Report pressures Australian and NZ govts to fund aviation biofuels

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Industry stakeholders in a new report are calling on the Australian and New Zealand governments to provide guarantees and financial assistance this year to kickstart a local aviation biofuel industry that could be exported to the larger Australasian region.

"The government has said that it will back sectors that have the potential to create green jobs that help move Australia to a low-carbon economy. The report we're launching today clearly shows that aviation, through the use and development of sustainable aviation fuel, has the potential to be one of those sectors," said Qantas head of risk and resilience John Valastro in Sydney.

Qantas with Air New Zealand, Boeing, and Virgin Australia - regional members of the Sustainable Aviation Fuel Users Group - helped commission and develop a report released today that provides a roadmap to how the region can achieve an economically and environmentally beneficial biofuel industry.

The Flight Path to Sustainable Aviation report said that without government assistance, financial in particular, supply chains will face "technological and market uncertainties and competition from other users of biomass resources" that will not deliver the "price signals and support for initial value chain investment and expansion" necessary for airlines to purchase biofuels.

Although Qantas has already formed two small-scale pacts to purchase biofuel from American renewable energy companies Solazyme and Solena and Virgin Australia said it would announce its own partnership within a few months, airline representatives said they are unlikely to be heavily involved in a local biofuel industry not supported by the government.

"None of us can solve this problem alone. Developing sustainable aviation fuel involves significant investment and research development. The solution will only be found through industry-wide initiatives and government support," said Virgin Australia corporate advisory executive Merren McArthur.

Now that the technical and commercial viability of biofuels is proven, "it is appropriate to take stock and review the range of government support mechanisms available," the report said. Although it noted that such a review was outside its scope, it added: "Mechanisms that directly target early stage commercialisation of the supply chain will be of most value as this is a priority for the sector."

A government-backed biofuel industry could by 2030 reduce aviation greenhouse gas emissions by 17% per annum when biofuels are used in a 50:50 share with Jet A1, generate up to 12,000 jobs in regional areas and reduce fuel imports by two billion Australian dollars ($2.1 billion).

The roadmap plans for the establishment of supply chain contracts next year and a refining demonstration facility in 2013. Although the report said there will be sufficient biomass to support 46% of Australia and New Zealand's aviation fuel needs by 2020 and 100% by 2050, refining capabilities will see smaller initial achievements: 1% in 2015 when the first commercial scale refinery comes online, and then 5% in 2020 with a second refinery.

Qantas has previously said it would like to source 2%-5% of its fuel needs by 2016. Virgin Australia has not publicly set a target.

Following the roadmap could give the region "the lead in the development of a sustainable aviation fuels industry" that the countries could export via knowledge, engineering skills, and hard product, the report said.

Such a proposition is particularly attractive to Australia and New Zealand as in their region they have "stable geopolitical environments and comparative advantages in skilled labour... [that] provides a suitable environment for investors," the report said.

The report called for research to lower the cost of feedstock and refining technologies and to start evaluations next year of existing feedstocks including forest stubble and bagasse, as well as new feedstocks including pongamia and coppice.

Virgin Australia announced it would analyse the life cycle of sugar, algae, and pongamia as potential jet fuel sources in partnership with Boeing and the University of Queensland. It will be the first study to analyse those feedstocks. Last month Yale University in partnership with Boeing released a life cycle analysis report on jatropha grown in Brazil.

In addition to the Sustainable Aviation Fuel Users Group, the Defense Science and Technology Organisation, the Climate Group, and the Commonwealth Scientific and Industrial Research Organisation also commissioned and developed the study and report.