Although production won’t begin for some time, Alaska Airlines has signed an agreement to purchase sustainable biofuel for its aircraft from Honolulu-based Hawaii BioEnergy.
The two companies agreed on terms earlier this summer, but Hawaii BioEnergy, a consortium of three of the Aloha State’s largest landowners and three venture capital firms, is still several years away from production.
Even so, the deal marks an intriguing commitment from a U.S. mainland-based carrier that was the first in the nation to operate multiple passenger flights using a biofuel blend.
According to Jay Long, Alaska’s director of fuel administration, the airline operated about 75 flights out of Seattle and Portland, Ore., in November of 2011, using a blend of standard jet fuel combined with about 20% biofuel.
Long said the flights were a “proof of concept” effort and “by no means economically feasible,” noting that the carrier paid about six times as much for the biofuel blend as it normally would for standard jet fuel, and he conceded that until those prices are more competitive, you won’t see biofuel used in airline operations.
“But it’s kind of a chicken-and-the-egg scenario,” he said. “Until somebody steps forward and helps the industry move along to where you can make it at commercial scale, the cost will never come down.”
Committing to purchase biofuel from Hawaii BioEnergy is an effort by Alaska to nudge that industry forward, especially in a market where Long said the carrier has some fuel supply concerns.
“Having another local source of fuel improves the supply integrity for the whole network of islands,” he said, adding that Alaska hopes to use biofuel produced in Hawaii on flights returning from the Islands to the mainland.
Alaska is actually Hawaii BioEnergy’s second customer. Aloha State energy company Hawaiian Electric Co. has agreed to purchase 10 million gallons of biofuel each year to provide power across the Islands, pending approval from the Hawaii Public Utilities Commission.
BioEnergy hopes to ramp up production of a woody biomass-based biofuel, likely created from eucalyptus trees, within five years of regulatory approval, enabling Alaska to potentially begin purchasing sustainable jet fuel for Hawaii flights as soon as the fall of 2018.
“Eucalyptus is a relatively fast-growing tree,” Hawaii BioEnergy’s executive vice president and COO, Joel Matsunaga, said. “We want to get the most biomass per acre, and we think eucalyptus will allow us to do that.”
Matsunaga said eucalyptus also requires a relatively limited amount of other resources to grow, noting that the company’s intent is to produce a biofuel with “rain-fed, non-irrigated biomass” likely on both Kauai and the Big Island of Hawaii.
Confident that his company can produce competitively priced biofuel in the next five years, Matsunaga also championed the future benefits of his company’s signed agreements with Alaska and Hawaiian Electric for Hawaii, a state whose economy is heavily dependent on tourism jobs and generates around 90% of its energy with imported fossil fuels.
“It’s critical that we develop a solution to the high energy costs we face in Hawaii,” he insisted. “So rather than exporting dollars to foreign countries to purchase fuel to be shipped back to Hawaii, we’ll be able to create jobs locally to produce a sustainable fuel in the state.”