Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

China Looks to Biofuel for Passenger Flights


With global demand for jet fuel climbing, and oil prices increasingly squeezing airline profits, a seed called jatropha is getting a lot of attention.

On October 28 Air China conducted its first trial flight of a passenger jet powered by a mix of biofuel and traditional aviation fuel.

The Jet A-1 biofuel kerosene used in the flight was derived from the seeds of tung trees, more commonly known as jatropha.

Air China's Boeing (BA) 747-400 landed safely at Beijing Capital International Airport at 9:30 a.m. after burning more than 10 tons of the biofuel, a 50-50 mixture of traditional Jet A-1 derived from oil and Jet A-1 processed from the jatropha seeds. The jatropha Jet A-1 is what's known as a drop-in, simply being admixed in a 50-50 ratio with conventional Jet A-1, and requires no engine modifications.

Air China Vice President He Li said the composition and the burning efficiency of the biofuel admixture had been tested along with its impact on the Boeing 747's four Pratt and Whitney (UTX) JT9D high-bypass turbofan engines.

The Hydro-treated Renewable Jet Fuel (or HRJ) used Honeywell (HON) subsidiary UOP's process to produce the biofuel. According to Jennifer Holmgren, Universal's former director for renewable energy and chemicals, UOP licenses the process "nonexclusively." UOP said in a release, "The flight is a result of a broader effort kicked-off in 2010 by China's National Energy Administration and the US Trade and Development Agency to address the technical, economic and institutional factors required for the development of a new biofuels industry in China."

Air China is the People's Republic of China flag carrier and one of the country's major airlines. The world's tenth largest airline company according to fleet size, it operates nine Boeing 747s scheduled to be phased out. Air China has already retired five Boeing 747s.

According to the International Energy Agency, China will lead the world in "demand growth" for jet fuel through 2012, reaching 5.6%. Total worldwide demand for Jet A-1 is forecast to reach 239.4 million gallons per day during the same period, compared 214.2 million gallons in 2007, a demand-growth rate of 2.3 percent. A 2007 422-page National Petroleum Council study, Facing the Hard Truths About Energy, reports that global demand for energy -- including jet fuel -- will grow by as much as 60% by 2030.

It is China's growing civilian air capacity that makes the test significant, as China Civil Aviation Administration official Zhang Hongying said following the test that the jatropha-derived biofuel was now ready to be used for commercial flights.

The Air China test flight is the world's sixth such demonstration flight using Jet A-1 derived from jatropha.

The success was long in coming. PetroChina (PTR) Vice President Shen Diancheng remarked that it had taken PetroChina a decade to overcome the technical barriers of converting jatropha oil into Jet A-1 aircraft fuel, but now that tests have proven its viability, PetroChina expects to ramp up production to 60,000 tons of jatropha Jet A-1 annually by 2014.

China's interest in developing biofuels for industrial use is growing rapidly. In late 2009 Boeing and China signed a biofuel agreement with the Chinese Academy of Sciences and Chinese universities calling for research and development that could support commercialization of jatropha. China has been proactive in the biofuel area for a number of years, with jatropha planted in 2007, and the plant -- either wild or cultivated -- can be found in Sichuan, Yunnan and Guizhou provinces as well as the Guangxi Zhuang autonomous region. Yunnan currently has 33,000 hectares under cultivation, and the Xinhua news agency reports that the country will have 13 million hectares of biofuel plantations by 2020 that will produce 6 million tons of biodiesel annually.

But commercial jatropha production has its bottlenecks. While jatropha grows wild in tropical regions and can be cultivated on land not suitable for crops, it produces a lot more on cropland, suggesting that if it becomes popular, airlines will have to be careful that it is not squeezing out crop production. Initial field tests of jatropha cultivation suggest that high oil yields require that the plant receive water, nutrients, and soil conditions that are comparable to many food crops.

A substantial drawback to jatropha is that it is currently harvested manually, and commercial producers have found that the plant is more labor-intensive than originally thought, especially for harvesting.

Despite these setbacks, commercial jatropha production is underway or being established abroad. Abundant Biofuels Corporation, which is headquartered in California, has jatropha cultivation projects underway in the Philippines, Columbia, Peru, and the Dominican Republic. D1 Oils of London has announced large projects in India, Malawi, and Zambia. A number of companies are reported to have recently acquired rights to cultivate jatropha in Ghana. The central and some state governments of India are promoting jatropha production on tens of millions of acres, although these efforts have been criticized for potential adverse impacts on forested areas, biodiversity, and food production. Early yields in India have been below expectations.

Accordingly, commercial firms growing jatropha and airlines worldwide will be watching events in China with great interest. Fuel and oil make up 25% of airlines' operating costs, and when the price of jet fuel rises one cent, it increases the global cost of aviation $195 million.

Given China's fiscal resources, it seems most likely that jatropha commercial aviation biofuel production will arise there first, if sufficient land not impacting the nation's food production can be found.

Perhaps in the future the East will not be so red as green.

This article was written by John C.K. Daly of

Follow the markets all day every day with a FREE 14 day trial to Buzz & Banter. Over 30 professional traders share their ideas in real-time. Learn more.

No positions in stocks mentioned.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Featured Videos