Reports suggest that state-owned Indian Oil Corporation is joining hands a clean-tech company and several domestic airlines to set up a sustainable aviation fuel project
India’s target of achieving 50% of its energy requirements from renewable resources by 2030 could get a shot in the arm through a plan, spearheaded by state-owned Indian Oil (IOC), that envisages the setting up of a sustainable aviation fuel (SAF) production facility.
Published media reports suggest that the IOC has chalked out plans to set up a joint venture with a US-based clean energy tech company for such a plant in India. What’s more, several of India’s domestic airline companies have already given their nod for sourcing their aviation fuel from this plant.
Indian Oil spearheads the move
A report published by ET says IOC would be forming a joint venture with LanzaJet Inc for the plant that would produce sustainable aviation fuel with an alcohol-to-jet technology at IOC’s refinery located at Panipat in Haryana. The cost of the project is said to be around Rs.3000 crore, the report said quoting unnamed sources.
Once the move fructifies, it would put India well on the road to achieving its target of obtaining about half of all its energy requirements from renewable sources while also reducing total projected carbon emissions to a billion tonnes by 2030.
The joint venture would be operated by IOC, which will hold 50% of the equity with LanzaJet taking a 25% stake and the remaining going to domestic airline companies in India. The report said these companies are keen to participate in the venture, given that they too have sustainable development goals to achieve by 2030.
Would airline companies participate though?
Of course, there is no information about the airline companies that could be part of this venture but sources said that depending on who all want to participate, the stake on offer could be between 2.5% to 5%. While IOC would invest Rs.1500 crore, LanzaJet would pump in Rs.750 crore into the venture with the rest coming from the airline companies.
The published report said amongst those approached were the Tata Group, which operates Air India, Vistara and AirAsia and Indigo, the two largest airline operators in India. Others like GoFirst and Blue Dart are also on the list and depending upon their levels of interest could end up pumping in between Rs.100 crore to Rs.150 crore each.
Reports indicated that the aviation industry was keen for the government to provide policy level support instead of asking for equity participation in the project. They held the view that equity participation in a non-core area for an airline would not make sense as airlines mainly invested in increasing capacity or maintaining liquidity.
What is SAF and how does it benefit the economy?
SAF is a biofuel used to power aircraft that has similar properties to conventional jet fuel but comes with a much smaller carbon footprint. Based on the feedstock and the technology used to produce it, SAF can reduce life cycle GHG emissions drastically compared to conventional ATF with some SAF pathways even reporting a net-negative GHG footprint.
Growing, sourcing and producing SAF from renewable sources and waste also can potentially create new economic opportunities for the farm sector, improve the environment and even boost aircraft performance over a long term. Farmers growing biomass crops tend to earn more money during off seasons by providing feedstock to this market, which can also curtail nutrient losses and improve soil quality.
In addition, these biomass crops can reduce soil erosion and enhance underground water quality as well as quantity, besides enhancing biodiversity while storing carbon in the soil that can deliver on-farm benefits and environmental benefits across the country. Producing SAF from wet wastes cuts down pollution pressure on watersheds and keeps methane output low.
Research has also revealed that several SAFs contain fewer aromatic components that enable cleaner burn in aircraft engines. This reduces local emissions of harmful chemicals around airports during take-off and landing. Moreover, aromatic components are known to be contrails that can increase the impact of climate change.
IOC’s proposed plant would use technology to convert corn-based, cellulosic or sugar-based ethanol into SAF, producing 85,000 metric tonnes of the fuel per year.