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SECTION 1 Introduction 1.1 What Are Alternative Jet Fuels? Alternative jet fuels are fuels made from nonpetroleum sources that have the same perfor- mance characteristics as today's petroleum-based jet fuels such as Jet A and JP 8. They can be pro- duced with different technologies and from a number of different feedstocks, both renewable and nonrenewable. Renewable feedstocks include plant oils, animal fats, and biomass (e.g., crop residues, wood chips, and prairie grasses); nonrenewable feedstocks include coal and natural gas. Depending on the feedstock and technology process used, alternative jet fuels have different environmental and economic characteristics. The location of production facilities with respect to feedstocks and end users is a key determi- nant of costs and, hence, the economic viability of alternative jet fuels. Therefore, it is important to consider alternative jet fuel projects in the context of their entire supply chain, as shown in Figure 1. In addition to location, an important logistical consideration for alternative jet fuels is blend- ing. Alternative jet fuels are currently certified and approved for use in existing jet fuel infrastruc- ture as blends. Thus, these fuels need to be blended with conventional jet fuel prior to injection into existing pipelines, storage, and other infrastructure and equipment. 1.2 What Is Driving the Interest in Alternative Jet Fuels? A diverse group of stakeholders, including airports, airlines, the military, and federal and local governments, want alternative jet fuels for a series of economic, operational, and environmental reasons. These reasons include: To diversify sources of conventional jet fuel: Alternative jet fuels offer the aviation indus- try the potential benefit of diversifying its supply of jet fuel. Virtually all of the jet fuel currently used in aviation operations is derived from petroleum. Petroleum's limited spare productive capacity and associated volatile, steadily increasing price are key business challenges for the industry, primarily because jet fuel is one of aviation's highest cost components. By dedi- cating resources to alternative jet fuels, the aviation community is looking for an opportu- nity to diversify its fuel supply chain and introduce competition to one of its main operating cost areas. To improve reliability and security of supply: Alternative jet fuels can incrementally secure the supply of liquid fuel to the airline industry. Given current technology, there are no practical options to power aircraft engines other than with liquid fuels. Unlike other transportation 4
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Introduction 5 Feedstocks Dedicated alt. Blending Conventional jet fuel Airport Production location storage transport and facility end users Conventional jet fuel Figure 1. Schematic of the integrated alternative jet fuel supply chain. sectors, such as ground and marine transportation, the aviation industry will be unable to switch to nonliquid energy sources such as solar, nuclear, or hydrogen to power its airplanes, at least in the near term. As competition for petroleum-based products intensifies due to increased demand from other industry sectors and the possible exhaustion of this nonrenew- able resource, there are concerns that aviation may find it difficult to meet its needs of liquid fuels over time. Furthermore, alternative jet fuel production facilities need not be located in the same places where conventional refineries are located. This would allow the geographic diversification of production away from sites prone to natural disasters, such as the U.S. Gulf Coast. To enhance energy security: The United States is the largest net importer of petroleum. These import supplies are subject to disruption because of regional or international conflicts. As major users of petroleum-based jet fuel, U.S. airlines and the military would like to develop domestic alternatives to lessen the dependence on foreign sources. The production of alternative jet fuels using feedstocks that are available in the United States can help meet this goal. To reduce the volatility of the price of jet fuel: Alternative jet fuels may contribute to reduc- ing the volatility of the price of jet fuel. By diversifying the supply of jet fuel and making jet fuel less dependent on unstable foreign sources and more immune from the vagaries of financial flows in the futures markets, alternative jet fuels may lead to less variability in the price of jet fuel. Furthermore, as the alternative jet fuel industry develops, airlines may have the ability to enter into long-term supply contracts with potential producers that would specify a certain price or price band over time. To provide regional economic benefits: Alternative jet fuels have the potential to generate new jobs and spur economic activity, especially in rural areas where feedstocks can be grown. In addition, the growth of a domestic alternative fuels industry would help reduce U.S. imports of foreign crude, and thus those resources that would otherwise be spent abroad could be re-invested domestically. Alternative jet fuels can also mitigate the economic impact of carbon taxes or other charges under consideration for conventional jet fuel. To provide potential environmental benefits: As a user of petroleum-based fuels, aviation is a source of carbon dioxide (CO2), nitrogen oxides (NOx), sulfur oxides (SOx), and particulate matter (PM). The introduction of alternative jet fuels can potentially help reduce aviation's environmental footprint, providing benefits to the airports, their surrounding communities, and the airlines they serve.