Bill Gates Green Jet Fuel Could Be As Cheap As Fossil

Price parity will only come as a result of a $50 million grant from Breakthrough Energy led by Bill Gates, along with support from discount loans and other financial subsidies.

LanzaJet, the Breakthrough-backed startup, is building its first commercial plant in the US state of Georgia and hopes to start production next year. The facility will double the current US capacity to manufacture sustainable aviation fuel, or SAF.

Although the global aviation sector is responsible for only about 3% of the gases that warm the planet today, its emissions are increasing rapidly. In a world that needs to reach net zero emissions to avoid the worst effects of climate change, green solutions are desperately needed to meet the growing demand for flights.

SAF is one of those solutions. It’s a broad label given to fuel that meets aviation standards that is made from more sustainable sources than traditional kerosene-based jet fuel, though SAF has so far been held back by limited supplies being sold to much higher prices.

LanzaJet’s technology takes ethanol from sources such as sugarcane in Brazil, waste gas in China, or corn in the US, and then chemically converts it into SAF and renewable diesel. Depending on the feedstock used to make the ethanol, LanzaJet says its SAF’s greenhouse gas emissions could be up to 85% lower than conventional fuel.

The chemistry to turn alcohol into jet fuel was developed nearly 100 years ago, but has since been perfected to work with much higher efficiency and lower costs. LanzaJet claims that it can convert almost all the carbon atoms that enter the process into usable fuel.

But the process is still energy intensive. That means that, without subsidies or other incentives, the cost of LanzaJet’s SAF from the first plant would be roughly double that of its fossil fuel cousin at current prices. To allow LanzaJet’s SAF to compete in the marketplace, the company sought “concessional capital,” meaning money that comes in the form of grants or low-interest loans.

LanzaJet got a cheap $50 million loan from Microsoft’s Climate Innovation Fund and also got a $14 million grant from the US Department of Energy. The rest of the $200 million it needs to build the plant will come from LanzaJet’s shareholders: LanzaTech, Mitsui & Co., Suncor Energy, British Airways and Shell Plc.

LanzaJet Chief Executive Jimmy Samartzis said Breakthrough Energy’s $50 million grant comes at a crucial time, two years after the Georgia plant was built. That’s because inflation in the last year sent construction costs skyrocketing. Without that additional money, the SAF produced at the plant would still have cost 25% more than conventional jet fuel. The subsidy erases that so-called green premium.

These kinds of unforeseen risks are common when it comes to bringing a new technology to market. That’s why Breakthrough Energy launched the $1 billion-plus Catalyst program, which includes contributions from 15 corporations and philanthropic organizations like General Motors Co. and Boston Consulting Group. Breakthrough aims to channel support to projects working to scale new technologies to commercial viability. The $50 million grant comes from Microsoft Corp., Builders Vision, the BlackRock Foundation and Gates himself.

The initial Georgia plant will produce 9 million gallons of SAF and 1 million gallons of renewable diesel per year. That’s a tiny fraction of the 14 billion gallons of jet fuel consumed by the US each year.

Given announced government and corporate policies to reduce aviation emissions, US demand for SAF is expected to grow by 3.2 billion gallons each year by 2030, according to BloombergNEF. LanzaJet said it hopes the lessons it learns in building and operating its first plant will help it scale up quickly, setting up factories with an initial capacity 10 to 30 times larger from 2026.

United Airlines Holdings Inc. is one of several airlines taking an interest in sustainable jet fuel as it seeks to reduce emissions. Its chief executive, Scott Kirby, told a conference in Chicago this week that he planned to create an investment vehicle related to SAF.

And why is Breakthrough giving a subsidy to a company whose shareholders are major oil companies at a time when the oil industry is making record profits? “No one is making money off of this product,” says Samartzis. The oil companies that own shares in LanzaJet are taking a risk, he says, because they have signed 10-year agreements to buy LanzaJet’s fuel regardless of what the broader market is doing or what happens if government incentives aim to encourage the development. and the use of SAF disappear.

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Bill Gates Green Jet Fuel Could Be As Cheap As Fossil