Industry Overview

The primary drivers for the substitution of biofuels for petroleum jet fuel are:

• The desire of aviation companies and governments to find an alternative supply to radically fluctuating availabilities and pricing of petroleum fuels. 2008 acted as a serious wake-up call for many.

• The worldwide push to address climate change is creating regulatory changes which force the use of biofuels and carbon credits. The EU is particularly aggressive in this area. On February 18, 2009, the EC stated that just over 2,700 airlines will be regulated for carbon emissions. Airlines from all over the world are included in the list, after the EU agreed to cap emissions from all aircraft that land and take off within the 27-nation bloc. These airlines will be included in the EU’s emission trading scheme (ETS) from 1 January 2012.

“It will come as a reality check for some airlines on the list which either have not known about the ETS or have been in denial,” said a spokesperson for the Association of European Airlines. Compared to its average emissions between 2004 and 2006, the aviation sector will have to cut its carbon emissions by 3 per cent in 2012, and 5 per cent from 2013.

The chart below, from the European Commission, Directorate General for Energy and Transport, shows that aviation emissions are by far the most troublesome emissions for the EU.

The price of petroleum oil, while roughly at parity today, is highly unlikely to remain this low over time. The oil producing countries have already stated they need $80+ per barrel prices to sustain their economies. There is little question that over time, biofuels and particularly jatropha derived fuels, are significantly cheaper to develop.