EQ2 Report_Aviation biofuel

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Managing the Future Today

insight Sustainable Flying:Biofuels as an

Economic and Environmental Salvefor the Airline Industry

EQ²Email: [email protected]: 0845 371 2520Interna onal: +44 7921 253 222




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Executive Summary Feb 2010

The avia on industry will need carbon-neutral biofuels as a feasible and desperately needed way to reduceits reliance on fossil fuels and cut its greenhouse gas emissions. The EU Emissions Trading Scheme (EU ETS),star ng from 2012, will put a direct cost on carbon emissions for all ights into or out of Europe. It is likelyonly a ma er of me before most ights around the world will be similarly taxed. More than just the carbonrisks, the airline industry has been ba ered by unstable jet fuel prices and biofuels o er a poten ally more

stable (not to men on more sustainable) fuel source.

This report provides a review of the development of biofuels for aircra and a cri cal examina on of theeconomic and climate impacts of the avia on industry moving towards the large-scale adop on of biofuels.

• Bio-derived Synthe c Para nic Kerosene (Bio-SPK), made from Jatropha, Camelina, algae orhalophyte feedstocks, is the most promising candidate for alterna ve jet fuel and test ightshave successful proven its feasibility as a replacement for conven onal jet fuel.

• Although not commercially viable yet, the EU ETS o ers a strong nancial incen ve for the

adop on of bio jet fuels. Based on the current EU ETS price for carbon in 2012 of €15 and2009 average jet fuel price of $1.69 per gallon, every gallon of jet fuel burned would incurcarbon costs of an addi onal $0.21, which is a total cost of $1.34 billion across the industry.This is a premium of 12.4% that would not apply to biofuel, but would help make it more costcompe ve.

• Further out, the EU ETS will impose costs of $9.56B in 2020 and $19.48B in 2030 on the airlineindustry. This will be equivalent to approximately 3.6% of the total opera ng cost of the EUavia on industry by 2030. While airlines may be able to pass along some of these costs toconsumers, it is too compe ve a market for the industry to reap windfall pro ts, par cularlyin later years when the industry needs to buy most (and likely all) of its carbon credits.

• Based on the Air Transport Ac on Group (ATAG) industry body assump ons of 15% and 30%consump on of biofuel in 2020 and 2030, the EU avia on industry will be able to avoid 35million tonnes of CO

2emissions in 2020 and 100 million tonnes in 2030. Such reduc on in

emissions is equivalent to $2.01 and $5.84 billion of savings on carbon expense in 2020 and2030, respec vely.

• Based on the same assump on of avia on biofuel consump on, the global avia on industrywill be able to avoid 129 million tonnes and up to 420 million tonnes of CO

2emissions in 2020

and 2030, respec vely.




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• If the global avia on industry is to achieve the Interna onal Air Transport Associa on (ATA)’saim of carbon neutral growth from 2020 solely by biofuel consump on, it will need to useapproximately 46.1–72.0 billion gallons of biofuel in 2030, which is equivalent to 38-49% of total jet fuel consump on.

The internalisa on of billions of dollars carbon costs by the air transporta on industry will provide a sig-ni cant nancial incen ve for the development and adop on of new carbon reduc on alterna ves. Biofuelo ers the only near to mid-term solu on for the industry to signi cantly reduce its climate impact, with theadded bene t of diversifying away from non-renewable fossil fuels.

2010 2020(15% biofuel)

2030 Lo w(30% biofuel)

2030 High(15% biofuel)

1600

1200

800

400

0

Avoided CO emission

C O e m i s s i o n

( M i l l i o n m e t r i c t o n n e s t )

Credit Cost ($ bn)

Biofuel Cost ($ bn)

E x p e n s e

( $ b n

) Jet Fuel Cost ($ bn)

$200

$160

$120

$80

$40

$0

2 0 2 0 ( n o b i o f

u e l ) 2 0 1 2 2 0 1 0

2 0 2 0 ( 1 5 %

b i o f u e l )

2 0 3 0 ( n o b i o f

u e l )

2 0 3 0 ( 3 0 %

b i o f u e l )

2 0 3 0 ( C n e u t

r a l b i o f u e l ) 2010 2020

(15% biofuel)2030 Low

(30% biofuel)2030 High

(30% biofuel)

1600

1200

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Av oided CO emission

C O e m i s s i o n

( M t )




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Content1. Introduction: Biofuel in aviation

1.1 The challenges faced by the aviation industry

1.2 Bio-derived Synthetic Paraf nic Kerosene (Bio-SPK)

1.3 The feedstock

1.4 Environmental bene t

1.5 Economic viability of Bio-SPK

1.5.1 Price and production cost uncertainties1.5.2 Oil price pressure on biofuel producers

1.5.3 Aviation industry’s dependence on fossil fuel

1.5.4 Emission trading

1.6 Other alternative jet fuels

2. Environmental and nancial impacts of aviation biofuel2.1 Main assumptions

2.2 Biofuel, EU aviation and EU ETS

2.3 Biofuel and carbon-neutral growth

2.3.1 Outlook of global aviation CO 2 emission

2.3.2 How much biofuel does the aviation industry need in order to

achieve carbon-neutral growth from 2020?

2.4 Global emission trading scheme for aviation

2.5 Aviation biofuel as a competitor to conventional jet fuel

2.6 Biofuel vs. Carbon offsetting

3. Bio-SPKs – the future of aviation fuel?Business Sustainability

4. References




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1. Introduction: Biofuel in aviation

Kerosene-type jet fuel has been the prevalent fuel used by commercial aircra sinceWorld War II when it became nancially preferable to gasoline-type fuels. The speci -ca on for the fuel was established in the 1950s and has not changed since. Such a mo-nopoly of fossil fuel in the avia on industry is set to change with the next genera on of new, sustainable jet fuel – biofuel.

In 2008, airlines started to carry out test ights using jet fuel blended with biofuel.Virgin Atlan c was the rst to carry out a test ight with a blend of coconut-derivedmethyl ester with conven onal jet fuel. Later in 2008, di erent airlines started to jointhe avia on biofuel tes ng trend and perform test ights with biofuel derived froma variety of feedstocks. Up to December 2009 there were ve successful biofuel test

ights performed by Air New Zealand, Con nental Airlines, Japan Air Lines, Qatar Air-ways and KLM. In addi on, Jet Blue, Interjet and Bri sh Airway have already scheduled

their biofuel test ights in 2010.

1.1. The challenges faced by the aviation industry

There are two main drivers forthe development of a sustainablealterna ve avia on fuel. The rstdriver is the nancial risk of thedependence on conven onal fos-sil fuel-derived jet fuel. Shadowedby the suspicion of peak oil andno sign of decline in demand forenergy and coupled with a rangeof market uncertain es (weatherevents, U.S. Dollar trend, etc), jetfuel price is not likely to be stableand such vola lity has and couldcon nue to exert enormous pres-sure on the opera on of the airlines. Although such risk can be nancially hedged tosome extent, the problem is not resolved as long as the industry s ll depends on non-sustainable fuel.

The problem is further worsened by the climate change crisis. The environmental is-

sues are so important nowadays that they are given the same priority as the economyon the na onal and global agenda. Transla ng these environmental issues into busi-ness opera ng terms is leading to addi onal regula ons and compliance, which meansa tougher opera ng environment. Companies endeavour to remain pro table whilepaying a considerable amount of a en on to their environmental footprint. A com-pany’s obliga on on environment has become the second driver for the developmentof sustainable avia on fuel.

1.2. Bio-derived Synthetic Paraf nic Kerosene (Bio-SPK)

Haunted by these opera onal pressures, airlines are looking for ways to become in-

dependent of conven onal jet fuel and the use of bio-derived jet fuel is considered to

1

Figure 1 - Jet Fuel and Crude Oil Price ($/barrel)

Source: Pla s, RBS




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1 Beginner’s Guide to Avia on Biofuel, Air Transport Ac on Group (2009)

be the way forward. One of the most promising candidates for alterna ve avia on fuelis Bio-derived Synthe c Para nic Kerosene (Bio-SPK). Bio-SPK is the biofuel used in

all the test ights men oned above, apart from Virgin Atlan c’s. It is the most testedtype of biofuel by the avia on industry and has shown very similar performance levelsto conven onal jet fuel. In understanding the poten al of Bio-SPK to the avia on in-dustry, this paper will provide an informa ve and cri cal account of the environmentaland nancial bene ts and uncertain es of Bio-SPKs both to airlines and the industryas a whole.

1.3. The feedstock

To understand the signi cance of the Bio-SPKs, we can start with the gura ve and lit-eral roots – the feedstock. The produc on of transporta on biofuels using food crops,

such as biodiesel and ethanol has generated enormous social and environmental con-cerns. One of the most furiously debated topics with regard to biofuel is the con ictbetween food and fuel produc on. A small, but signi cant por on of food crops (suchas corn for ethanol) have been turned in to biofuel, leading to a fall in the output and

2

Camelina Algae Jatropha Halophytes

Camelina has high lipid oil con-tent and the primary market of its oil is as a feedstock to pro-duce renewable fuels. Camelinais o en grown as a rota onalcrop with wheat and other ce-real crops when the land wouldotherwise be le fallow as partof the normal crop rota on pro-gram.

Algae is poten ally the mostpromising feedstock for produc-ing large quan es of sustain-able avia on biofuel. These mi-croscopic plants can be grownin polluted or salt water, desertsand other inhospitable places.They thrive on carbon dioxide,which makes them ideal for car-bon capture (absorbing carbondioxide) from sources like powerplants. One of the biggest advan-tages of algae for oil produc onis the speed at which the feed-stock can grow. It has been es-

mated that algae produces upto 15 mes more oil per squarekilometer than other biofuelcrops.

Jatropha produces seeds con-taining inedible lipid oil that canbe used to produce avia on fuel.Each seed produces 30 to 40% of its mass in oil and is capable of growing in a range of di cult soilcondi ons, including arid andotherwise non-arable areas. Theseeds are toxic to both humansand animals and are thereforenot a food source.

Halophytes are salt marsh grass-es and other saline habitat spe-cies that can grow either in saltwater or in areas a ected by seaspray where plants would notnormally be able to grow.

Figure. 2 - The four most promising feedstock for “second genera on” biofuel 1




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storage of edible crops to historically low levels; a study by the World Bank in 2008suggested that biofuel produc on has caused the world’s food prices to surge by 70-75% 1.

This, furthermore, led to another long-term environmental problem; the alterna onof land use and deforesta on, which contributes signi cantly to GHG emissions, thuscausing an increasing rate of climate change.

Moreover, all of these biofuels cannot be used directly by aircra . Re ning biofuel toavia on fuel involves energy-intensive manufacturing processes and in so doing, thecost and life-cycle GHG emission of these processed biofuels increase substan ally andcan exceed that of conven onal jet fuel.

While commercialisa on of food-derived biofuels may be unsustainable, Bio-SPKs arederived from a new array of feedstocks, namely Jatropha, Camelina, algae and halo-phytes. Biofuel derived from these feedstocks are some mes referred as ‘second-gen-era on biofuel’ and they share two overwhelming advantages over tradi onal biofuelfeedstocks. The rst advantage is that these second-genera on feedstocks are all ined-ible, which means the produc on of bio-SPK will not compete with the food supply.The second advantage is that the feedstock vegeta ons do not need to be cul vatedon fer le farmland. For example, Jatropha is resistant to drought and pests and canbe grown on non-arable land. This gives them the poten al to be cul vated in remoteareas or factories

3

1 A Note on Rising Food Prices, The World Bank (2008)

Fischer-TropschThe Fischer-Tropsch (FT) process is a process that al-lows the produc on of liquid fuel, such as gasoline,diesel and jet fuel, from carbonaceous feedstocksincluding natural gas, coal and biomass. Avia on bio-SPKs can be produced from the FT process using bio-mass feedstocks. The FT process involves four mainsteps:

1. Crea on of synthesis gas from feedstocks2. Removal of CO 2 and other undesired compounds3. FT synthesis using iron- or cobalt-based catalyst 4. Upgrading to liquid fuel by re ning

Hydro-processingBio-SPKs that are produced from hydro-process-ing are referred to as hydro-processed renewable jet fuel (HRJ). The produc on of HRJ includes aprocess that rst uses hydro-processing to deoxy-genate the oil and then uses hydro-isomeriza onto create isopara nic hydrocarbons. The chemi-cal contents of these HRJs can ll the dis lla onrange of conven onal jet fuel and are thus suit-able for avia on use.

Bio-SPK Produc on Technology

Bio-derived Synthe c Para nic Kerosene (Bio-SPKs) is the most promising candidate for sustainable alterna veavia on fuel. The current research into Bio-SPKs is being conducted using second-genera on feedstocks. Second-genera on biofuel generally refers to biofuels that are derived from sustainable and inedible biomass sources;Bio-SPKs represent biofuel derived from sustainable feedstocks that have the same dis lla on range as the jet fueland can be used readily by aircra s.There are two main processes to produce Bio-SPKs: Fischer-Tropsch processing and hydro-processing.




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1.4 Environmental bene t

In terms of environmental e ect, the greatest ad-vantage of Bio-SPK is that not only is it a carbon-neutral fuel, but it also releases signi cantly fewergreenhouse gases (GHGs) than conven onal jet fuelin its life cycle. As a fuel, Bio-SPKs are considered tobe carbon neutral because the amount of CO

2ab -

sorbed by the feedstock during cul va on is roughlythe same as the amount of CO

2released back to the

atmosphere when they are burnt, as opposed tofossil fuels that release GHGs that are buried under-ground. However, there are both direct and indirectcarbon emissions related to the produc on of the

fuel, including processes from feedstock harvest-ing and transporta on, to oil extrac on and hydro-treatment. As these processes cause GHG emissions,they are considered in the calcula on of life cycleGHG emissions of the fuel. It is some mes referredto as the ‘well-to-wake’ GHG emissions – the emis-sions from the wellhead through re ning and nalcombus on and emission in an airplanes wake (seeFigure. 3).

Second-genera on biofuels show substan al reduc-on in life cycle GHG emissions compared to conven-onal jet fuel. The amount of life cycle emissions re-

duc on is es mated in the range from 20 – 98% lessthan conven onal jet fuel, depending on the type of feedstock. Apart from the bene t in GHG emissions,Bio-SPKs also have much lower par culate ma er(PM) and sulphur content than conven onal jet fuel.The sulphur content in bio-SPKs is below 15 partsper million, while conven onal Jet-A consist of 700parts per million of sulphur on average.

However, it is important to address the poten alenvironmental impact of the development of sec-ond-genera on biofuel. Although the feedstock of

second-genera on biofuels are inedible and can begrown in non-food crop farmland, developers mustplan the produc on thoroughly to minimise theenvironmental footprint. Figure. 5 shows that thelife-cycle GHG emissions of biofuels can be greatlyincreased due to misuse of land. Another poten alproblem that may be caused by biofuel developmentis the introduc on of invasive species. The introduc-

on of alien species can lead to serious ecologicaldisasters and great care must be taken to restrict theundesirable propaga on of feedstock vegeta on.

4

Figure. 3 - Comparison of life cycle GHG emissions between con-ven onal jet fuel and avia on biofuel

Source: Beginner ’s Guide to Avia on Biofuels, ATAG 2009

Figure. 4 - Life-cycle GHG emission comparsion between peto-leum jet fuel and Bio-SPKs

Source: Evalua on of Bio-Derived Synthe c Para nic Kerosenes(Bio-SPK), Boeing (2009)

PetroleumJet fuel

JatrophaBio-SPK

CamelinaBio-SPK

g C O

2 e q

/ M J

90

60

30

80

50

20

70

40

10

0

Cul va on

Oil Produc on

Fuel Produc on

Transporta on

Use




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1.5 Economic viability of Bio-SPK

The technology for extrac ng oil from inedible feedstock is available and Bio-SPKs testights have shown promising results; both producers and airlines are keen to get the

fuels on to the market. However, there are several uncertain es on the economic vi-ability of Bio-SPKs.

1.5.1 Price and production cost uncertainties

Firstly, it is hard to accurately es mate the economic viability of bio-SPKs due to thelack of price and produc on cost informa on. The price of bio-SPKs largely dependson the underlying feedstock from which they are derived. Currently, Camelina can beproduced at low cost and will have a price comparable to conven onal jet fuel in thenear future. On the other hand, producing a gallon of algae-derived biofuel would cost$32.81, according to its manufacturer Solix in April 2009 1. Although Solix suggests thatit can reduce the cost to $3.50 a gallon in the near future, there is no clear meline forsuch development. The price of bio-SPKs is also determined by the method of produc-

5

1 “It’s $33 a gallon”, Greentech media (2009)h p://www.greentechmedia.com/ar cles/read/algae-biodiesel-its-33-a-gallon-5652/

Scenarios(S0) No land-use change (Soy oil to HRJ)(S1) Grassland conversion to soybean eld (Soy oil to HRJ)(S2) Worldwide conversion of noncropland (Soy oil to HRJ)(S3) Tropical rainforest conversion to soybean eld (Soy oil to HRJ)(P0) No land-use change (Palm oil to HRJ)(P1) Logged-over forest conversion to palm eld (Palm oil to HRJ)(P2) Tropical rainforest conversion to palm eld (Palm oil to HRJ)(P3) Peatland rainforest conversion to palm eld (Palm oil to HRJ)

Source: Near term feasibility of alterna ve jet fuel, Hileman et al. (2009)

Figure. 5 – the poten al life cycle GHG emission intensity (normalised with conven onal jet fuel) of di er -ent type of alterna ve jet fuel in di erent produc on scenarios. This gure illustrates how unsustainablecul va on of feedstock can lead to drama c increase in life cycle GHG emissions of biofuel.




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on. The current produc on price es ma on for coal-and-biomass-derived Fischer-Tropsch jet fuel from a coal-and-biomass-to-liquid (CBTL) FT plant range from $1.97 to$2.39 per gallon. However, pure biomass-derived FT fuel produced from a biomass-to-

liquid (BTL) FT plant costs $6 per gallon. For hydro-processed renewable jet fuel, whichmost of the test ights used, cost informa on is not yet publicly available.

1.5.2 Oil price pressure on biofuel producers

Given the lack of cost informa on for second-genera on biofuels, we can consider theproblem from another perspec ve. One of the domina ng factors that determines thedevelopment of next genera on biofuel is the price of crude oil. Due to high produc-

on costs, the biofuel industry is par cularly vulnerable to low oil prices. According tothe Interna onal Energy Agency’s World Energy Outlook 2009, the investment in con-ven onal biofuel produc on has fallen heavily over the past year and such a downturn

is directly linked to the sharp reversal of oil prices from their peak in late 2008. A seriesof new bio- neries’ construc on has been put on hold and many exis ng plants havebeen le idle in recent years. Therefore, the ques on for avia on biofuel developersas well as the aircra operators is whether they are going to face the same problems.

1.5.3 Aviation industry’s dependence on fossil fuel

To answer this ques on, we should consider one of the main incen ves to developavia on biofuel – the avia on industry’s complete dependence on liquid fossil fuel.This is the strongest incen ve for the avia on industry to develop avia on biofuel.

There is a fundamental di erence between the natures of energy consump on in theavia on industry versus other sectors. While switching energy supply from coal to re-newable energy sources is rela vely easy for manufacturing or ground transporta onindustries, it is not the same case for avia on. Avia on is a truly interna onal and

6

1 Press Releases: Ques ons & Answers on Avia on & Climate Change, European Union (2005)

Figure. 6 - Global assest nancing of bio-re nery. The gure suggests that the amount of investment in biofuel sector closely resemble the trend of oil priceSource: World Energy Outlook 2009, IEA (2009)




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mobile industry that involves personnel, facili es and infrastructure all over the world.Such reliance makes the avia on industry extremely vulnerable to the instability of oilprices and such nancial risk makes the avia on industry keen to develop alterna ve

fuels and gradually reduce its dependence on fossil fuel.

Therefore, economically and nancially speaking, the avia on industry’s desire for a‘drop-in’ renewable fuel far exceeds any other industry simply due to the lack of alter-na ve solu ons. Although avia on biofuel developers will be stressed by the uctua-

on of oil prices, they are likely to have a more stable client base and receive robustsupport from the airlines.

1.5.4 Emissions Trading

In addi on to a strong incen ve driven by the dependence of crude oil, there are direct

nancial bene ts to support the development of avia on biofuel – the implementa-on of carbon emissions trading regimes. Emissions trading is regarded o en as thebest and most economically e cient global mechanism for tackling climate change.In 2008, the global carbon market was es mated to be worth more than $125 billion.

The European Union Emission Trading Scheme (EU ETS) is the key framework for achiev-ing the emissions reduc on targets the EU has set out as part of its commitment underthe Kyoto Protocol. Accoun ng for over half of all global avia on emissions, ights de-par ng from and arriving into the EU play a key role in gh ng climate change. The EU’sincrease in CO

2emissions from interna onal avia on has been rapid and it is es mated

that emissions will rise 150% by 2012 compared to 1990 levels if such growth ratescon nue. As such increases in avia on emissions would o set more than a quarter of the emissions reduc ons the EU is required to make under the Kyoto protocol 1.

From January 2010, all aircra operators in the EU are required to take part in the EUETS. Aircra operators are now obligated to submit their annual emissions and tonne-kilometre data for benchmarking purposes. Emission allowances, called EuropeanUnion Allowances (EUAs), will be issued to the operators in 2012, when they will haveto start paying for their emissions. The total quan ty of allowances to be allocated toaircra operators in 2012 will be equivalent to 97% of the historical avia on emissionsand the cap will be further ghtened in the following years.

15% of the EUAs will be auc oned in 2012 and the rest will be allocated freely to theavia on industry. It is an cipated that auc oned EUA will reach 100% by 2020, whichmeans the avia on industry will need to pay for every tonnes of CO

2they emit. The

implementa on of emissions trading scheme will generate signi cant nancial pres-sure on the avia on industry. Regarded as carbon neutral, biofuel will provide an op-portunity for the avia on industry to reduce its expense on carbon credits. The impactof emissions trading scheme implementa on and the poten al opportunity of avia onbiofuel will be quan ta vely examined in the following sec on.

1.6 Other alternative jet fuels

Although the avia on industry is eager to nd a replacement for tradi onal jet fuel,Bio-SPKs are not the only alterna ve jet fuel available.

Jet A derived from oil sands or Venezuelan Very Heavy Oils (VHO) is an alterna ve fuelthat is already in wide commercial use, with a cost compe ve with conven onal Jet

7




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A. The re ning technology is well developed and there is a su cient supply of oil sandsfrom Canada. The down side of oil sands-derived Jet A is that they have even higherlifecycle GHG emissions than conven onal jet fuel and they are not derived from sus-tainable feedstocks and are not carbon neutral.

Another type of alterna ve jet fuel that is of wide commercial use is Fischer-Tropschsynthe c jet fuels. While Bio-SPKs produced by FT processes are s ll in the develop-ment stage, mainly due to the immaturity of the supply of the second-genera on feed-stocks, FT fuel derived from fossil fuel has long been used by the avia on industry.Since 1999, aircra leaving O. R. Tambo Interna onal Airport in Johannesburg, SouthAfrica, may receive a blend of up to 50% FT synthe c fuel. However, the downside of FT synthe c fuels is that their lifecycle emissions are signi cantly higher than conven-

onal crude-oil derived jet fuel. Compared with conven onal jet fuel, coal-derived FTfuel is es mated to be 2.0 to 2.4 mes higher in lifecycle GHG emissions and natural

gas-derived jet fuel is about 1.15 mes higher1

.

Recently FT fuel suppliers are pu ng e orts into minimising the environmental im-pacts of FT synthe c fuel produc on by employing carbon capture and sequestra on(CCS) technology. This would contribute to a substan al reduc on in life-cycle emissionof FT synthe c jet fuel down to 0.8 to 1.3 mes that of conven onal jet fuel.

These alterna ve jet fuels, though s ll fossil-fuel derived and not sustainable, couldbe used as a subs tute for conven onal jet fuel before Bio-SPKs are available in com-mercial scale.

2. Environmental and nancial impacts of aviation biofuel

This sec on analyses the environmental and nancial impacts of biofuel on the avia-on industry. This sec on will quan ta vely demonstrate:

1. Poten al impact on conven onal jet fuel consump on caused by the intro-duc on of avia on biofuel

2. Environmental abatement in terms of CO2

emissions reduc on

3. The related cost implica on for the introduc on of avia on biofuel

Carbon emissions trading will also be taken into account when es ma ng the costimplica ons. Due to the uncertain perspec ve of a global emissions trading system forthe avia on industry, we will consider the environmental and nancial impact for theEU and global avia on industries separately.

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1 Technical Report: Near-Term Feasibility of Alterna ve Jet Fuels, Hileman, et al (2009)




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2.1 Main assumptions

Our projec ons and es ma ons are based on the following assump ons:

• Rate of biofuel commercialisa onIn this report, based on the commercialisa on rate suggested by Air Transport Ac onGroup, we assume that avia on biofuel consump on will be equal to 15% and 30% of total jet fuel consump on in 2020 and 2030, respec vely.Source: Beginner guide to avia on biofuel, Air Transport Ac on Group & enviro.aero (2009)

• Conven onal avia on fuel price

• Carbon price

• EU ETS avia on emission cap

There will be other assump ons related with each speci c case and will be stated inthe footnotes.

2.2 Biofuel, EU aviation and EU ETS

We es mate the cost implica ons of the EU ETS to the EU avia on industry to be sig-ni cant. In 2012, the avia on industry will be included in the EU ETS and the emis-sions cap will be approximately 144 million tonnes (Mt) based on historical emissionlevels. We es mate that the total CO

2emissions of EU ights will reach around 184 Mt

in 2012. This implies that the avia on industry will need to spend a total amount of $1.34 billion on European Union Allowances (EUAs), including the 15% auc oned EUAs

9

Currency 2012 2020 2030

EURO/tCO2 €15.00 €40.00 €40.00

USD/tCO2 $21.95 $58.53 $58.53

Table. 2 - Assump ons for carbon credit price: 2012, 2020 & 2030

Source: 2012 carbon price – Carbon Price Summary, Ver s Finance (2009)2020 and 2030 carbon price - IATA 2008 Report on Alterna ve Fuel, IATA (2008)December 2009 exchange rate - 1 EURO = 1.4632 USD

Table. 3 - Assump ons for EU ETS emission caps for avia onSource: Transporta on emission data, European Commission (2009)

emission (Mt)

2012 Cap(97%

average)

2013 onwardscap (95% average)

EU27 148.90 144.43 141.45

Unit 2010 2012* 2020 2030

Barrel $139.00 $139.56 $145.00 $205.00

Gallon $3.31 $3.32 $3.45 $4.88

Table. 1 - Assump ons for conven onal avia on fuel price: 2010, 2012, 2020 & 2030 Source: IATA economic brie ng: outlook for oil and jet fuel price, IATA (2008)

*Jet fuel price 2012 is projected with linear projec on based on the IATA Economic Brie ng gures




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and the purchased EUAs from other industry sectors, and excluding the free creditsallocated to them. Without biofuel, we es mate the poten al EUA cost on airlines willrise to $9.6 billion in 2020 and $19.5 billion in 2030. Such an increase is drama c and isequivalent to an 11% spending increase on carbon credits annually.

Rela ng these gures with business opera on terms, spending $1.34 billion on EUAsin 2012 is equivalent to nearly 2% of the total fuel cost. The percentage rises sharply to10% of the total fuel costs when the credit expense reaches $19.5 billion in 2030 if nobiofuel is used by the avia on industry. This rapid increase is driven by a combina onof avia on industry growth, increase in EUA prices and an increase in auc oned EUAs.

In other words, assuming that fuel cost accounts for 35% of airlines opera ng costs,the carbon credit expense in 2030, without using biofuel, would be equivalent to ap-proximately 3.6% of total opera ng cost.

There is a possibility that the spending increase will be even sharper than we es mate

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Table. 5 – Cost implica on and bene t associated with EU ETS compliance

Table. 6 – Biofuel price premium in US Dollar per gallon

*Total opera ng cost is calculated based on the assump on that total fuel expense account for 35% of the total operat-

ing cost. [Source: Boeing, IATA]

EUA price($/tonnes)

Biofuel pricepremium ($/gal)

Projected jet fuel price ($/gal)

Percentage price premium

2012 $21.95 0.21 3.32 6.33%

2020 $58.53 0.56 3.45 16.23% 2030 $58.53 0.56 4.88 11.48%

Table. 4 – Fuel consump on and CO 2 emissions implica ons of biofuel consump on for EU27 av ia on

2010 2012 2020 2020 2030 2030 2030

Scenario s Nobiofuel

w/biofuel

Nobiofuel

w/biofuel

Carbon neutralgrowth from 2020)

- - - 15 - 30 40.2

EUA expense ($ bn) $1.34 $9.56 $7.51 $19.48 $13.64 $11.65

Avoided EUA expense ($bn)

- - - $2.06 - $5.84 $7.83

Total (maximum)expense on fuel ($ bn)

$59.91 $65.23 $94.04 $94.04 $189.25 $189.25 $189.25

EUA expense vs total0.72% 3.56% 2.79% 3.60% 2.52% 2.15% -

2010 2012 2020 2020 2030 2030 2030Scenario s No

biofuelw/

biofuelNo

biofuelw/

biofuelCarbon neutral

growth from 2020)

- - - 15 - 30 40.2

Total jet fuel 18.10 19.23 24.47 24.47 34.78 34.78 34.78

gal)- - - 3.67 - 10.43 13.98

Total CO 2 emissions (Mt) 173.22 183.98 234.13 199.01 332.81 232.97 199.01

CO2 emissions avoided bybiofuel (Mt)

- - - 35.12 - 99.84 133.80




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between 2012 and 2020 because it is a possibility that auc-oned EUAs may likely reach 100% of the emissions cap by

2020, from 15% in 2012.

One of the solu ons to mi gate the nancial pressure of theEU ETS is to use avia on biofuel. Regarded as a carbon neu-tral fuel, airline operators do not have to buy EUAs for biofuelcombus on. Assuming 15% and 30% consump on in 2020and 2030 respec vely, we es mate that biofuel applica oncan contribute to poten al saving of $2.1 billion in 2020 and$5.8 billion in 2030 on carbon credits. This would only be trueif bio jet fuels were the same price as tradi onal jet fuel.

Currently, second-genera on biofuels are very expensive toproduce, but with the price expected to come down as tech-nology and produc on volumes improve. Given that biofuelwould avoid the nancial carbon costs associated with tra-di onal jet fuel, airlines would be willing to pay a price pre-mium at least up to the fuels associated carbon cost savings.

The price premium of biofuel varies depending on the priceof EUAs. Based on the current EU ETS price for carbon in 2012of €15 and 2009 average jet fuel price of $1.69 per gallon,every gallon of jet fuel burned would incur carbon costs of anaddi onal $0.21, which is equivalent to a premium of 12.4%.Table. 6 summarises the price premium of avia on biofuelcalculated using our main assump ons on EUAs and project-

ed conven onal jet fuel prices. Note that, an increase in jetfuel prices or a decrease in biofuel prices would cause a de-crease in the percentage price premium of avia on biofuel.However, only an increase in jet fuel prices would create anincen ve to develop and adopt avia on biofuel.

2.3 Biofuel and carbon-neutral growth

As no binding commitments were made in the Copenha-gen climate talks, there is no clear prospec ve for a globalemission trading system for avia on. Despite this, member

airlines of the Interna onal Air Transport Associa on (IATA)have commi ed to aggressive goals on emissions reduc on.In June 2009, the IATA pledges to achieve carbon neutralgrowth from 2020 and reduce carbon emissions 50% by 2050compared to 2005 levels. The IATA has indicated that it wouldachieve this goal through e ciency improvements, biofueluse and emissions o sets. If emission o set credits werecheap enough, the industry could avoid actually reducing itsemissions, as discussed later in this sec on.

11

Credit Co st ($ bn)

Biofuel Cost ($ bn)

E x p e n s e

( $ b n

) Jet Fuel Cost ($ bn)

$200

$160

$120

$80

$40

$0

2 0 2 0 ( n o b i o f u e l ) 2 0 1 2

2 0 1 0

2 0 2 0 ( 1 5 % b i o f u e

l )

2 0 3 0 ( n o b i o f u e l )

2 0 3 0 ( 3 0 % b i o f u e

l )

2 0 3 0 ( C n e u t r a l b i o f u e

l )

Figure. 7 - Projec on of 2010 - 2030 jet fuel consump on of EU27 avia on

Figure. 9 - Fuel and carbon credit expense for EU27 avia on

Figure. 8 - EU27 avia on CO2

emission and carbon credit implica-ons

*Grey sec on ( gure. 7) represents the amount of jet fuel whoseemissions would need to be o set to achieve the IATA target of carbon-neutral growth from 2020.

Other Assump ons

• Projec on of jet fuel consump on: 4.1% annual increase [Boe-ing Avia on outlook 2009-2028]

• Fuel e ciency improvement: 2000 – 2010 = 1.3%; 2010 – 2020= 1.0%; 2020 – 2030 = 0.5% [es ma on used by DEFRA]

• Prjec on from EU27 avia on emission 2006 [Source: EuropeanCommission]

40

30

20

10

0

2 0 1 0 2 0 1 2

2 0 2 0 2 0 3 0

Biofuel

C O e m i s s i o n

( M t )

350

280

210

140

70

0

Paid credits (w biofuel)

Paid credits (w/o biofuel)

Free cr edits

2 0 2 0 ( n o b i o f u e l ) 2 0 1 2 2 0 1 0

2 0 2 0 ( 1 5 % b i o f u e l )

2 0 3 0 ( n o b i o f u e l )

2 0 3 0 ( 3 0 % b i o f u e l )




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2.3.1 Outlook of global aviation CO 2 emissions

According to the es mates generated by he FAST model (UK DEFRA’s Global Atmo-sphere Division), global CO

2emissions from avia on will reach 860 Mt in 2020 and

will further rise to 1,172 – 1420 Mt in 2030 (see footnote of table. 8). This would beequivalent to consump on of 89.9 billion gallons of jet fuel in 2020, and 122.5 – 148.4billion gallons in 2030.

With the same assump on that avia on biofuel consump on will be 15% in 2020 and30% in 2030, the global avia on industry will consume a total of approximately 13.5

billion gallons of biofuel in 2020 and 36.8 – 44.5 billion gallon in 2030. This would leadto a reduc on of 129 Mt CO

2emissions in 2020 and 352 – 426 Mt in 2030.

2.3.2 How much biofuel does the aviation industry need in order toachieve carbon neutral growth from 2020?

EUIf the commitment of carbon neutral growth from 2020 is achieved en rely by avia-

on biofuel u liza on, the level of biofuel penetra on needs to be even higher thanAir Transport Ac on Group (ATAG)’s targets. Assuming that avia on CO

2emissions will

be capped at 2020 levels, we es mate that the EU avia on industry alone will require

around 14 billion gallons of biofuel in 2030 in order to achieve carbon neutral growth

Low High

2010 2020 2020 2030 2030 2030 2030

Biofuel - - 15 - 30 - 30

(bn gallon) 61.03 89.88 89.88 122.48 122.48 148.40 148.40

gallon) - - 13.48 - 36.75 - 44.52

Total CO 2 emissions (Mt ) 584 860 731 1172 820.4 1420 994

CO2 emissions avoided bybiofuel (Mt )

- - 129.00 - 351.60 - 426.00

Figure. 10 - Projec on of 2010 - 2030 jet fuel consump onof global avia on industry

Figure. 11 - Global CO 2 emission and poten al emis -sion abatement by using biofuel

Table. 7 – Fuel consump on and CO 2 emissions implica ons of biofuel consump on for global avia on industry

2010 2020(15% biofuel)

2030 Low(30% biofuel)


0

40

80

120

16 0

Biofuel

2010 2020(15% biofuel)

2030 Low(30% biofuel)


1600

1200

800

400

0

Avoided CO emission

C O e m i s s i o n

( M t )




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solely on biofuel. That would be 8.8 billion gallons more than we es mate with a biofu-el market penetra on of 30%, and will be equivalent to 40% of total fuel consump on.

GlobalWe es mate that the en re industry will need to use 46-72 billion gallons of biofuelin 2030 globally in order to achieve the carbon neutral growth target en rely withbiofuel. That is equivalent to about 38-49% of total jet fuel consump on in 2030. Thislevel of biofuel consump on in the avia on industry is very unlikely to happen in 2020or 2030 due to current biofuel produc on constraints.

2.4 Global emissions trading for aviation

Accoun ng for 2-3% of global CO2

emissions, avia on is a signi cant contributor to an-thropogenic global warming. This percentage is likely to increase due to the growth of avia on industry and e ciency improvements of other sectors. EQ 2 believes there willbe a signi cant possibility that avia on will be included into a global emission tradingmechanism.

In this sec on, we es mate the emissions and cost implica ons if the en re global avia-on industry is to be included into an emission trading system. Most of the assump-ons for this es ma on will remain the same as the ones listed above. Addi onal or

altered assump ons are listed below table 8.

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Table. 8 – Cost implica on and bene t associated with EU ETS compliance*Total opera ng cost is calculated based on the assump on that total fuel expense account for 35% of the total opera ngcost. [Source: Boeing, IATA]

Other Assump ons

• Assumed emission cap used is 457.9 Mt, 95% of 2005 level • CO

2emission forecasts are taken from “Alloca on of interna onal avia on emissions from scheduled air tra c - future

cases, 2005 to 2050 ( nal report to DEFRA global atmosphere division)” and the 2030 High (FAST-A1) and Low (FAST-B2)emission forecasts is generated by the FAST model. FAST model is a global avia on inventory model that general projec-

on using external data on projec ons of revenue passenger km (RPK).

2020 2020 2030 2030 2030 2030 2030 2030

Scenario -15%

biofuel-

30%biofuel

Biofuelcarbonneutral

-30%

biofuel

Biofuelcarbonneutral

Biofuel- 15% - 30% 38% - 30% 49%

Total (maximum)expense on fuel &EUA ($ bn)

$337.85 $337.85 $653.04 $653.04 $653.04 $794.06 $794.06 $794.06

EUA expense ($ bn)

$27.55 $20.00 $86.11 $47.43 $37.60 $113.39 $66.53 $37.60

Total biofuel cost ($ bn)*

- $54.09 - $218.03 $273.47 - $264.16 $427.25

EUA expense : total fuel cost (%)

8.16% 5.92% 13.19% 7.26% 5.76% 14.28% 8.38% 4.73%

EUA expense :

expense (%)2.85% 2.07% 4.61% 2.54% 2.02% 5.00% 2.93% 1.66%

Low High




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Without using any biofuel, we es mate that carbon expenses will be $27.6 billion at15% auc oned credit level (2020), and $86.1 - $113.4 billion at 50% auc oned credit

level (2030) for the global avia on industry. By using biofuel, the expense on carboncredits can be greatly reduced, with the corresponding expense on biofuel increasing if the avia on industry needs to pay a premium price for biofuel.

2.5 Aviation biofuel as a competitor to conventional jet fuel

Reaching 15% and 30% of u lisa on, avia on biofuel will be a direct compe tor toconven onal jet fuel and is likely to directly a ect the price of conven onal jet fuel.According to Hileman et al. (2009), each addi onal 1 million barrels of alterna ve fuelsupply is es mated to cause a reduc on of 0.6% to 1.6% of world oil prices, and this is

14

Can the cost of carbon credit be passed onto consumers?

One of the main concerns of the avia on industry is whether they can pass their car-bon credit expense to customers through cket prices. In order to maximise pro t-ability, the avia on industry would try to pass all of its carbon credit expense ontocustomers. They may even a empt to increase prices for the freely allocated creditsand reap ‘windfall pro ts’, as done by the electricity sector in the rst phase of theEU ETS. However, the airline’s ability of passing through the credit cost is limited by anumber of factors.

First, the propor on of cost they can pass through is determined by type of journeyand the cost sensi vity of the customer. For leisure journey, airlines are not likely tobe able to pass the cost through to the customer as they are very cost sensi ve andthey look for the cheapest o er available. On the other hand, airlines are more likelyto pass the cost onto business trip ckets and freight transporta on. These customergroups are less price sensi ve and airline can pass more than 100% of the credit priceto them 1.

Another factors that determine the propor on of pass through is compe on. An Enrst& Young report, suggests that at uncongested airports, pass-through rate lies between50% to 100% of the total credit cost. While at congested airports with high compe -

on, no carbon credit expenses can be passed through to consumers. As the demandfor air transport is an cipated to increase, the level of compe on will only increaseand that would further curtail the market power of airlines.

However, from a quan ta ve perspec ve, the poten al cket price increase associat-ed with carbon credit price is limited. According to the EU’s es ma on 2, even if airlinesfully pass on these extra costs to customers, by 2020 the cket price for a return ightwithin the EU could rise by between €1.80 and €9.While the industry may be able to pass along some of its carbon costs to consum-ers (even more than its own costs on certain segments, ini ally), we believe that theavia on industry will s ll have to absorb signi cant costs from paying for its carbonemissions.

Footnote:

1. Department for Environment, Food and Rural A airs (2007), A Study to Es mate Ticket PriceChanges for Avia on in the EU ETS: A Report to Defra and DfT

2. Ernst & Young, & York Avia on (2007), Analysis of the EU Proposal to Include Avia on Ac vi-es in the Emissions Trading Scheme




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independent on fuel produc on loca on and fuel consump on purpose. Based on thesame penetra on assump on, we es mate that global avia on biofuel produc on will

be 0.88 million barrels per day in 2020 and about 2.40 to 2.90 million barrels per day in2030. That implies the poten al downward price pressure of avia on biofuel on worldoil prices will be about 0.53% to 4.64%. Therefore, there is a fair possibility that futureavia on biofuel prices likely could be lower than our es ma on.

2.6 Biofuel vs. Carbon offsetting

Our es mate for the price premium of Bio-SPK is based solely on industry fuel expens-es and carbon prices. However, in reality, the price premium of avia on biofuel is notdetermined en rely by the price of carbon credits. The avia on industry can achieveits goal of carbon neutral growth through carbon o se ng. As noted, if carbon o set

credits are cheap enough, the nancial incen ves for using avia on biofuel would benega vely a ected. In reality, carbon o sets have always been cheaper than EUAs(par cularly depending on the quality of the carbon o set), which in theory wouldexert more downward pressure on the price of avia on biofuel. We would not recommend using carbon o se ng as a method to mi gate a com-pany’s environmental footprint because this would not would not reduce its climaterisk exposure or improve sustainability in the long term. Moreover, it is suggested that40% of the addi onality (o se ng programs that actually reduce CO

2emissions on

top of business-as-usual scenario) of registered o se ng program are “unlikely” or“ques onable” 1. Since the public is sensi ve to “greenwash” ac ons, airlines shouldnot put their brand reputa on at stake. Most importantly, the avia on industry shouldput its focus and investment on developing a sustainable business model, rather thanshort-term treatments. The failure to develop sustainable business models could leadto dras c consequences and lessons should be learnt from the recent decline in theauto industry.

3. Bio-SPKs – the future of aviation fuel?

In 2008, venture capitalists invested a total of $680.2 million into US biofuel develop-ers, including $175.9 million in microalgae. Throughout 2009, airlines have been do-ing test ights on di erent bio-SPKs, and Boeing is aiming to obtain fuel approval andcer ca on in 2010. In December 2009, a core group of Air Transport Associa on (ATA)airlines, comprising 15 airlines from the US, Canada, Germany and Mexico signed amemoranda of understanding with AltAir Fuels LLC and Rentech, Inc for a future supplyof alterna ve avia on fuel. While Rentech will be supplying synthe c jet fuel derivedfrom coal or petroleum coke, AltAir Fuels will supply approximately 75 million gallonsper year of avia on biofuel derived from Camelina oils or comparable feedstock.

This ac on by the avia on industry demonstrates that the recent biofuel test ights arelikely more than just marke ng stunts. All of this evidence points towards the prolifera-

on of avia on biofuel and leads us to the $64 million ques on: Is biofuel the futureof avia on fuel? This is not an easy ques on to answer, and it is certainly worth muchmore than $64 million.

We have examined the incen ves and costs associated with the development of bio-

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1 Is the CDM Ful lling its Environmental and Sustainable Development Objec ves? An Evalua on of the CDMand op ons for improvement, Schneider, L. (2007)




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fuel. We have iden ed that the biggest incen ve for the development of avia onbiofuel is avia on industry’s dependence on crude oil. Such dependence makes theindustry passive and vulnerable to oil price uctua on. A “drop in” fuel derived fromsustainable source is hugely desirable and will bring about a paradigm shi to the fuelconsump on habit of the avia on industry.

Policies and compliance costs create direct nancial incen ves for the developmentof avia on biofuel. Without any biofuel consump on, we es mated that the carboncredit expense will cost the EU avia on industry $9.56 billion in 2020. The expensewill rise sharply to about $19.5 billion in 2030, which is equivalent to 11% of the totalfuel cost and 3.6% of total opera ng cost. Such nancial pressure in an industry withvery narrow to non-existent pro t margins clearly demonstrates how compliance costscan have a potent e ect on airlines’ energy policies. The same theory can be appliedto the global avia on industry. The Interna onal Energy Agency ’s ndings (Figure. 10)suggest that if the world is to commit to stabilise CO

2-e concentra on at 450 ppm, the

demand for second genera on biofuels, including Bio-SPKs, would increase more than6 fold.

Business Sustainability

Ul mately, the development of Bio-SPKs is all about sustainability.

Financially, Bio-SPKs poten ally help aircra operator to ease their opera onal burdenby avoiding carbon allowance expenses. However, most important of all, Bio-SPKs pro-vide a chance for the avia on industry to shi into a truly sustainable business modelby decoupling from the reliance on crude oil, thus depar ng from the passive posi onof being controlled by fossil fuel prices.

Environmentally, as a signi cant GHG emi er, the avia on industry cannot isolate itself from the ght against climate change. While aircra fuel e ciency has increased over80% from the 1960s through to the 1980s, mainly due to the development of wide-body and mid-range aircra s, e ciency improvements have dropped to less than onepercent annually since. Under the aspira onal aim of energy-related emissions to peakby 2020 and stabilising global CO

2-e at 450 ppm, changing to renewable fuel is the only

op on that the avia on industry can adopt to contribute to this ba le against anthro-pogenic climate change.

Figure. 12 - Biofuels demand by type and scenarioSource: World Energy Outlook 2009, Intera onal Energy Agency (2009)




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4. References

Air Transport Ac on Group (2009), Beginner’s Guide to Avia on Biofuel

The Boeing Company (2009), Current Market Outlook 2009 – 2028

Biofuelwatch (2009), Biofuels for Avia on: More Future Land Grabbing and Deforesta-on for Agrofuels to Jus fy Today’s Airport Expansion? h p://www.aef.org.uk/down-

loads/Avia on_biofuels_Biofuelwatch_March2009.pdf

Cobbs, R. & Wolf, A. (2004), Jet Fuel Hedging Strategies: Op ons Available for Airlinesand a Survey of Industry Prac ces h p://www.kellogg.northwestern.edu/research/

mrc/papers/jet_fuel.pdf

Commi ee on Climate Change (2009), Mee ng the UK Avia on Target – Op ons forReduc ng Emissions to 2050

Dagge , D.L., Hendricks, R.C., Walther, R. & Corporan, E. (2008), Alterna ve Fuels, forUse in Commercial Aircra , NASA

Department for Environment, Food and Rural A airs (2007), A Study to Es mate TicketPrice Changes for Avia on in the EU ETS: A Report to Defra and DfT

Department for Environment, Food and Rural A airs (2008), A study to es mate theimpacts of emissions trading on pro ts in avia on

Ernst & Young, & York Avia on (2007), Analysis of the EU Proposal to Include Avia onAc vi es in the Emissions Trading Scheme

EUROPA (2009), Avia on and climate change – Consolidated Version of the EU ETSDirec ve 2003/87/EC, European Union h p://ec.europa.eu/environment/climat/avia-

on/index_en.htm

Hendricks, R.C. (2008), Alternate-Fueled Flight: Halophytes, Algae, Bio-, and Synthe cFuels, Na onal Aeronau cs and Space Administra on

Hileman, J.I., Or z, D.S, Brown, N., Maurice, L. & Rumizen, M. (2008), The Feasibil-ity and Poten al Environmental Bene ts of Alterna ve Fuels for Commercial Avia on,

MIT, RAND Corpora on & Federal Avia on Administra on

Hileman, J.I., Or z, D.S., Bar s, J.T., Wong, H.M., Donohoo, P.E., Weiss, M.A. & Waitz,I.A. (2009), Technical Report: Near-Term Feasibility of Alterna ve Jet Fuels, Partnershipfor AiR Transporta on Noise and Emission Reduc on & RAND Infrastructure, Safety,and Environment

Interna onal Air Transport Associa on (2008), IATA 2008 Report on Alterna ve Fuels

Interna onal Air Transport Associa on (2008), IATA Economic Brie ng: Outlook for Oiland Jet Fuel Prices, IATA

17




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Interna onal Civil Avia on Organiza on, Pu ng Avia on’s Emissions in Context h p://www.icao.int/Act_Global/Avia on_Emissions-in-Context.pdf

Interna onal Energy Agency (2009), World Energy Outlook 2009

Kanellos, M. (2009), Algae Biodisesl: It’s $33 a Gallon, Greentech media h p://www.greentechmedia.com/ar cles/read/algae-biodiesel-its-33-a-gallon-5652/

Kinder, J.D. & Rahmes, T. (2009), Evalua on of Bio-Derived Synthe c Para nic Kero-sene (Bio-SPK), Sustainable Biofuels Research & Technology Program, The Boeing Com-pany

Nygren, E. (2008), Avia on Fuels and Peak Oil, Uppsala Universitet h p://www.tsl.

uu.se/uhdsg/Publica ons/Avia onfuels.pdf

Oilgae Blog (2009), Biofuels Digest released summary of US venture capital investmentin biofuels h p://www.oilgae.com/blog/2009/01/biofuels-digest-released-summary-of-us.html

Owen, B. & Lee, D.S. (2006), Study on the Alloca on of Emissions from Interna onalAvia on to the UK Inventory – CPEG7: Final Report to DEFRA Global Atmosphere Divi-sion: Alloca on of Interna onal Avia on Emissions from Scheduled Air Tra c –FutureCases, 2005 to 2050 (Report 3 of 3), Manchester Metropolitan University

Pa l, V., Tran, K.Q. & Giselrod, H.R. (2008), Towards Sustainable Produc on of Biofuelsfrom Microalgae, Int. J. Mol. Sci., Vol. 9, pp. 1188-1195

Rutherford, D. (2009), Stagna on in Aircra E ciency Improvement Highlights Needfor Comprehensive Carbon Dioxide Standards, The Interna onal Council on CleanTransporta on

Sims, R., Taylor, M., Saddler, J. & Mabee, W. (2008), From 1st- to 2nd-Genera on Bio-fuel Technologies: An Overview of Current Industry and RD&D ac vi es, Interna onalEnergy Agency & Organisa on for Economic Co-opera on and Development

Wallace, L. & Macintosh, A. (2008) Interna onal Avia on Emissions to 2025: Can Emis-sions be Stabilised without Restric ng demand?, Centre for Climate Law and Policy,The Australian Na onal University

Cover page image: Renewable Fuel and Power, LLC

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The contents of this report may be used by anyone providing acknowledgement is given to EQ 2. The information herein hasbeen obtained from sources, which the authors and publishers believe to be reliable, but the authors and publishers do notguarantee its accuracy or completeness. The authors and publishers make no representation or warranty, express or implied,concerning the fairness, accuracy, or completeness of the information and opinions contained herein. All opinions expressed

herein are based on the authors and publishers judgment at the time of this report and are subject to change without notice

© 2010 EQ 2.

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