United Continental Holdings Inc., owner of the world’s second-biggest airline, is making a $30 million equity investment in Fulcrum BioEnergy Inc. to help develop fuel from garbage for its jets.
The closely held U.S. biofuel producer will begin supplying United as early as 2018, with deliveries increasing to 90 million gallons (340 million liters) annually by 2021, Chicago- based United said in a statement Tuesday. The target, enough for about 20,000 flights, would be the equivalent of approximately 2 percent of the 3.9 billion gallons the carrier used last year.
Using fuel derived from plants and animal waste is one way airlines can reduce the production of greenhouse gases that are driving up global temperatures. A plan by the Environmental Production Agency to cut aircraft emissions may not take effect until 2018.
“What United has done is a big step forward, getting involved in helping us accelerate the date that we’ll be producing renewable, low-carbon fuel,” Fulcrum Chief Executive Officer Jim Macias said in a telephone interview Tuesday. “This will have a big impact on the industry and draw more into the game.”
United didn’t disclose how big of a stake in Fulcrum it received for its equity investment or whether it will get any seats on the company’s board. Cathay Pacific Airways Ltd., a Hong Kong-based carrier, made a similar strategic investment last year. Macias declined to disclose how much capital Pleasanton, California-based Fulcrum has raised since its 2007 founding.
Fulcrum agreed on May 5 to pay Abengoa SA $200 million to build its first commercial-scale plant near Reno, Nevada. That will produce about 10 million gallons per year of synthetic crude for jet fuel using solid waste as feedstock.
The company, which also operates a demonstration plant in North Carolina, intends to build five factories with larger output capabilities near five United hubs to expedite fuel delivery.
“United was very aggressive in wanting to do something,” Macias said. “It’s just a start, but it’s a good start.”