United Airlines Boeing 737-924(ER) (32835/2817) N75432 sports the carriers "Eco-Skies" livery.
(Photo - United Airlines)
United Airlines has invested $30 million for a stake in renewable fuels producer Fulcrum BioEnergy in a deal that could see the carrier buy 90 million gallons a year of jet fuel made from municipal waste.
The equity stake in Fulcrum is the largest single investment by a US airline in alternative fuels, United EVP and general counsel Brett Hart said. Hong Kong-based Cathay Pacific Airways made an undisclosed equity investment in Fulcrum in August 2014.
United has also signed a long-term supply agreement with Fulcrum giving it the opportunity to purchase at least 90 million gallons of sustainable jet fuel a year for a minimum of 10 years, beginning in 2018, at a cost competitive with conventional jet fuel.
Cathay has negotiated a supply agreement for an initial 375 million gallons over 10 years. This would be supplied by Fulcrum bio-refineries at multiple locations, primarily in North America, described as strategic to the airline’s network.
The United agreement covers the joint development of up to five refineries located near the airline’s US hubs, with the combined capacity to produce up to 180 million gallons a year. Fulcrum CEO Jim Macias says the five locations are “complementary” to those covered by the Cathay agreement.
Macias says the five locations for United are included in the eight US plants included in Fulcrum’s initial build-out plans. “We have secured all the feedstocks necessary for the first eight plants under 20-year contracts that guarantee our costs and eliminate volatility,” he says.
Fulcrum’s process gasifies pre-sorted municipal solid waste to produce syngas, which is then converted to liquid fuels using the Fischer-Tropsch (F-T) process. Synthetic paraffinic kerosene produced via F-T is already approved for use in aircraft in blends up to 50% with conventional jet fuel.
Fulcrum has just awarded contracts to begin constriction of its first commercial-scale biorefinery in Reno, Nevada, which is scheduled to become operational in 2017. The majority of initial jet-fuel production is committed to Cathay and United, says Macias.
Based on Fulcrum’s build-out plans, United expects to reach the 90 million gallons a year purchase level—enough to fuel 20,000 flights—by 2021, says Angela Foster-Rice, United’s managing director of environmental affairs and sustainability.
The waste-to-jet fuel will reduce life-cycle carbon emissions by more than 80% compared with conventional jet fuel, she says, adding that Fulcrum process meets its sustainability, fuel cost and commercial scalability requirements.
United in 2013 signed the airline industry’s first long-term biofuel offtake agreement with a three-year deal with AltAir Fuels. Foster-Rice says AltAir will finish upgrading its refinery in the next few weeks and United expects to begin biofuel flights out of Los Angeles “later this summer.”
Hart says United has invested in Fulcrum “to help make biofuels salable and scalable” and to provide “a hedge against future fuel price volatility and carbon regulation.” Foster-Rice says “we need to be willing to invest to take out some of the risk” in scaling up to commercial quantities.
(Graham Warwick - ATWOnline News)