Rentech, 13 airlines ink alternative fuels purchasing MOU

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Thirteen airlines and synthetic fuels producer Rentech have reached a memorandum of understanding (MOU) to develop a framework for a future supply contract for alternative jet fuel produced by the Los Angeles company.

Air Canada, AirTran Airways, American Airlines, Atlas Air, Delta Air Lines, FedEx, JetBlue Airways, Lufthansa, Mexicana, Polar Air Cargo, United Airlines, UPS and US Airways signed the non-binding MOU as certification was achieved earlier this year for up to 50% blends of generic synthetic paraffinic kerosene (SPK) derived from the Fischer-Tropsch process, enabling the commercial production and use of such alternative fuel.

The MOU includes terms that are expected to serve as the basis for a definitive purchase agreement for the roughly 250 million USgal (946.4 million litres) per year of SPK derived from the Fischer-Tropsch process that Rentech intends to produce at its proposed production facility near Natchez, Mississippi.

Rentech has purchased roughly 450 acres for the forthcoming facility and plans to submit air, water and construction permit applications for the site in early 2010.

The Rentech announcement comes after voluntary standards development organisation ASTM International this year passed a specification for non-petroleum-based fuels, D7566, and approved the modification of the existing specification for aviation turbine fuel, D1655, to recognize fuels made with synthetic components.

ASTM this year considered up to 50% blends of SPKs derived from the Fischer-Tropsch process. The Commercial Aviation Alternative Fuels Initiative (CAAFI), a consortium of aerospace firms, trade groups and the FAA to advance the production and acceptance of alternative aviation fuels, expects ASTM to consider 100% SPKs derived from the Fischer-Tropsch process in 2011.

In the meantime, CAAFI anticipates ASTM will publish a specification for up to 50% blends of bio-derived SPKs, called hydrotreated renewable jet (HRJ), in 2010, paving the way for commercial production and use of up to 50% HRJ blends derived from sources such as jatropha, camelina and algae with petroleum-derived jet fuel.

Specifications for 100% HRJs are expected in 2013.

US Airways managing director of fuel administration Michael Baer said in October that airlines were considering alternative jet fuel joint purchasing programmes to bolster the fledgling alternative aviation fuels industry though they would prefer that producers obtain financing or government help.

With uncertainty surrounding the ability of emerging alternative jet fuel producers to obtain funding from commercial lenders in the economic downturn, airlines recognize they may need to step up for commercial quantities of alternative fuels to materialise, says Baer, who serves as the CAAFI business and economic team leader and is a member of the energy council at the Air Transport Association of America (ATA).

A variety of airline executives have called for government investment of aviation alternative fuels.

"Today's announcement reinforces the proactive steps that airlines are taking to stimulate competition in the aviation fuel supply chain, contribute to the creation of green jobs and promote energy security through economically viable alternatives that also demonstrate environmental benefits," United CEO and ATA board chairman Glenn Tilton said in a statement issued today. "Our intention as an airline industry is to continue to do our part by supporting the use of alternative fuels. We urge the US government and the investment community also to do their part to further support this critical energy opportunity."