Airbus estimates airlines may derive 30% of their fuel from plant-derived sources by 2030.
Airlines have gotten initial approval to blend conventional fuel with biofuels from inedible plants, such as algae and woody biomass, reports the Air Transport Association.
Technical standards group ASTM International gave the airlines the go-ahead to incorporate biofuels into as much as 50% of the total fuel they use on passenger flights. The biofuels can be made from organic waste or non-food materials, such as algae or wood chips. Final approval is expected July 1 at the earliest.
Airbus SAS and Deutsche Lufthansa AG are planning to start a six- month trial in the coming weeks where one engine is powered 50% by biofuels from jatropha, camelina and animal waste.
"The real winners of this type of regulatory breakthrough will be technology companies involved in the production of aviation biofuels," says Harry Boyle, an analyst at Bloomberg New Energy Finance. "The biotech-biofuels business models of Amyris Inc. (AMRS), Codexis Inc. (CDXS), Gevo Inc. and Solazyme Inc. are all making claims to these types of new markets."
Aviation fuel is a $139 billion market. Besides emerging, young companies that are racing to produce aviation biofuels are Neste Oil Oyj (NES1V) of Finland, Spain’s Abengoa and Honeywell International Inc. (HON)’s UOP unit, which is developing a fuel-making technology.
"The decision to amend jet fuel specifications to include fuels from bio-derived sources "is a tremendous accomplishment for aviation and the result of tremendous collaboration across the entire industry," Billy Glover, Vice President of Environment and Aviation Policy for Boeing told Bloomberg.
"Developing a renewable fuel supply is a critical part of our industry’s strategy for achieving carbon-neutral growth beyond 2020," Glover said.
The EU has included the aviation industry in its mandatory cap-and-trade system beginning next year. Aviation generates about 2% of global carbon emissions.
Airbus and Boeing, which combined make about 80% of the world’s passenger planes, plan to set up biofuel production chains across the world.
Airbus plans to create a supply hub in India where it would form partnerships with growers, transporters and refiners. Boeing is similarly negotiating with companies in the biofuels supply chain in South America.
James Rekoske, vice president of renewable energy at Honeywell’s UOP estimates the cost differential between biofuels and conventional diesel is less than $2 a barrel.