United Airlines has purchased a stake in Fulcrum BioEnergy, which develops alternative fuels for the aviation industry.
The US$30 million deal marks the single largest investment by a US airline in biofuel industry. In addition to the equity investment, United and Fulcrum have entered into an agreement for up to five projects, to be located near United’s hubs, which could have the potential to produce up to 180 million gallons (681.4m litres) of biofuel per year.
“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 United’s executive vice president & general counsel, Brett Hart.
“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.”
United has also negotiated a long-term supply agreement with Fulcrum, giving it the opportunity to purchase at least 90m gallons of sustainable aviation fuel per year for a minimum of 10 years, at a cost that the airline says is “competitive with conventional jet fuel”.
“This alternative fuel will be a drop-in fuel that meets all of the airline’s technical requirements and specifications, and will power the aircraft in the same way as conventional jet fuel,” the airline said.
Fulcrum expects to begin commercial production of sustainable fuel in 2017. The company converts household waste, known as municipal solid waste (MSW), into jet fuel.
United made became the first North American carrier to perform a two-engine aircraft biofuel flight in 2009, and in 2013 the airline secured a deal with AltAir Fuels for biofuel to be used on its flights out of Los Angeles International Airport.