Report: price is the renewable jet fuel challenge

By Anna Simet | May 14, 2014

While U.S. government branches are supporting efforts to achieve federal renewable and alternative fuel goals, difficulties in obtaining private investment, policy uncertainty and high feedstock costs are resulting in prohibitive fuel costs.

According to a new report from the Government Accountability Office, which authored the report to provide information on the progress and challenges to developing and using alternative jet fuel in the U.S., there are currently no alternative jet fuels that are cost-competitive with traditional jet fuel. Based on numerous stakeholder interviews, the consensus as to why that’s the case is development costs are high, federal regulations and policies such as the renewable fuel standard (RFS) are uncertain, and securing or growing and transporting feedstocks are high, all reasons which make obtaining private investment difficult.

FAO recognized that the actual cost of alternative jet fuel varies depending on the feedstock, the production process used and fuel distribution and quantities produced. For example, of the two alternative jet-fuel production processes approved for use in commercial and military aircraft, Fischer-Tropsch and HEFA (Hydroprocessed Esters and Fatty Acids), the U.S. Department of Defense paid from $3 to $150 per gallon—$3 per gallon for 315,000 gallons of alternative fuel derived from natural gas using Fisher-Tropsch, and $150 per gallon for 1,500 gallons of algae-oil derived fuel using the HEFA process. The report later notes that while low-cost natural gas production can lower the cost of alternative fuel production in the U.S., jet fuel produced from nonrenewable sources does not meet the statutory definition of renewable biomass under the RFS, and therefore could not generate renewable identification numbers.

The report recognizes that the dollar amounts reported reflect purchases of small quantities of fuel for testing and approval activities, and that government officials and a fuel producer GAO interviewed said that the prices are higher than what they would be if the quantities were produced at commercial scale.

In addition, new potential alternative jet fuel production processes are current undergoing review by ASTM International for approval, which FAO says FAA officials told us may be approved by June 2014.

Input from stakeholders indicated that continued research and development efforts that target superior feedstock identification and conversion breakthroughs, as well as regulatory and policy certainty—specifically that the RFS will not be repealed and changes in annual mandated volumes will be minimal— and direct financial support from the government, including long-term purchase agreements,  would help the industry advance.