British Airways has pledged to halve its carbon emissions by 2050 from 2005 levels, and in that objective it has come up with a novel approach – partner in a venture that generates jet fuel from rubbish.
The UK flag carrier, owned by holding company International Airlines Group (LON:IAG), which also owns Irish flag carrier Aer Lingus and Spain's Iberia among other aviation assets, has submitted its plans for a commercial waste to aviation fuel facility to be built in Immingham, North East Lincolnshire, close to the Humber Estuary.
The venture - a first of its kind in Europe - is in collaboration with oil giant Royal Dutch Shell (LON:RDSB) and Altalto Immingham Limited, a subsidiary of London-listed renewable fuels smallcap firm Velocys (LON:VLS). British Airways said it would purchase jet fuel produced at the plant for use in its aircraft as part of its wider carbon reduction and sustainability strategy.
The idea is to take half a million tons of non-recyclable household and commercial solid waste per year, and break it down, via processes including thermochemical and catalytic production, thereby turning it into sustainable aviation biofuel.
Together with its project partners, British Airways said the move would reduce greenhouse gas emissions by 70% for every ton of conventional fossil fuel it replaces while offering "a lower emissions pathway" for processing U.K. waste compared to incinerators or landfills sites.
The foray, while not alien to Shell or Velocys, is a bold one for an airline with ownership of fuel refining plants being rare for the industry. With very different objectives pertaining to fuel hedging costs, Delta Airlines bought Trainer Refinery in Pennsylvania, U.S. in 2012 from Phillips 66, a move that wasn't really replicated across the aviation sector.
Furthermore, conjuring biofuel brings with it very different economics. There are relatively few suppliers in Europe at the moment because the cost of processing biofuel is around three times the price of cracking crude oil for fuels.Change is afoot though, with high hopes for longer-term cost reductions. Alex Cruz, CEO of British Airways, noted: "Sustainable fuels can be a game changer for aviation which will help power our aircraft for years to come.
"This development is an important step in the reduction of our carbon emissions and meeting the industry targets of carbon neutral growth from 2020, and a 50% in CO2 reduction by 2050 from 2005 levels. It also brings the U.K. another step closer to becoming a global leader in sustainable aviation fuels."
Among other forays, British Airways' rival Virgin Atlantic is partnering with LanzaTech to build an alcohol to jet fuel facility in the U.K., United Airlines has agreed to buy 10 million gallons of biofuel from World Energy over the next two financial years, and KLM has placed a ten-year order with SkyNRG. However, British Airways', and by extension IAG's, move appears to be the boldest in the sector yet.
