Drop-in biofuels for international marine and aviation markets

Drop-in biofuels for international marine and aviation markets

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Description: The IEA Bioenergy Technology Cooperation Programme (IEA Bioenergy TCP) held its biannual workshop in Rotorua, New Zealand on 9 November 2016 in conjunction with their Executive Committee meeting (ExCo78). The workshop on ‘Drop-in biofuels for international marine and aviation markets’ was prepared in close collaboration with SCION. The workshop consisted of three sessions: (1) setting the scene & organising supply chains, (2) perspectives for marine biofuels, and (3) perspectives for aviation biofuels.

The workshop concluded with a panel discussion on policy options and recommendations to support biofuels in international marine and aviation markets.

 
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Contents:
Drop-in biofuels for
international marine
and aviation markets
Summary and conclusions from the IEA Bioenergy
ExCo78 workshop

This publication provides the summary and
conclusions for the workshop ‘Drop-in biofuels
for international marine and aviation markets’
held in conjunction with the meeting of the
Executive Committee of IEA Bioenergy in
Rotorua, New Zealand on 9 November 2016.

IEA Bioenergy: ExCo: 2017:04

Drop-in biofuels for international marine and aviation markets
Summary and conclusions from the IEA Bioenergy ExCo78 workshop

Copyright © 2017 IEA Bioenergy. All rights Reserved
Published by IEA Bioenergy

IEA Bioenergy, also known as the Technology Collaboration Programme (TCP) for a Programme of Research, Development and Demonstration on
Bioenergy, functions within a Framework created by the International Energy Agency (IEA). Views, findings and publications of IEA Bioenergy do not
necessarily represent the views or policies of the IEA Secretariat or of its individual Member countries.

EXECUTIVE SUMMARY
Luc Pelkmans, Technical Coordinator, IEA Bioenergy
The IEA Bioenergy Technology Cooperation
Programme (IEA Bioenergy TCP) held its
biannual workshop in Rotorua, New Zealand
on 9 November 2016 in conjunction with their
Executive Committee meeting (ExCo78). The
workshop on ‘Drop-in biofuels for international
marine and aviation markets’ was prepared in
close collaboration with SCION. The workshop
consisted of three sessions: (1) setting the scene
& organising supply chains, (2) perspectives
for marine biofuels, and (3) perspectives for
aviation biofuels. The workshop concluded
with a panel discussion on policy options
and recommendations to support biofuels in
international marine and aviation markets.

Some countries have already implemented
favourable conditions for marine biofuels,
but on the global scale developments are
moving very slowly. Both market and product
developments are needed to make biofuels a
significant part of the future marine fuel mix.
While current legislation is focusing on local
emissions, a shift to include greenhouse gases
is needed. There is consensus that shipping has
to do its ‘fair share’ of emission reduction. Some
initiatives have started to introduce liquefied
natural gas (LNG) in shipping, which would have
clear impacts in terms of air quality; however,
natural gas provides limited advantages in GHG
emissions so further decarbonisation is needed.
Global regulation is needed with clear
GHG reduction targets and mechanisms
in the shipping sector, and recognition of
biofuels as a pathway to reduce emissions.
Shipping companies tend to be risk averse
and marine fuel prices are relatively low.
Moreover, in the system of chartered vessels
it is difficult to make investments and
modifications. Nevertheless, cargo owners
need to make a real commitment to low-carbon
transport. The industry needs to work cohesively,
and the sector can learn from the coordinated
steps taken in the aviation industry (ICAO2).

BIOFUELS IN INTERNATIONAL
MARINE MARKETS
Current marine fuels consumption globally
is estimated to be around 330 million tonnes
of fuel annually, most being heavy fuel oils.
As global trade increases, overall fuel demand
for marine transport is predicted to double
by 2030. The maritime sector is facing stricter
emission regulations by the implementation
of Emission Control Areas (ECAs) as well as
the IMO1 commitment to reduce fuel sulphur
levels. Ships are also subject to local rules in
different areas of world, such as the EU or
the US. To meet these regulations, ships need
to change to more expensive low-sulphur diesel
fuels or to install costly scrubber units. It is
estimated that 70,000 ships will be affected by
this change. Biofuels, which are basically sulphur
free, may meet the demand for new fuels in the
maritime sector. Marine fuels offer a relatively
easy market for lignocellulosic fuels, especially
when compared to road or aviation fuels, as the
quality constraints are much lower. Pyrolysis oils
from lignocellulosic material may form a basis
for marine fuel applications.

Next to international industry agreements,
country commitments and local incentive schemes
can be an important driver and create markets for
low-carbon fuels. Typical for marine applications
is that fuel distribution is much more centred
compared to road fuels. For instance, only 15
ports account for 85% of marine fuel bunkering
globally. Ports are making efforts to become
‘sustainable ports’, while also committing to
reduce footprint emissions. There is a need
to engage with the shipping lines to better
understand the capabilities of and drivers for
biofuels.

1  International Maritime Organisation

2  International Civil Aviation Organisation

1

Road biofuel incentives can be extended
to marine fuels, as in the Netherlands,
or alternatively CO2 and other emissions
can be included when calculating fairway
and port duties (e.g. Clean Shipping Index in
Sweden). Tenders for public contracts form an
easy mechanism to give CO2 a substantial value
and allow the market to come up with the most
cost-efficient carbon reduction solutions.

with growth needs significantly exceeding
historical global biofuel production growth
rates. The development of such an industry
would require immediate and sustained
investment in alternative aviation
fuel production infrastructure, which would
only take place if enabled by the right policies.
Alternative aviation fuels will remain more
expensive to produce than conventional jet fuel
in the short- and medium term and significant
cost savings will still need to be realised for
many pathways. Including biojet production
in a refinery framework (next to higher value
chemicals) would also reduce costs. A certain
level of higher costs may be justifiable from a
societal perspective as long as the environmental
benefits (e.g. in terms of CO2 reduction)
compensate for the additional costs.

BIOFUELS IN AVIATION MARKETS
The aviation sector has recognised that
biojet fuels are a key component to achieving
significant carbon reduction, well after 2050.
The recent Carbon Offsetting Scheme (CORSIA)
of ICAO to reduce CO2 emissions creates a
commitment to look for low carbon solutions.
Various airlines and ports have engaged
in biofuel purchase agreements, direct
investments in fuel production facilities
and development of alternative fuel feedstock
sources. Different airlines have made public
commitments to purchase and use biofuels
and some are broadly involved in creating
sustainable fuel supply chains. Others have
announced their engagement in advancing
supply chain development. Nevertheless, thus far,
development of biojet fuels has been slow and
consumption is still limited.

International agreements are important to get
sector commitments; however the offset values
in the CORSIA agreement are probably too low
to stimulate biojet fuels. Country commitments,
national incentives and regional initiatives
are needed to launch biofuel markets. Fiscal
incentives have the greatest potential to increase
investment in carbon reduction in aviation, both
for supply chain members and airlines, and could
bridge the price parity gap. It is also crucial to
de-risk investments as capital investments are
very intensive – offtake agreements and long
guarantees would aid developments.

Currently, most biojet fuels are derived through
the oleochemical pathway, based on upgrading
of oils and fats. This pathway will continue to
be the main source of biojet for the next 10
years. In the long-term there may be a shift to
lignocellulosic feedstock. The aviation industry
will have to compete with other industries for
biomass feedstocks. In particular, road biofuels
are a more likely target product for sustainable
fuel refiners, at least in the short term.

There are regions where biojet is promoted as
an extension of road transportation policies.
Domestic aviation (which falls under the Paris
Agreement) also provides more scope for tax
incentives for countries with the aim to target
emission reductions, so domestic aviation can
be a driver for biojet production. Regional multistakeholder initiatives, centred around a main
airport (the ‘BioPort’ concept) are emerging,
with regional policy incentives; such initiatives
can play a key role in the expansion of biojet.

Significant questions remain about the
economic viability and the necessary scaleup of the industry. Large scale replacement
would require high production ramp up rates,

2

CONCLUSIONS AND
RECOMMENDATIONS:

commitment in the aviation sector to look for
low carbon solutions, although the offset values
themselves are probably too low to stimulate
biojet fuels. The marine sector so far has focused
less on CO2 emissions, as most regulations
are focused on local air quality, particularly
to reduce the sulphur content of shipping fuels.
This can also create momentum for the sector
to consider alternative fuels.

Biofuels are currently mostly associated
with road transport, but it is acknowledged
that in the longer term the role of biofuels in
international transport (aviation, shipping) will
increase as these sectors rely on high energy
density fuels. While road transport fuels are
mostly regulated at national level, aviation
or maritime fuels operate in global markets.
So the international nature of these sectors
requires a different approach to stimulate
biofuels in international aviation or shipping.

Next to these international industry initiatives
and agreements, country commitments, national
incentives and regional initiatives are needed
to launch biofuel markets. Some countries
are opening national road transport biofuel
incentives for biojet fuels or marine biofuels.
Domestic aviation can also be a way to launch
biojet fuels in national markets. In the case of
shipping, including CO2 emissions to calculate
fairway and port duties or to award public
contracts can encourage the market to come up
with cost-efficient carbon reduction solutions.

There is a clear gap between the cost of
biofuels and fossil fuels, both for aviation
and marine applications. In the first instance,
technology evolution will be needed to bring
costs down and de-risking investments will be
crucial to deploy these technologies; it will
also be important to evolve towards biorefinery
approaches, delivering a range of outputs. In
that sense, marine biofuels and biojet fuels are
complementary as they are at different ends of
the fuel spectrum (high vs low specifications).
Marine fuels are generally of low quality and
marine engines can accept different fuel grades,
while aviation is much more regulated from a
safety management and engine performance
perspective, and aviation fuels need to meet
high quality standards. Further research and
development into the best fit for fuels for the
maritime and aviation sector is required.

An interesting evolution is regional multistakeholder initiatives, centred around a
main airport/harbour (the ‘BioPort’ concept),
with regional policy incentives. Typical for
marine and aviation is that fuel distribution
is much more centred compared to road fuels.
So BioPort concepts can be an important
step to launch biofuel markets, both in
marine and aviation markets.
The PowerPoint presentations can be
downloaded from IEA Bioenergy’s website
http://www.ieabioenergy.com/publications/ws21drop-in-biofuels-for-international-marine-andaviation-markets/

Negative externalities are not included in current
fossil fuel costs, and this distorts the playing field.
Including societal cost – e.g. through a carbon
tax – can make the case for positive returns for
biofuels in a shorter timeframe. To avoid market
distortions, a carbon price should be applied
across all sectors and then markets would decide.
Reaching a substantial scale of biofuels in
aviation and marine applications will require a
mix of international and regional initiatives. The
recent CORSIA agreement of ICAO creates a

3

Session 1: Setting the
scene and organising
supply chains

WORKSHOP
WELCOME SPEECHES
Prue Williams of the New Zealand Ministry of
Business, Innovation and Employment welcomed
the participants to New Zealand and presented
the science investments directions of the New
Zealand government. The Government’s overall
strategic direction is to encourage a shift towards
renewable energy. Science has a key role in the
future of the New Zealand bioenergy story.

This session was moderated by
the IEA Bioenergy Chair Kees Kwant.

ARENA’S INVESTMENT
PRIORITIES IN BIOFUELS IN
AUSTRALIA
Amy Philbrook, Australian Renewable
Energy Agency (ARENA)

Warren Parker, the CEO of SCION, gave a short
introduction to the New Zealand forest industry,
Scion and bioenergy. 1.7 million hectares in New
Zealand are plantation forests. Increased forest
planting (up to 1 million additional hectares) is
critical to New Zealand meeting its international
2030 carbon commitments. While electricity is
already more than 80% renewable, New Zealand
will also need to increase bioenergy use in the
industrial heating, transport and aviation sectors.
Transition to a renewable low carbon bioeconomy
is key, with a major role for forest biomass.



Kees Kwant, the Chair of IEA Bioenergy,
stated that big changes are going on in the energy
sector. Renewable electricity seems to be on the
right track, but transport and heating are lagging
behind. In the future, biofuels should play a major
role in the international marine and aviation
sectors where other alternatives such as electric
propulsion are much more difficult to implement.
This workshop will focus on these markets and
the aim is to come to concrete recommendations
on what can be done to stimulate furthers steps
in these sectors.

ARENA is the Australian Renewable Energy
Agency. It was established in July 2012 to
improve the competitiveness of renewable
energy technologies and to increase the supply
of renewable energy in Australia. ARENA has
invested 1.1 billion AUD in renewable energy
projects with 47 million AUD for bioenergy
activities.
The priority areas for biofuel investments are
developed through industry consultation, market
analysis and outcomes from ARENA funded
projects. Specifically in the fuels space, ARENA
sees areas of key opportunities to be:
• Pathways that meet demand, i.e. projects
that are developed as part of a commercial
proposition such as to meet key demand
areas, for example, aviation fuel or military
fuels;

4

• Aggregation of feedstocks to facilitate
project delivery;

route seems much more valuable in rapidly
growing chemicals markets.

• The downstream end of the biocrude to
biofuel sector including refining to produce
drop-in usable fuels;

Canada has vast forest resources and
an innovative forestry industry that could
potentially support an evolving biojet sector.
British Columbia has been at the forefront
of increased wood residue utilisation as
exemplified by the established pellet sector.
A current project, assessing the viability of
producing biojet from forest residues based
on thermochemical conversion technologies,
with involvement of several international
partners, including airlines and manufacturers
was also presented. The project is focused on
producing biojet through upgrading of biocrude
from pyrolysis and hydrothermal liquefaction.
In addition to a focus on the technical
challenges, the project is currently investigating
the supporting policy framework that will be
essential for development of biojet production in
this region (see presentation by van Dyk below).

• The role of co-products – it is recognised
that high value products tend to form a
material component of the commercial
proposition of development projects.

PATHWAYS AND COMPANIES
INVOLVED IN DROP-IN BIOFUELS
FOR MARINE AND AVIATION
BIOFUELS
Jack Saddler,
University of British Columbia, Canada,
co-Task Leader of IEA Bioenergy Task 39
IEA Bioenergy Task 39 (“Commercialising
conventional and advanced liquid biofuels from
biomass”) has been, and continues to investigate
the challenges and potential of technologies for
producing drop-in biofuels. A report published in
2014, “The potential and challenges of dropin biofuels”, is currently undergoing an update.
There continues to be considerable interest in
developing biofuels that can be readily integrated
into the existing petroleum fuel infrastructure
in a “drop-in” fashion, particularly by sectors
such as aviation where there is no alternative,
sustainably produced, low carbon emitting fuel
source. There are several ways to produce dropin biofuels, including oleochemical processes
(i.e. the hydroprocessing of lipid feedstocks),
thermochemical processes, such as gasification,
pyrolysis or hydrothermal liquefaction
(HTL) followed by catalytically upgrading/
hydroprocessing, and biochemical processes,
such as the biological conversion of sugars or
cellulosic materials to longer chain alcohols
and hydrocarbons. In the near-term, biojet fuels
will likely be produced via the oleochemical
route. However, longer-term biojet production
will likely be based on lignocellulosic feedstock
using thermochemical platforms. The biochemical

PRODUCTION OF BIO-CRUDE
OIL AS A PLATFORM FOR BIOCHEMICALS, MARINE AND
AVIATION FUELS
Steve Rogers, Licella, Australia
Licella is an Australian based company that has
pioneered the idea of producing a “bio-crude”
oil that can be refined, in the same way as fossil
crude, into an array of fuels and chemicals. The
technology is able to produce a drop-in fuel, that
can be used in existing oil fuel infrastructure.
In the past seven years, Licella has built three
pilot plants at its facility at Somersby, Australia,
scaling the plant by a factor of ten at each point,
and has tested a wide range of lignocellulosic
feedstocks as well as micro and macro algae.
Today the plant is used to produce bio-crude
from potential client’s feedstocks for evaluation
purposes.

5

The bio-crude produced can be blended with traditional fossil crude and co-processed using traditional
refining infrastructure and catalysts, into a range of finished fuels. A significant portion of the biocrude can be converted into higher value bio-chemicals that can be used to make products such as
resins, thereby assisting with the overall economics of the process.

Products from Licella’s Cat-HTR process

A ROADMAP FOR THE ADOPTION OF
AVIATION BIOFUELS IN EUROPE

In order to move the technology to the next scale,
Licella has recently formed a Joint Venture (JV)
with a large Canadian pulp company to integrate
the technology in a commercial mill. Given
the low current price of fossil crude, Licella
believes that selecting a good JV partner
where long term objectives are aligned is
critical, as well as ensuring the project is eligible
for the significant incentives that are available
in certain geographies.

Sierk de Jong, SkyNRG/Utrecht University,
the Netherlands
The adoption of biojet fuels in aviation is
an important part of the basket of measures
to achieve emission reductions in aviation.
Significant growth in biojet production
volumes is required in the coming decades
if the aviation industry is to contribute to
a 2°C emission trajectory. In the context of
the RENJET project, Utrecht University and
partners developed a roadmap for the adoption
of aviation biofuels in Europe, which is to be
published by the end of 2016. In this roadmap,
the feasibility of different biojet deployment
scenarios is evaluated and key pre-conditions to
achieve these scenarios are identified. Interaction
with road biofuels is also indicated.

The following two presentations were brought
forward as they were delivered through
videoconference.

6

Feedstock-technology portfolio for all transport biofuels in the EU under different scenarios (RENJET project)

INTRODUCING SUSTAINABLE
MARINE BIOFUELS

The general findings are that
1. aviation should be addressed in (inter)
national decarbonisation strategies,

Sjors Geraedts, GoodFuels Marine, the
Netherlands

2. growing a biofuel industry takes multiple
decades and hence a long-term vision,

So far there has been a lot of attention given
to aviation biofuels and very little to the marine
sector. Nevertheless, biofuels are the only
realistic low-carbon option for the marine sector.
However, legislation promoting the use of biofuels
in this sector is lacking, as is the awareness of
the shipping sector concerning the potential
of biofuels. Current legislation is focusing on
local emissions; a shift to include greenhouse
gases (GHG) is needed. There is consensus that
shipping has to do its ‘fair share’ of emission
reduction, but the International Maritime
Organisation (IMO) has just postponed its
definite GHG strategy to 2023.

3. significant effort and funding is required and
4. strategic (policy) choices need to be made
now to achieve climate targets.
Feedstock mobilisation and technology
development should be stimulated, in the short
term through financial mechanisms, to de-risk
investments and cover the price premium (at a
local level); in the longer term the price premium
should be incorporated into the service (at a
global/EU level). The aviation industry should
actively support the development of renewable
jet fuels and use offsets to buy time; it is also
recommended to develop consumer programmes
at an airline (e.g. Fly Green Fund) or airport
level (e.g. Airport Initiative) to cover the price
premium and gain experience with renewable jet
fuels.

Marine fuels offer a relatively easy market
for lignocellulosic fuels, especially when
compared to road or aviation fuels, as the
quality constraints are much lower, so that
the lower quality products in biorefineries
can be directed to these markets.

7

Session 2: Perspectives
for marine biofuels

Some countries have already implemented
favourable conditions for marine biofuels,
but at the global scale developments are
moving very slowly. Both market and product
developments are needed to make biofuels a
significant part of the future marine fuel mix.

This session was moderated by Corinne Drennan,
PNNL.

Global regulation is needed with clear
GHG reduction targets and mechanisms
in the shipping sector, as well as recognition
of biofuels as a pathway to reduce emissions.

BIOFUEL SUPPLY TO THE NEW
ZEALAND INTERISLANDER

Cargo owners need to make a real commitment
to low-carbon transport. The industry needs to
work cohesively, and the sector can learn from
the coordinated steps taken in the aviation
industry (ICAO).

Current marine fuels’ consumption globally
is estimated to be around 330 million tonnes
annually. 80 to 85% is estimated to be residual
fuel oils and the balance is mainly distillate fuels.

Peter Wells, Interislander, New Zealand

As global trade increases, overall fuel demand for
marine transport is predicted to double by 2030.
Globally the biggest impact on marine fuel types
used will be regulation of sulphur content
of those fuels. The International Maritime
Organisation (IMO) is the principle forum for
rule generation. MARPOL is the International
Convention for the Prevention of Pollution from
Ships. Its Annex VI specifically addresses air
pollution effects from Sulphur Oxides (SOx)
and Nitrogen Oxides (NOx). Sulphur limits in
Emission Control Areas (ECAs) are restricted
to 0.1% from January 2015. The ruling
introduces limitations on sulphur content of fuels
progressively, from 3.5% currently, reducing to
0.5% from January 2020. It is estimated that
70,000 ships will be affected by this change.
Ships are also subject to local rules in different
areas of the world, such as the EU or the USA.
As a result of the upcoming sulphur restrictions,
the industry is looking at what fuel options there
are, including biofuels.

Local incentive schemes can be an important
driver and create local markets for low-carbon
fuels. This can happen through extending road
biofuel incentives to the marine sector, as in the
Netherlands, or through including CO2 emissions
in incentive schemes (see Clean Shipping
Index to calculate fairway and port duties in
Sweden). Tenders for public contracts are an
easy mechanism to give CO2 a substantial value
and allow the market to come up with the most
cost-efficient carbon reduction solutions.

8

Marine fuel sulphur regulations

The main challenges are that:

Overall it can be stated that changing
regulations will require changes to existing fuel
supply arrangements. Some biofuels can be used
with minimal changes to ships equipment. It is
critical to have consistent quality and volume.
Solutions also need to address storage and
supply infrastructure needs. Pricing is likely
to be a considerable challenge.

• shipping companies tend to be risk averse;
• marine fuel prices are relatively low;
• in the system of chartered vessels it
is difficult to make investments and
modifications.
On the other hand, the opportunities are that
• marine fuel standards are relatively easy
to meet;
• marine diesel engines are very tolerant
of low quality and unusual fuels;
• they are large consumers, with single points
of supply;
• multi engine plants in ships have high levels
of redundancy facilitating trials;
• skilled engineering staff are on board
to monitor and supervise.

9

A PORT’S PERSPECTIVE ON
MARINE FUEL QUALITY

POTENTIAL AND CHALLENGES OF
DROP-IN MARINE BIOFUELS

Rosie Mercer, Ports of Auckland, New Zealand

Claus Felby, University of Copenhagen, Denmark

Air quality is an important issue for city
ports. They have a social license to operate
and community expectations often exceed the
requirements of rules and regulations. Ships
come close to city centres, in particular cruise
ships, which keep facilities running when they are
at the berth. Particularly emissions of nitrogen
dioxide, sulphur dioxide and particulate matter
are to be considered, SO2 being the biggest
concern. Shipping represents around 40% of SO2
emissions in the region of Auckland.

Merchant shipping is responsible for 90% of
international trade. Small and medium sized
vessels make up the largest percentage of the
fleet by number, but large vessels consume 70%
of the marine fuel used. In fact only 15 ports
account for 85% of marine fuel bunkering
globally. So the sector is operating on a global
scale, as opposed to the local/regional scale for
road transport. Fuel cost accounts for 50% of
operating costs.
A major part of the fuels are heavy fuel oils
used in 2-stroke diesel engines. The maritime
sector is facing stricter regulations on particle
emissions by the implementation of Emission
Control Areas as well as a general reduction in
fuel sulphur levels. To meet these regulations,
ships need to change to more expensive lowsulphur diesel fuels or to install costly scrubber
units. 80% of current fuels / engines need to be
modified by 2020.
Biofuels, which are basically sulphur free, may
meet the demand for new fuels in the maritime
sector. From a technical point of view, diesel fuels
for large 2-stroke engines have a wider range of
fuel specifications as compared to e.g. jet fuels,
so new biofuels and feedstocks can be relevant
for the maritime sector. In fact, jet fuels are not
much higher priced than marine diesel oil.

Port of Auckland

Next to international action on fuel quality
(e.g. IMO/MARPOL and Emission Control
Areas), different ports are taking local
initiatives. The Port of Auckland wants to
be a leading sustainable port and has made
a commitment to reduce footprint emissions.
It seeks opportunities to partner with shipping
lines to drive change, and also considers options
to incentivise the use of alternative fuels,
including biofuels. There is a need to engage
with the shipping lines to better understand the
capabilities and drivers of biofuels. With the IMO
commitments towards 2020 and shipping lines
looking for solutions to fulfil these requirements,
it is a good time for biofuels to gain leverage.

Scaling is an issue, as any test in shipping engines
requires major fuel volumes. Commercial scale
production plants / refineries are needed to start
the process. A basic process for large-scale
cracking of biomass components is needed, most
likely a thermal process. Lignin, which has high
energy density, is cheap and available at large
quantities, and could be a good starting base.

10

PROSPECTS OF PYROLYSIS OF
LIGNOCELLULOSIC BIOMASS TO
PRODUCE MARINE BIOFUELS
Alan Zacher, Pacific Northwest National
Laboratory, United States, Task Leader
of IEA Bioenergy Task 34 (Direct
Thermochemical Liquefaction)
Zacher presented a review of the suitability
of pyrolysis oils for marine fuel applications
and the approaches that may be required to
upgrade pyrolysis oils for such use. Pyrolysis
oil is considered an energy carrier that
may have various insertion points into the
hydrocarbon economy. However, it has a
number of significant differences compared
to petroleum derived energy carriers. These
differences include: water content, energy
density, presence of particles (carbon,
alkali metals), viscosity, storage stability,
miscibility, low pH and engine combustion
(performance, longevity and emissions).
The quality requirements of bio-oil must be
defined in the context of an end-use and this
is also reflected in the upgrading technologies
that can be used. The proposed methods for
upgrading bio-oils are solvation, physical
modifications such as separation or chemical
treatment, catalytic upgrading at various levels of
severity, or modifications in the bio-oil production
process. Modifications to the end use are also
likely, e.g. changes to engines, storage and
handling. Of course, all approaches add cost.



The following recommendations were given:
• Commercial (large scale) marine biofuel
supply is needed within the next 10 years,
preferably based on lignocellulosic feedstocks.
• Full-scale tests should be performed
on ocean going vessels.
• Work with IMO on regulations to
facilitate biofuel infrastructure
• Long term policies and/or mandatory
targets are a must!

The upgrading requirements of bio-oil for marine
fuel are currently being researched, as well as
combustion impacts.

11

Session 3: Perspectives
for aviation biofuels

scheme from 2027 is mandatory, with some
exemptions for small aviation markets. In total,
it is currently expected that over 80% of the
growth in aviation CO2 from 2020 will be offset,
but other States are also encouraged to volunteer
to join the scheme, which will boost the coverage.

This session was moderated by Jack Saddler,
University British Columbia

THE ROLE OF BIOFUELS IN
REDUCING EMISSIONS IN
AVIATION
Michael Lakeman, Boeing, United States
Aviation is a vital part of modern life. 3.4%
of the global economy is supported by aviation,
with a 5.4% average yearly growth of passenger
air traffic since 1990; 2% of global CO2
emissions are attributable to aviation. Aviation
is under growing social and political pressure to
reduce its environmental footprint. The aviation
industry recognises its contribution to greenhouse
gases and has committed itself to ambitious
targets to reduce its carbon emissions. It is
important to note that these targets apply at the
global level and do not mean slowing down the
growth of aviation. They are intended to give the
industry a license to grow.



CO2 emission reduction targets of the international
aviation industry (IATA)

ICAO’s Committee on Aviation Environment
Protection (CAEP) developed a set of scenarios,
which looked at the potential cost of the global
offsetting scheme to the industry. Looking at
different projections of price and industry CO2
growth, the CAEP forecasts that the cost of
the scheme may be equivalent to 0.2 to 0.7%
of industry revenue in 2025, increasing to 0.4
to 1.8% in 2035. Fuel costs represent around
a third of operating costs, and carbon offsets
could increase those by 3 to 8%.

2016 has been an important year for aviation in
terms of carbon emissions. In February 2016,
an ICAO Airplane CO2 emissions standard was
agreed, which impacts OEMs3. In October the
ICAO Carbon Offsetting Scheme (CORSIA) was
adopted. CORSIA is a carbon offset programme
for international commercial flights, covering
CO2 emissions. It is aligned with carbon neutral
growth. The CORSIA has a phase-in process:
The first part of the scheme from 2021 until
2026 is voluntary for States to participate in
(but, it should be emphasised that once a State is
in the scheme, all airlines based there are part of
it too, for all their routes to other States taking
part in the scheme). So far, 66 States have
volunteered to join. The second phase of the

Aviation needs ‘drop-in’ biofuels, meeting
(or exceeding) the performance of petroleum
derived fuels, which can be blended directly
with conventional jet fuel, and require no
change to airplanes, engines or fuelling
infrastructure. Four pathways have been
approved since 2011: HEFA (hydroprocessed esters and fatty acids), FischerTropsch synthetic fuels, Alcohol-to-Jet and

3  Original Equipment Manufacturer

12

synthesised iso-paraffins (SIP) from sugars.
The commercial projection of biojet fuels is
rising with the first dedicated commercial
aviation biofuel refinery in California (AltAir).
Off-take agreements between biofuel producers
and airlines are growing and have moved
beyond demonstration, with many of the
major airlines involved.

The aviation industry will have to compete
with other industries for biomass feedstocks.
Other transport modes, electricity generation
and high value product industries will also be
seeking to substitute some biomass for their
current fossil fuel inputs. In particular, road
biofuels are a more likely target product for
sustainable fuel refiners, at least in the short
term.

‘Green diesel’ is a game changer for aviation
biofuel, as HEFA jet fuel and Green Diesel
are produced from the same process.

With high market volatility and technological
uncertainty, investors will need expectations
of high returns or formalised off-take
arrangements to secure project finance.
Further, novel mechanisms of risk reduction
or risk sharing, such as loan guarantees, may
be required.

PROSPECTS AND EVOLUTIONS OF
SUSTAINABLE AVIATION FUELS IN
AUSTRALIA
David White, Whitejet, Australia

Significant work has been undertaken on
specific aspects especially feedstock and
conversion (biorefinery). A focus is required
on downstream elements and supply chain
integration. A nice example is the Brisbane
BioPort initiative, with partners SkyNRG,
Virgin Australia and the Brisbane Airport
Corporation. The aim is to determine the
most promising supply chain combination
with the ultimate goal of producing an investable
business case and advancing to the construction
phase. No pre-commitment is made to a specific
feedstock, logistics or technology combination
upfront.

Since 2006 the airline industry in Australia
has had a strong interest in utilising low
carbon alternative fuels in their aircraft fleet.
With a strong need for guidance on how best
to support the development of a local industry,
Virgin Blue (now Virgin Australia) took the
lead in establishing the Australian Sustainable
Aviation Fuel Users Group (SAFUG), the core
membership also including Air New Zealand
and Qantas. The main output from this Group
was a roadmap study, released in June 2011,
which identified the potential of a renewable
jet fuel industry in Australia.

The key financial issue is to unlock capital
– both debt and equity. To be economically
viable renewable jet fuel must be priced at
a level the market will find acceptable. With
current prices of fossil jet fuel and renewable
jet fuel, the biofuel option would be much
more costly at existing CO2 offset costs (rated
at 10$/tonne CO2). The question is how to bridge
this gap, bearing in mind the volatility of fossil
fuel prices (jet fuel price levels in September
2016 were only half the level in mid-2014). Oil
import regions like Australia and New Zealand
can be very vulnerable to international oil prices.

The roadmap study calculated that by using
a variety of existing and new non-food biomass
resources and sustainable practices for growing
them, there will be sufficient biomass to support
almost half of the aviation fuel needs of both
Australia and New Zealand by 2020 and over
100% of fuel needs by 2050. Lignocellulose
is the most abundant and low cost type of
feedstock. However, it has lower energy density
than other biomass resources and established
refining processes for lignocellulose are high
cost. The lowest cost refining systems favour
inputs based on plant or algae oils, which are
by themselves more expensive to produce.

13

Government support for renewable transport
fuels should provide incentives to produce
renewable fuels over fossil fuels. They should
not skew production towards one particular
renewable fuel over another. While producer
grants are structured to provide excise relief,
their impact from a whole market perspective
must be considered.

The main cost drivers for biofuels are feedstock
and capital investment. The solutions can be to
aim at waste and low cost feedstocks, reduce
hydrogen demand and pressure, and to leverage
existing infrastructure (refinery integration).
Refinery operations germane to biofuels include
hydrotreating, alkylation and hydrocracking.
From a refiner’s perspective, safety, reliability,
predictability and profitability are crucial. Risks
and challenges are low when starting from welldefined and consistent quality single molecules
(like ethanol, butanol, farnesene); risks increase
when using intermediates requiring minor treating
(like triglycerides), and are highest for oils that
need composition changes (like pyrolysis oils).

AVIATION BIOFUELS: ENHANCING
TECHNICAL AND ECONOMIC
COMPETITIVENESS
Corinne Drennan, Pacific Northwest National
Laboratory, United States

Regulatory pressures and fuel price volatility
resulted in vertical integration, i.e. upstream
investments of airlines in the supply chain.
Typical are fuel purchase agreements, direct
airline investments in fuel production facilities
and development of alternative fuel feedstock
sources. Various airlines have made public
commitments to purchase and use biofuels and
some are broadly involved in creating sustainable
fuel supply chains. Others have announced
their engagements in advancing supply chain
development.

Aviation fuels contain different
hydrocarbon families: cyclo-paraffins,
n-paraffins, iso-paraffins and aromatics.
Iso-paraffins have high energy content
and high combustion quality even at low
temperatures. Aromatics have rather poor
combustion quality, but around 7% aromatics
are needed to ensure seal swell. So biofuels
should comprise the right molecules and meet
specific performance and storability criteria.
The ASTM process can be quite lengthy,
and throughout the process, increasingly
larger amounts of fuel are required, involving
substantial capital and operating costs for
pilot fuel production. Component, rig and
engine testing also represent a significant
cost to the producer.

ECONOMIC AND ENVIRONMENTAL
PERFORMANCE PERSPECTIVES OF
ALTERNATIVE AVIATION FUELS
Robert Malina, University of Hasselt, Belgium/
Massachusetts Institute of Technology, United
States
Alternative jet fuels have received
considerable attention from policy-makers
as a potential means to mitigate aviation’s
contribution to global climate change. While
current consumption of alternative jet fuel is
less than 0.01% of global jet fuel consumption,
the aviation industry is aiming for a large-scale
replacement of petroleum-derived jet fuel with
non-fossil alternatives by 2050.

ASTM process for jet fuel approval

14

PERSPECTIVES FOR BIOJET
SUPPLY TO AIRLINES

A wide body of literature shows that alternative
jet fuels from different feedstock to conversion
pathways can significantly reduce life cycle GHG
emissions compared to conventional jet fuel from
petroleum, if adverse impacts from land-use
change can be avoided. However, the potential
magnitude of aviation GHG emissions’ reductions
from the use of alternative fuels is limited by
their specific environmental benefits (which
differ by type of biofuel), and the availability
of the fuels.

Chris Field, Air New Zealand
Fuel is around 25-30% of airlines operating
costs and there are no alternatives to energy
dense, drop-in fuels for aircraft. Biofuels provide
significant benefits as they are renewable, reduce
GHG emissions and decouple from commodity
based fossil fuels. But they must be competitive
and sustainable. The following are challenges
before widespread use can be anticipated:

Significant questions remain about the economic
viability and the necessary scale-up of the
industry. Biojet as a co-product in biochemical
production may create commercial opportunities,
although, volumes would be limited. Large scale
replacement would require high production ramp
up rates. Growth needs would significantly exceed
historical global biofuel production growth rates
when total GHG emission reductions of greater
than 20% need to be achieved in 2050, and
overall investment needs would be in the order
of tens of billions of US dollars. The development
of such an industry would require immediate
and sustained investment in alternative aviation
fuel production infrastructure, which will only
take place if enabled by the right policies.
The CORSIA CO2 off-sets (equivalent to
around 0.1 US$/gallon) would not be
a game changer for aviation biofuels.

1. Biofuels must be capable of distribution
and use without modification to aircraft or
existing infrastructure. This requires stringent
and time consuming safety certification which
is exacerbated by the number of feedstocks
and conversion processes being considered.
2. The industry has signed up to a challenging
ICAO greenhouse gas reduction target and
any biofuel must demonstrate a life cycle
carbon reduction from source through to use.
3. Additional sustainability criteria and
measures beyond GHG reduction must also
be taken into account when sourcing biofuel.
4. The current and short term forecast price
of fossil fuel makes a difficult hurdle for
investors.
Airlines are looking for ways to encourage this
nascent industry by offering potential off-take
agreements, but this is only one element in the
supply chain risk from an investor or lender
perspective. There are many other parties that
need to collaborate to support a viable local
solution for biofuel production in New Zealand
and Australia. Leadership, collaboration and a
supportive environment are the keys to success.

Alternative aviation fuels will remain more
expensive to produce than conventional jet
fuel in the short- and medium term. One must
remember that societal perspectives are different
from investor’s perspectives, and these are also
the basis for policy intervention. Higher costs
are justifiable from a societal perspective as
long as the environmental benefits compensate
for the additional costs. In order to achieve
this, significant cost savings will still need
to be realised for many pathways.

15

THE KEY ROLE OF POLICY IN
DEVELOPMENT OF BIOJET FUELS

and national components falling under
different regulatory frameworks which require
a different approach compared to road
transportation.

Susan van Dyk, University British Columbia,
Canada

Mandates have been the driving force of
road transportation biofuels development,
with emission reduction as a key metric. But
this is difficult to apply in aviation as this is
challenged by current low production volumes
/ capacities and international competitiveness.
Fiscal incentives have the greatest potential
to increase investment in carbon reduction in
aviation, both for supply chain members and
airlines, and could bridge the price parity gap.
There are regions where biojet is promoted as
an extension of road transportation policies, e.g.
since 2013 biojet can earn RINs and blender
credits in the USA, and biojet can receive
‘biotickets’ in the Netherlands in the frame of the
renewable energy targets. While renewable diesel
is cheaper to produce than biojet, this may create
competition for the same incentive. On the other
hand, biojet can be produced as a co-product of
renewable diesel, so that there may be synergies
in these developments.

The development of biofuels for road
transportation has been driven by strong
supporting policies that have created mandates
and provided incentives to producers / blenders,
in addition to policies supporting feedstock
development and construction of facilities.
This has resulted in significant production
and consumption of biofuels in jurisdictions
such as the USA, Brazil and the EU.
The aviation sector has recognised that biojet
fuels are a key component to achieve significant
carbon reduction, well after 2050. However,
development of biojet fuels has been slow and
consumption is still limited. Currently, most
biojet fuels are derived through the oleochemical
pathway, based on upgrading of oils and fats.
This pathway will continue to be the main source
of biojet for the next 10 years. In the long-term
there may be a shift to lignocellulosic feedstock.
Significant expansion of biojet fuel
production and consumption will require
strong, long-term policies similar to what has
driven the development of road transportation
fuels. However, aviation has international

Market based mechanisms, like the CORSIA
agreement are unlikely to have a significant
impact on the development of biojet fuels;
further policies at national level have to be
explored to find unique solutions for this sector.

Jet fuel and carbon prices
7.00

Current
biofuel
cost

1.80
1.60

6.00

US$ per litre

1.40

5.00

1.20
Biofuel projected
cost

1.00

4.00

0.80

3.00

0.60

0.20
2000

2005

2010

2015

2020

2025

2030

2035

Jet
kerosene

2.00

The timeframe for parity of biofuels
with traditional jet fuel can be
shifted forward with government assistance

0.40

Jet + cost
of carbon

US$ per gallon

2.00

1.00

2040

2045

2050

Source: Jet kerosene price based on 25% markup over IEA’s crude oil forecast in Energy Technology perspectives 2010. Carbon price taken from UK DECC 2010 central
case forecast for traded carbon price. All are in constant (inflation adjusted) US dollars. IATA Economics. Schematic, indicative diagram.

Indicative projections of jet fuel and carbon prices (IEA)

16

PANEL DISCUSSION ON POLICY
OPTIONS AND RECOMMENDATIONS
TO SUPPORT BIOFUELS IN
INTERNATIONAL MARINE AND
AVIATION MARKETS

Regional multi-stakeholder initiatives, centred
around a main airport/harbour (the ‘BioPort’
concept), with regional policy incentives, can play
a key role in the expansion of biojet. Domestic
aviation (which falls under the Paris Agreement)
also provides more scope for tax incentives
for countries with the aim to target emission
reductions, so that domestic aviation can be a
first driver for biojet production.

The panel session was moderated by Paul
Bennett, SCION and Jack Saddler, UBC.
Panel participants were Michael Lakeman
(Boeing), Robert Malina (Univ. Hasselt/MIT),
Chris Field (Air NZ) and Claus Felby (Univ.
Copenhagen).


Karlstad BioPort project (SkyNRG)



Cost gap
There is a clear gap to be filled between the cost
of biofuels and fossil fuels, both for aviation and
marine applications. At the moment biojet fuels
are far more expensive than fossil jet fuels, and
this can be expected to persist, at least in the
short to medium term. From the technology side,
it was stressed that biojet production should
be in a refinery framework (next to higher
value chemicals), and this would reduce costs.
In fact, the fossil industry has also evolved in
this direction in the past century (with current
oil refineries, delivering a range of outputs). In
that sense, marine biofuels and biojet fuels are
complementary as they are at different ends of
the fuel spectrum (high vs low specifications).
Such synergies should be further pursued. The
key to success is not to focus too narrowly on
one product; this makes a business case much
more robust.

17

Negative externalities are not included in
current fossil fuel costs, and this distorts
the playing field. The difference between
societal and investor costs is central to the
whole discussion. Including societal cost (e.g.
through carbon tax) can make the case for
positive returns in a shorter timeframe. The
question is how to bridge this difference and
convince governments and sectors to play an
active role in this.

Policies are actually driving evolutions at the
moment. The actual value of fuels is very low,
and incentives / carbon price mechanisms
are decisive for alternative fuels. There are
programmes to support market entry, with
subsidies for such facilities. What is crucial is to
de-risk investments. CAPEX is very intensive, and
offtake agreements and long guarantees would
aid developments.
International initiatives like ICAO’s
CORSIA initiative help to get the focus in
the same direction, but the current carbon
offsets (valued at 0.10 US$/gallon biofuel)
are too low to compensate for the additional
costs of biofuels. Next to these international
industry actions, country commitments and
national / regional initiatives are needed.
Incentives for road transport biofuels can
be extended to include biojet or marine fuels.
Biojet fuels in the USA can use blender credits
and RIN markets, which are valued at around
1.0 US$/gallon biofuel.

The discussion also led to the issue of
willingness to pay. Airlines are very hesitant to
increase ticket prices. There was some discussion
about whether consumers are willing to pay a
‘green premium’. Some claimed that leaving it
to the customer will not work (e.g. the success
of low cost airlines – people look for the cheapest
tickets, no matter what the background is of the
airline; others mentioned that flying passengers
are open to paying a premium for carbon offsets
(not connected to the flight itself), or for flights
using biofuel (connected to the actual flight).
The impact of offsetting on flight ticket
prices is generally very limited.

Regional bioport developments are starting
to appear in several regions, in fact in both
marine and aviation biofuels, supported by
regional incentives. These initiatives provide
the opportunity for actors to ‘walk the talk’.
Bioports can be important to launch biofuel
markets in aviation and marine applications.

Solutions
In principle, a carbon price should be applied
across all sectors and then markets will decide.
There is a tendency for people to start to accept
the idea of a carbon tax (as for taxing cigarettes
and alcohol), as the problem of carbon emissions
is more and more being recognised. However,
if carbon prices become common practice,
someone will have to pay the cost. The question
will be how to handle the transition phase (i.e.
when some sectors / players have implemented a
carbon price, and others have not, will the latter
have a competitive advantage?). Panellists were
asked what level the carbon price needs to be to
make a real difference, and it was stated that this
would probably need to be a three digit number
(i.e. over a hundred US$/tonne carbon).

18

Conclusions

solutions, although the offset values themselves
are probably too low to stimulate biojet fuels.
The marine sector thus far has focused less on
CO2 emissions; most regulations are focused
on local air quality, particularly to reduce the
sulphur content of shipping fuels. This can also
create momentum for the sector to consider
alternative fuels.

Biofuels are currently mostly associated
with road transport, but it is acknowledged
that in the longer term the role of biofuels in
international transport (aviation, shipping) will
increase as these sectors rely on high energy
density fuels. While road transport fuels are
mostly regulated at national level, aviation or
maritime fuels operate under global markets.
So the international nature of these sectors
requires a different approach to stimulate
biofuels in international aviation or shipping.

Next to these international initiatives and
agreements, country commitments, national
incentives and regional initiatives are needed
to launch biofuel markets. Some countries
are opening national road transport biofuel
incentives for biojet fuels or marine biofuels.
Domestic aviation can also be a way to launch
biojet fuels in national markets, at least in larger
countries like the US. In the case of (regional)
shipping, including CO2 emissions to calculate
fairway and port duties (e.g. Clean Shipping
Index in Sweden) or tenders for public contracts
giving CO2 a substantial value can encourage
the market to come up with cost-efficient
carbon reduction solutions.

There is a clear gap between the cost of
biofuels and fossil fuels, both for aviation
and marine applications. In the first instance,
technology evolution will be needed to bring
costs down and de-risking investments will be
crucial to deploy these technologies; it will
also be important to evolve towards biorefinery
approaches, delivering a range of outputs. In
that sense, marine biofuels and biojet fuels are
complementary as they are at different ends of
the fuel spectrum (high vs low specifications).
Marine fuels are generally of low quality and
marine engines can accept different fuel grades,
while aviation is much more regulated in the
frame of safety management, and aviation
fuels need to fulfil high quality standards.

An interesting evolution is regional multistakeholder initiatives, centred around
a main airport / harbour (the ‘BioPort’
concept), with regional policy incentives.
Typical for marine and aviation is that fuel
distribution is much more centred compared
to road fuels. For instance, in terms of marine
fuels, only 15 ports account for 85% of marine
fuel bunkering globally. So BioPort concepts can
be an important step to launch biofuel markets,
both in marine and aviation markets.

Negative externalities are not included
in current fossil fuel costs, and this distorts
the playing field. Including societal cost
(e.g. through carbon tax) can make the case
for positive returns for biofuels in a shorter
timeframe. To avoid market distortions,
a carbon price should be applied across
all sectors and then markets will decide.
Reaching a substantial scale of biofuels in
aviation and marine applications will require
a mix of international and regional initiatives.
The recent Carbon Offsetting Scheme (CORSIA)
of the International Civil Aviation Organisation
(ICAO) to reduce CO2 emissions creates an
industry commitment to look for low carbon

19

Acknowledgements
The workshop sessions were facilitated by
Kees Kwant, Corinne Drennan, Jack Saddler
and Paul Bennett. The contributions of these
and also the invited speakers are gratefully
acknowledged. A special thanks goes to the
host, in particular Paul Bennett and Gillian
Todd of SCION for providing the venue and
taking care of all practical issues before
and during the workshop.
Luc Pelkmans, the Technical Coordinator of
IEA Bioenergy, prepared the draft text with
input from the different speakers. Pearse
Buckley, the IEA Bioenergy Secretary,
facilitated the editorial process and
arranged the final design and production.

20

Further Information
IEA Bioenergy Website
www.ieabioenergy.com
Contact us:
www.ieabioenergy.com/contact-us/