The Long Haul to
Alternative Aviation Fuels
Dr. Charles Cameron, Head of Technology, Downstream
BP Refining & Marketing
June 2012
Overview
• Aviation GHG and sustainability ambitions
• Biojet fuel technologies available today
• Potential future biojet technologies
• Fuel specs and processing steps
• Barriers to commercial deployment
• Policy challenges
• Selection criteria for long-haul frequent travellers
2
Aviation industry goals on sustainability
IATA Goals
1.5% pa efficiency to 2020
Carbon neutral growth from 2020
50% reduction in carbon by 2050
Source: International Air Transport Association (IATA)
3
Technical matters – biojet
Industry demands that jet fuel molecules are the same as fossil jet
– a tough target but several routes available:
Today: synthetic jet
• (Not FAME) – Fatty Acid Methyl Esters contain oxygen
and olefins
• Hydrogenated Vegetable Oil (HVO) – sustainable or not?
• Fischer-Tropsch (FT) Jet from coal or gas feedstocks
Long term…
• Biomass-to-jet via FT
• Algal Oils-to-jet via hydrogenation
• Sugar-to-jet via hydrogenation of diesel and hydro-isomerization
Green check mark indicates technically qualifies
4
Future routes to advanced middle distillates
from ‘sustainable’ sources
1.
•
•
•
HVO from sustainable feedstocks
Technology available today
Moderate capital costs when linked to a refinery (hydroprocessing)
High feedstock costs and availability are issues
Hydrogenated oils
2.
•
•
•
via FT (Synthetic Kerosene)
Technology available today
High capital costs for plant at scale: gasifier, air separation unit
Requires a large supply of low-value feedstock (waste wood)
Kerosene
3. Sugar-to-Diesel
• Technology not ready for demonstration (BP-Martek project)
• Heterotrophic micro-organisms produce lipids from sugar avoiding photosynthesis
• High feedstock cost an issue
4. Photosynthetic Algal oil production
• Technology not ready for demonstration
• High yields per hectare, but high engineering costs (EBI report, others) need for
very high surface areas for light exposure
• Multiple market hurdles: location, water, nutrients, carbon source, purification
Micro-organisms
Algae
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Sugar to diesel technology
Technology
•
Non photosynthetic conversion of sugars into oils for application in
transportation fuels (biodiesel, aviation fuels)
Steps
Source: BP Biofuels
•
Access cost effective and sustainable sugar juice extracted from sugar
or Ligno-cellulosic material
cane
•
Use proprietary heterotrophic micro-organism to convert (fermentation
pathway in “conventional” fermentation vessels) the sugars into lipids/oils
•
The lipids produced have profiles and/or properties similar to conventional
vegetable oils (rapeseed, soyabean oil), or tailored to specific applications
•
“Upgrade” the lipids/oils to FAME or hydrocarbons through existing chemical
or thermo-catalytic conversions for direct use in automotive or aviation
applications
6
Typical distillation ranges and carbon-number
ranges for fuels
A portion of diesel can be put into the jet pool and vice-versa
depending on market supply/demand/price economics
Source: RAND Technical Report TR554 “Near-Term Feasibility of Alternative Jet Fuels”, figure 3.1, 2009.
The motor-gasoline and jet-fuel data are from Speight (2002, p. 158, Table 7.1).
The diesel-fuel data are for number-2 diesel and were obtained from Chevron (1998).
NOTE: Jet fuel includes Jet A as well as other jet fuels, such as JP-8.
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The big issue for biojet
• All of the previous technologies can produce diesel and Increasing
kerosene
Price
• Bio-diesel molecules are easier to produce: the processes or
natural products preferentially produce diesel like molecules
• Bio-diesel to biojet conversion: additional cost and yield loss
• Biojet sales price will need to sustainably compete with biodiesel to enable the market to invest
− Short-term stimuli and uncertainty will not induce the
market to invest in capital intensive solutions
French metaphor: The principle “des vases communicants”
In relation to the market – arbitrage
product will pour into the market that offers the highest return
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How much will an airline (passenger) pay?
•
Aviation fuel prices track road
diesel prices, trading at a premium
or discount depending on regional
basis differentials
•
FAME biodiesel trades at a
premium to road diesel and HVO
trades above FAME
•
Feedstock constraints and
incremental processing costs drive
FAME/HVO prices
•
HVO pricing indicative but will be
higher than FAME due to lower
conversion efficiency, additional
processing and increasing demand
•
Carbon prices in EU ETS will not
cover biofuel premium
Indicative pricing, 2011
↑
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The challenge: overcome technology cost
hurdles to meet 5 Mb/d of demand by 2030…
Illustrative Cost of Supply Curve for 5 Mb/d biofuels in 2030
400
Total Production Costs ($/boe)
US/EU Wood
Biomass to liquids
300
150
Ligno-cellulosic
bagasse
100
Ligno-cellulosic
energy grasses
Brazil
sugarcane
Brazil other
sugarcane
Ligno-cellulosic
agri waste
200
100
US/EU veg
US/EU grains
oils
0
Sugarcane RoW
50
-100
Ethanol
0
0
1
2
3
Biodiese
l
4
Implied carbon price ($/te)
200
-200
5
6
Supply (Million Barrels of Oil Equivalent per day)
This 5 Mb/d case would require:
• land use of 101 M ha (61M ha in global grains and oil crops, and 40M ha in perennials including cane)
equivalent to 2% of the world’s total agricultural land, or an area roughly the size of Texas
• approx. 1,000 production sites based on today’s world-scale capacity
• a total capital invested of $500 - 700bn
Source: BP Biofuels, 2010
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Vegetable oil supply growth vs potential
biodiesel demand and sustainability concerns
Supply growth 2010-2020 [million tonnes]
Main producing
countries
Malaysia, Indonesia
CAGR = 2.3%
CAGR = 2.8%
Ukraine, Argentina
EU, China, Canada
US
Argentina,
Brazil
•
•
•
Incremental global vegetable oil supply growth will predominately be sourced from Asian palm
and Latin American soya
Potential EU biodiesel consumption driven by the 2020 10% RED target
Both sources may not meet European biodiesel sustainability requirements
Source: LMC International “Global Battle for Acres 2010”; BP Demand 2050 study 2011; ECN National Action Plan stats
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The policy challenge:
barriers and constraints
Challenges
•
Biofuel mandates propel demand for biodiesel and current high prices
•
Hydrogenated Renewable Jet (HRJ) production requires an additional HVO
processing step with cost and market implications
•
Some concerns have been raised about some HVO GHG footprint and
sustainability (source of vegetable oil). Regardless of these concerns, feedstock
prices are not likely to fall sufficiently to overcome the economic drivers for road
biodiesel. The incentive to sell to the road market will remain
•
EU ETS prices are very low ($10 per tonne of CO2), signalling that there are other
low cost carbon abatement choices available. HRJ GHG cost equivalent will vary
widely from ~$300 (waste wood) - ~$800 (some HVO) per tonne of CO2
•
Global competition in aviation sector will make it highly unlikely for any airline to
invest in new fuel technology without risking competitive position
•
New HRJ manufacturing capacity will require long-term off-take agreements to
support cost recovery and an array of other support mechanisms to draw
investment capital
12
The policy challenge: What rational policies can
make aviation biofuels work? (Are there any?)
Possible biojet support mechanisms
Create sufficient commercial deployment to capture “learnings” and understand the
lowest cost route to CO2 avoidance.* This could be a long and expensive pathway to
market competitiveness and the goal may never be achieved
•
Programme to kick start commercial scale production (x plants and y capacity),
government funding and capital grants
•
Long-term feedstock agreements
•
Long-term fuel off-take obligations placed on EU airline consortia. Competition law
clearance required along with appropriate Government guarantees of off-take
obligations (strong guarantees)
− Create (WW-RIN) an enforceable worldwide RIN scheme (US Renewable
Identification Number) providing the incentive to produce and use HRJ
Global competition factors make any policy support difficult to implement and enforce
* Potential solutions are so far from the airline industry commercial
targets that is it illusory to think that a positive conclusion
could ever be attained
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Things important to long-haul customers
Are we clear on the priorities?
• Cleanliness
• Comfortable seat
• Cost efficiency
• Food and beverages
• Green aviation
• In-flight entertainment
• No lost baggage
• On-time arrival
• Polite staff
• Total journey time
The Big Question:
What is the problem statement that explains why
we care ‘at all’ about biojet?
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Your comments and questions
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