Virgin Australia in talks with biofuel producer

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Virgin Australia is in discussions to financially support an alternative fuel company's project to produce bio-derived jet fuel on a commercial scale.

"Virgin Australia is seeking innovative ways to support the scale-up of biofuels and we hope to announce our investment in one of these projects in the coming months," said Merren McArthur, Virgin Australia's group executive for corporate advisory.

The airline is finalising an agreement for a land-based project with a "single type of process that can be used right across Australia with a range of feedstocks", said David White, Virgin Australia's sustainability and climate change manager.

Although Virgin declined to name its forthcoming partner, White said Virgin would not be working with Solazyme or Solena, the US companies Qantas has engaged with to develop business cases for algae-based and biomass from municipal waste jet fuel. Those projects will help Qantas with its aim to source 2%-5% of its fuel needs from renewable sources within five years.

Virgin expects to soon announce an "aspirational target" of how much renewable energy sources could constitute its fuel needs in the short/medium-term, White said. "We're a member of IATA now and IATA has a whole of industry target. We support that, but we do have to look at the local context. We may be able to go beyond that. It may be less."

Like Qantas, Virgin's partnership will develop the biofuel locally.

"[The project] has a strong regional connection in helping regional economies," White said. "We want to favour local, regional development when possible."

The project will also refine the feedstock locally, both for to drive a local industry and for logistical reasons.

"For a lot of these feedstocks, it's really necessary to refine them locally as well because they're quite light," said Heather Brodie, the chief executive of Biofuels Association of Australia. "It doesn't make sense to take them overseas for refining and then bring them back. You really have to have that whole logistics supply chain in one place."