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With Investment From Shell, LanzaJet Looks To Produce 10 Million Gallons Of Ethanol-Based Jet Fuel By 2023

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LanzaJet Board Chair, Dr. Jennifer Holmgren, says that if you pass by the company’s Alcohol-to-Jet (AtJ) aviation fuel production facility in Soperton, Georgia in late 2022, it will “look exactly like you’re driving by a [petroleum] refinery, a smaller version of a full refinery”.

While 10 million gallons of jet fuel seems like a lot, it’s not even a drop in the bucket of global consumption. Commercial airlines consumed 96 billion gallons in 2019 and were projected to top 98 billion gallons before the pandemic struck in 2020. LanzaJet’s demonstration-scale version of a full refinery will be staffed by about 50 people and, if the company’s business plan succeeds, grow in size and numbers as the decade goes on.

Established last year, LanzaJet is a subsidiary of Illinois-based LanzaTech, a carbon recycler which employs a bacterial process that produces ethanol and/or specialty chemicals from industrial “off-gases”. Off-gases include syngas generated from any biomass resource (solid waste, organic industrial waste, agricultural waste) and reformed biogas.

LanzaTech says the process is “like retrofitting a brewery onto an emission source like a steel mill or a landfill site, but instead of using sugars and yeast to make beer, pollution is converted by bacteria to fuels and chemicals.”

LanzaJet’s specific AtJ process converts ethanol to Synthetic Paraffinic Kerosene and Synthetic Paraffinic Diesel. The yield is up to 90% sustainable aviation fuel (SAF) with the remaining 10% as renewable diesel. The company claims its process results in over 80% greenhouse gas emission reductions compared to conventional jet fuel and has minimal impact on food, land, and water use.

Ms. Holmgren says that SAF is one of three revenue streams the parent company will cultivate, the others being production of ethanol for use in consumer goods (apparel, seatbelts, etc) and production of chemicals using patented synthetic biology. But SAF has attracted enough investment to spin out a dedicated subsidiary.

Royal Dutch Shell Plc is the newest equity investor in LanzaJet joining Suncor Energy Inc., Mitsui & Co., Ltd., and British Airways. While the size of Shell’s investment wasn’t disclosed, the refiner has been playing catch-up with peers like British Petroleum and France’s Total SE which have invested heavily in renewable energy firms.

LanzaJet isn’t indicating what timeline or volume production threshold it will need to create positive return on investment but other aviation synthetic and biofuel firms are targeting mid/late-2020s profitability. Based on current ethanol prices, a gallon of LanzaJet SAF costs around $3 according to Holmgren. That compares to a spot price of $1.58 per gallon for fossil jet fuel as of early April according to the International Air Transport Association.

In addition to acquiring equity, LanzaJet investors will contribute to commercializing SAF production in their own jurisdictions (Canada, Europe, UK, Japan), Holmgren says. “By doing that, I hope that by 2025 or 2026 we’ll have over 150 million gallons of SAF [annually] in the market.”

Shell’s aviation distribution channel (like Suncor) is naturally complimentary, a key to market penetration. Access to LanzaJet’s gas-to-ethanol process is the prime motivation for the oil refiner’s investment Holmgren stresses, giving them “a seat at the table” while learning how to leverage alternative liquid fuels.

Leveraging alternative fuels also confers the imprimatur of “de-carbonization”, as much a political as environmental incentive for multi-national firms of all stripes.

LanzaJet has previously tested its SAF in airliners, making its first commercial flight in the tanks of a Virgin Atlantic 747 in October of 2018. The SAF was mixed 50-50 with conventional Jet A as required by the American Society for Testing and Materials (ASTM) standards agency.

However, LanzaJet’s fuel has been flown in jet aircraft in proportions up to 90-plus% in testing with Canada’s National Research Council. Holmgren points out that aircraft engine manufacturers like Rolls Royce and General Electric continue to make progress in moving to certify 100% synthetic/biofuel operation in their powerplants, likely spurring demand.

Production ramp-up and full scale commercialization of SAF will take time, giving competing propulsion sources opportunity to gain a foothold in the market. Electrification is chief among these though hydrogen fuel cells and, more importantly, pure hydrogen combustion are gaining attention as well.

Like other alternative aviation fuels producers, Holmgren doesn’t anticipate these sources being major competitive factors for LanzaJet’s SAF in the near to mid-term.

“Electrification is going to be a regional [aviation propulsion] solution. You’re not going to fly an electric plane between Orlando and Gatwick [UK] any time soon. Hydrogen may suit longer range [flights] near term but it will also be a while before that infrastructure is realized. If we’re going to de-carbonize, we should want all these solutions to be successful.”

LanzaJet is well capitalized for this demonstration phase of its growth Holmgren says but the company is seeking assistance in the form of a loan guarantee from the U.S. Department of Agriculture to underwrite debt associated with standing up its Georgia plant.

The SAF-maker will establish as many four production plants as it scales to market, a status bolstered by British Airways’ plans to use quantities of LanzaJet’s ethanol-derived fuel starting late 2022.

“We’re in really fast growth mode and the Shell investment helps,” Holmgren acknowledges.

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