Aviation Biofuels Desperate for Policy Boost
Biomass Intel has spilled a lot of ink on the aviation biofuels issue of late (read here and here). The issue continues to dominate as oil scarcity, price volatility, and the threat of carbon regulation threaten to make life particularly difficult for an industry trying to plan for an uncertain future.
Flightglobal.com is the latest to run an interesting article about the future of biofuels in light of Airbus and Boeing’s recent agreement to coordinate on renewable fuel lobbying efforts. The article explores recent deals, projects currently underway, prospects for commercialization, feedstock availability, and algae-based fuel.
The article concludes:
Clearly, biofuels could offer the airline industry a bottom-line boost. The questions now are: can governments afford to take a long-term view and support their development? And can they afford not to?
For a good background on many of the key issues and challenges, read the article here.
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Yeah, I can imagine that the airline industry and aircraft manufacturers want to underwrite the cost of their fuel. Currently, jet fuel costs around US$ 680 per metric tonne (www.iata.org/whatwedo/economics/fuel_monitor/index.htm). The cost of coconut oil (a mid-priced oil) is around US$ 525 per metric tonne — its lowest price in five years(http://www.fao.org/es/esc/prices/tmp/1268089443183.csv). But the cost of converting that to bio-jet fuel would bring the cost of bio-jet to more like US$ 750 per tonne. And, of course, if demand for the feedstock oil were to increase, its price would quickly shoot up to a more typical price of US$ 800 per tonne (i.e., $1140 per tonne of bio-jet) or higher. That is a big difference from US$ 680 per tonne.
So, like so many other industries, the aviation industry looks to government to cover their extra costs. But what is the compelling public policy argument for the government to pay these costs?