United Airlines negotiates long term supply agreement with Fulcrum BioEnergy Inc.
United Airlines announced on Tuesday that it will invest $30 million in Fulcrum BioEnergy Inc, a company that has developed a low-cost, sustainable aviation biofuel which converts municipal solid waste into aviation biofuel.
“Investing in alternative fuels is not only good for the environment, it’s a smart move for our company as biofuels have the potential to hedge against future oil price volatility and carbon regulations”, says Brett Hart, United’s Executive Vice President and General Counsel.
The UA investment is the largest single investment by a U.S. airline in alternative fuels. Along with the deal, the two companies have entered into an agreement that contemplates the joint development of up to five projects which have the potential to produce up to 180 million gallons of fuel per year.
“United’s investment and participation in our projects is a tremendous boost to our program”, said E. James Macias, Fulcrum’s President and Chief Executive Officer. “Their support, commitment and backing accelerate our schedule to bring large volumes of competitively-priced, sustainable fuels to United and the rest of the aviation industry.”
“We know alternative fuels is an emerging industry that is vital to the future of aviation and this is just one of our initiatives to help make these fuels saleable and scalable,” said Hart.
United Airlines and Fulcrum have negotiated a long-term supply agreement which would see United purchase at least 90 million gallons of sustainable aviation fuel each year for a minimum of 10 years, depending on availability.
The cost is competitive with conventional jet fuel.
According to United, the biofuel will be a drop-in fuel that meets all the airline’s technical requirements and specifications and will power the aircraft in the same way as conventional jet fuel.
Fulcrum says it expects the first alternative fuels plant to be commercial production in 2017.
The technology converts household trash, known as municipal solid waste (MSW), into renewable jet fuel. Fulcrum says the biofuel is expected to provide a greater than 80 per cent reduction in lifecycle carbon emissions when compared to conventional jet fuel.
“This partnership underscores United’s efforts to be a leader in alternative fuels as well as our efforts to lead commercial aviation as an environmentally responsible company,” said United’s Managing Director for Environmental Affairs and Sustainability Angela Foster-Rice.
To date, Fulcrum has developed and proven its technology to convert MSW into low-cost, low-carbon transportation fuels in an innovative, clean and efficient thermochemical process.
Fulcrum has received support from the U.S. Air Force and U.S. Navy for the future production of fuel that meets military specifications.