced biofuels, given the high investment cost, long planning horizon and project duration.
The majority of the executives regard the recently adopted, renewed EU Directive for Renewable Energy (RED II) a good enabling framework, but the way to get there was rocky and it took very long. European regulation brought fundamental changes (e.g. Indirect Land Use Change Directive 2015, ILUC) to the investment environment in the middle of the 10-year period of the first EU Renewable Energy Directive (RED I, 2011-2020).
In conclusion
It is likely that biojet use will grow rapidly in the coming decades. But its widespread use will depend on a regulatory framework or significant carbon pricing. Europe has currently the most conducive policy environment. But longer-term cost reductions will be critical to close the gap with conventional jet fuel. While emissions reduction in aviation is challenging, it has a strong symbolic function. It is likely that a number of supply routes will coexist and HEFA will be supplemented with other types of advanced biofuels.
Finally, it should be noted that both oil derived jet fuel and biofuel combustion cause contrails, possible cirrus cloud formation and NOx emissions. Combined these are likely of a comparable magnitude as the warming impact of the CO2 emitted. Therefore, minimising flying is always the best option for the environment.
Sources: EUBCE side event “where will we get our biojet”, organised by IRENA, 28 May 2019, Lisbon
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Dolf Gielen is the Director of the Innovation and Technology Center in Bonn, IRENA
Sakari Oksanen is a former Deputy Director-General of IRENA
