While generous tax credits have certainly helped boost wind and solar power, so have mandates: About half of the total growth in clean electricity in the United States since 2000 is linked to state laws requiring that Electric utilities get some of their electricity from renewable sources, according to a recent study. report from the Lawrence Berkeley National Laboratory.
Mr. Kirby says United’s attempts to grow the market are more important than just counting its SAF usage. The centerpiece of these efforts is a US$75 million (S$103 million) investment in a Sustainable Flight Fund, which has invested in half a dozen clean fuel startups.
This certainly dwarfs the investments of other major US airlines.
But $75 million is less than 1 percent of United’s annual jet fuel bill. And that amount is unlikely to make a difference for SAF developers, who often need $500 million to build a factory.
To put this in broader perspective, McKinsey & Co estimates that the world needs to invest around $175 billion a year – mainly in the development of new sustainable fuels – if airlines are to meet their mid-century climate goals.
Critics say United and other U.S. airlines, by balking at raising prices for cleaner fuels and lobbying against mandates, are standing in the way of meaningful progress on SAF.
“It’s disappointing to see this kind of greenwashing from United Airlines and Airlines for America,” said Mr. Nik Pavlenko, program manager for fuels at the non-profit International Council on Clean Transportation.
A decade ago, United took a bolder approach to sustainable jet fuel. Part of the airline’s impact is visible at a century-old refinery in Paramount, a suburb of 50,000 just outside Los Angeles.
On a scorching August afternoon, when the nearby San Gabriel Mountains are shrouded in mist, a dense network of steel pipes, tubes, scaffolding and towers teems with life.
This refinery, owned by Boston-based biofuel producer World Energy, was the sole manufacturer of SAF in the United States for the past seven years. Its first domestic competitor went live in May.
Instead of oil, the refinery is powered by black rail cars filled with animal fat the consistency of Crisco. Shipments come from slaughterhouses in the United States, Canada and Australia.
Most of the grease is turned into renewable diesel for trucks. Each year, the refinery also produces about 8 million gallons of jet fuel for use at Los Angeles International Airport and other nearby facilities.
World Energy’s SAF produces less than half the greenhouse gases of conventional options. And it exists, in part thanks to United’s help. In 2013, the airline signed an unprecedented agreement with the refinery.
Details of the deal have never been publicly disclosed, but three people familiar with the matter say the airline agreed to pay a slight premium over conventional jet fuel for a three-year supply when the refinery was eventually commissioned. in service.
More importantly, it included a risky “hot idle clause,” which meant United would continue to pay the biofuel producer even if it had to stop delivering due to high raw material costs or other reasons.
Guaranteed cash flow made the project more attractive to donors. United also shared profits from the refinery. If the fuel could command a higher price than the airline would pay (which it ultimately did), the producer could sell it elsewhere — and share the premiums with United.
“United played an absolutely crucial role in launching SAF,” said Mr. Gene Gebolys, CEO of World Energy, who declined to discuss the terms of the deal. “They moved when others didn’t.”
This is exactly the type of deal most airlines are unwilling to make today.
When United signed a second contract with World Energy in 2019, the airline announced it would purchase up to 10 million gallons over the next two years.
But this time, the company assumed none of the risks associated with the refinery and ultimately purchased less than 20 percent of the announced amount. (United officials noted the huge drop in fuel consumption during the Covid-19 pandemic.)
United and other airlines began touting huge deals for the future supply of sustainable fuels, even when their plans lacked substance.
Two years ago, for example, United unveiled what it called “the largest publicly announced SAF deal in aviation history” by committing to purchase 1.5 billion gallons over two decades. to Alder Renewables, a clean fuels startup.
Alder rebranded her company in July to introduce a broader range of renewable products she hopes to manufacture beyond just SAF; and Mr Darren Fuller, the company’s chief commercial officer, downplayed the United deal in an interview, calling it “a little hangover from our previous management”.
(After Bloomberg Green requested comment on the matter from United, Alder officials sent a written statement with a different tone saying they were excited to eventually provide sustainable fuel to the airline.)
Many airlines have struck equally frothy deals.
JetBlue Airways Corporation, for example, entered into an agreement two years ago to purchase 670 million gallons of SAF at a price competitive with traditional jet fuel. The airline says it is well ahead of its 2030 targets.
“We are well past the point of vague climate commitments,” said Robin Hayes, CEO of JetBlue.
This miraculous supply of affordable SAF was supposed to start arriving this year.
But JetBlue’s deal was for a startup that had just a few employees and no facilities to produce fuel. The airline quietly pulled the plug a year later, profoundly mentioning in an unrelated press release that the deal had been “terminated.” JetBlue did not respond to multiple interview requests.
Persuading airlines to pay the higher cost of SAF remains a major challenge.
Aemetis is trying to build a 90-million-gallon-a-year plant in a former Army munitions factory about 100 miles east of San Francisco. It plans to use waste from nearby almond orchards to help make low-carbon fuels, which could be used to power trucks or planes.
But Aemetis needs to raise $500 million to build the plant, which it calls Carbon Zero 1. It’s a tall order, even for publicly traded Aemetis, which generates about $250 million a year, in mainly selling biofuels for road transport.
To show investors that there is demand for low-carbon jet fuel, Aemetis two years ago invited airlines to negotiate the plant’s future fuel supply.
Despite all the airlines’ promises to use large quantities of SAF, discussions have been difficult. Airlines are notoriously tough on fuel, which accounts for about a third of their operating costs.
“There is no desire to be a penny per gallon less competitive,” says Eric McAfee, CEO of Aemetis.
The biofuel company ultimately persuaded at least eight airlines, including American Airlines, Qantas and Japan Airlines, to pay a small premium – 10 percent above the future price of conventional jet fuel – for about half of the expected production of factory.
Visibly absent from the wave of Aemetis announcements: United. Negotiations with the company failed, Mr. McAfee says, because United did not want to pay a higher price for the cleaner fuel. “They would only buy it if it was at or below the price of conventional jet fuel.”
United officials said in a statement that the airline had done its due diligence with the biofuel company and “determined that this was not the right solution for us.”
All this raises a fundamental question: who should pay the bill for the decarbonization of air transport?
United’s chief says the public should not expect companies to pay extra for climate-friendly products.
“The straightforward answer is that businesses, individuals and governments will not buy green products unless they are cost competitive. That’s not the case,” Mr. Kirby said. “This is coming from someone who really wants to make a difference in the fight against climate change.”
But if airlines are unwilling to pay more for cleaner fuels, they pass the blame onto the public, mainly through government incentives. In effect, this would lead all taxpayers to subsidize the richest, those who take the most flights.
In the United States, adults in households earning more than US$150,000 fly five times more often than those in households earning less than US$50,000, according to a 2018 survey by Airlines for America.
