Qantas Investigates Sugar Cane as Fuel for Domestic Fleet

The Australian – February 2011

Qantas is joining forces with another US biofuel company to investigate the possibility of using Queensland sugar cane to help power its domestic fleet. Solazyme, which counts Richard Branson and Unilever among its investors, is the second alternative fuel company that Qantas has engaged to undertake a feasibility study on setting up shop in Australia. The other study with US-based Solena is looking at using urban rubbish to produce fuel using technology also about to be installed in London to supply British Airways.

Qantas hopes both technologies will prove viable for Australia and allow it to replace 2-3 per cent of its domestic fuel burn with biofuels by 2015. The airline believes it will take three years for the companies to complete the feasibility study, site location, planning and construction. Qantas chief executive Alan Joyce said the two partnerships represented the best technology in the field. “And we’re hopeful that after we go through the evaluations we’ll commit to both and have both of them producing a reasonable amount of our fuel,” he said.

Qantas is luring the companies with a promise of long-term contracts, but Mr Joyce said the airline was also looking at equity stakes in the Australian ventures. He is also keen to get federal and state governments involved. “These things are good employers, they’re green jobs and they’re where the economy should be going,” he said. “So a lot of our states are actually very interested in getting into this.”

Fuel produced by Solena’s process, based on the German Fischer-Tropsch (F-T) technology, has already been certified for use as a drop-in product that can be used in existing jet engines or mixed with conventional fuel. The Solazyme process, which produces oil using single cell algae as a biocatalyst in a large-scale industrial fermentation process, is expected to get the green light later this year. Solazyme’s oils can be tailored for different uses but the company is heavily focused on products that can be refined to make sustainable, low-carbon diesel and aviation fuel.

It already has a contract with the US Navy to supply both types of fuels and sees a deal with Qantas as a chance to use Australia as a platform to commercialise the process. “What we do is take microbes that we’ve optimised to produce oil and we put those microbes in big stainless steel tanks and we feed those microbes different types of plant sugars,” Solazyme chief executive Jonathan Wolfson said. “And what the microbes do is they eat the plant sugars and they make oils. We then extract the oils from those microbes and we refine the oils into fuels.”

Solazyme is talking to Queensland sugar producers and has had a visit from Premier Anna Bligh. It sees Australia as an attractive place to commercialise its technology because of its educated workforce, the demand for sustainable alternatives and the forward thinking of governments and companies such as Qantas. The process is not limited to sugar cane — it can use a wide variety of cellulosic material, such as grasses and forest residue — but there are difficulties economically harvesting many of these. The advantage of sugar cane is the logistics are already in place and a plant could be set up near a sugar mill to process mulch.

How many plants can be built, and where, will depend on the business relations that can be forged with mills, refiners and Qantas, Mr Wolfson said. “So we’re still developing the exact case of what size the plant would be and what the exact location would be,” he said. “But we certainly know what the contours of the relationship look like — who the parties are, what the feedstock is, the relative proximity to a sugar cane mill, what the fuels are and who’s going to use them.” As to price, Solazyme is looking at the crude oil equivalent to $80 a barrel for the input oil before it is refined to jet fuel.

The Solena joint venture would use high temperature gasification and the F-T system already in use to produce aviation fuel in other parts of the world from sources such as coal and natural gas. Unlike synthetic fuels, however, biofuels produced by the F-T process from waste have a lower carbon footprint over their production lifecycle than traditional jet fuel.

A similar plant being built with British Airways in London, due to come on line in 2014, will convert up to 500,000 tonnes of waste a year into 73 million litres of green jet fuel — enough to power 2 per cent of BA’s Heathrow fleet. The plant will use scraps and other household material, such as grass and tree cuttings, and agricultural and industrial waste as a feedstock for the fuel. Solena estimates the process offers lifecycle greenhouse gas savings of up to 95 per cent compared with fossil-fuel derived kerosene.

It says the annual CO2 savings from the fuel it produces will be the equivalent of taking 48,000 cars off the road. Solena chief executive Robert Do told The Australian this week the company was still evaluating locations in Australia but Sydney made the most sense from a hub standpoint. Dr Do said the site would be determined by factors such as planning requirements and the availability of feedstock. He said the London project had originally begun with 60 sites, which had been narrowed down to 12 and then six before it worked with BA and the City of London to determine the final location.

He said a plant would employ up to 2000 people in the two-year construction phase and about 200 permanent employees to run operations. In addition to its discussions with Qantas, Solena would be talking to companies about feedstock. Rather than collect the rubbish itself, it would work with waste companies to divert rubbish that would normally go to landfill. “We are actually an added value to the waste management side because we are avoiding the landfill,” Dr Do said. The company’s high temperature gasification system allows it to be flexible in terms of feedstock and Dr Do said it could essentially handle any kind of organic material, including agricultural and forestry byproducts, but its main focus in Sydney would be household waste.

“We really don’t have much of a restriction on what we can handle but on the other hand we do need it to have some calorific content because we’re converting it into fuel,” he said. Dr Do also said the company expected to be able to sell the fuel for a price that was competitive with current aviation fuel prices and that it would offer a stability to airlines that was not available from volatile traditional sources.

“The key for us is we have a fixed cost of production, a fixed cost of capital and, we believe, a fixed cost of feedstock,” he said. “So that price that we’ll be selling to market competitiveness will be something we will fix over a long period of time and won’t be subject to the normal volatility of the oil market.” There was also the possibility of building additional plants to supply a greater percentage of Qantas’s fuel needs. “Each plant would generate 50,000 tonnes (of fuel) so if there’s availability and a capacity to build a second one, perhaps in another hub, then we’ll be able to add to that percentage,” Dr Do said.