Cathay Pacific Sees a Biofueled Future: Q&A with Philippe Lacamp

Cathay PacificThe first of Cathay Pacific Airways’ 20 brand new Airbus A350-1000 aircraft arrived in Hong Kong from Toulouse, France, earlier this month. It flew the long-haul route on a blend of biofuel. Eight more of these aircraft will be delivered in 2018.

Compared to traditional jet fuel, biofuel can reduce lifecycle greenhouse gas emissions by as much as 80%, according to the airline. Using — and investing in — alternative fuels is part of Cathay Pacific’s sustainability strategy.

“Biofuel is fuel. It’s not some gooey mess that’s going to clog up your engine,” says Philippe Lacamp, senior vice president of Cathay Pacific Airways for the Americas. “It has the same properties as fuel derived from hydrocarbon sources.”

Lacamp spoke during a plenary session at the 2018 Environmental Leader & Energy Manager Conference in Denver. He discussed ways the airline is working to curb carbon emissions, increase its use of biofuel, and close the loop on waste. Recently we caught up with him to learn more about Cathay Pacific’s approach.

What are some of the biggest challenges with biofuel adoption for airlines?

There are two main challenges: One is cost and the other is supply. Those are intricately intertwined.

Those of us who are using biofuels generally are paying a significant premium. There is a group of airlines leading in this space, of which we are definitely one. We were the first airline in the world to invest directly in biofuel technology rather than simply procure biofuel and use it. It speaks to our intent to enable the industry rather than just being an end user, although the end users are important to drive scale and demand.

How much biofuel can you add to the mix right now?

In terms of the blending capacity, you could run an aircraft on 100% biofuel today. That has not yet been regulated. Aviation is a very highly regulated industry, and you can understand the reasons for that. As a result, people are cautious about approving anything that is new, whether it’s a new type of seat or a type of fuel. The slight irony is that biofuel has to jump over many more hurdles at a far higher bar for acceptance than fossil fuels.

At the moment we’re using a 10% blend for all the A350-1000 deliveries from Toulouse. We have the same 10% blend on the A350-900 on every single flight that is delivered to us from Toulouse; Toulouse–Hong Kong is the longest operation for any biofuel flight. The intent is that those blends are certified to be higher and higher.

Certain feedstocks are approved up to around the 30 – 40% mark already. The US military has been flying with 50% blends for years, so we expect the level for commercial aviation to increase as regulators become more comfortable with it, and as feedstocks pass rigorous certification standards.

Let’s talk about the current price of biofuel within the airline industry.

The feedstock is an important consideration. We invested in Fulcrum BioEnergy, whose feedstock is municipal solid waste. That seems to avoid the food, fuel, and land-use debates, and it’s clearly something we’re not going to run out of any time soon. Other feedstocks include second-generation sugars derived from agricultural waste or woody biomass. Conversion technologies range from bacteria to heat, pressure, and catalysts.

The target price per barrel of biofuel has been around $70. That will come down over time through larger scale adoption and commercialization through proven technologies. However, the industry is heavily impacted by the price of oil.

When oil is at $120 barrel, it makes a $70 barrel of biofuel very attractive. When oil is at $28 barrel, which happened in the last couple years, you can see the kind of damage that would do to a nascent technology. That really put a brake on the development of biofuel.

What do you see happening with biofuel in the near future — what’s your read?

My read is dictated by the carbon-neutral growth target that’s coming into play in 2020 that the airline industry signed up to. That requires either simply procuring carbon credits or using biofuel.

Biofuel will be what we call zero-rated. The carbon that you prevent from being emitted through the use of the feedstock allows you to not pay a price for carbon per ton that you burn. That will be market-dependent. If the carbon credit is sufficiently cheap, then many airlines will opt to buy carbon credits. If they are high, then I imagine one will see greater interest in biofuel.

The other important factor is that the biofuel emission footprint is much lower, much less polluting than for fossil fuel. One of the reasons we invest heavily in new aircraft is improved performance. That also comes with a reduction in fuel because of greater efficiency, which automatically reduces the emissions. And these new aircraft are significantly quieter. The overall societal impact is reduced, which is of interest to airports.

Speaking of aircraft, during your plenary session you mentioned that Cathay Pacific recycles entire planes. How does that work?

You can recycle or repurpose up to about 90% of an aircraft. It’s kind of like recycling your car. You find someone who can recycle it, you drive it down there, and they take it apart — just on a larger scale. It’s a bit of a sorry sight, seeing an aircraft dismantled, but it’s for a very good cause, closing that waste loop.

What’s next for Cathay Pacific’s initiatives?

There are a lot of areas where we’re going to start to see opportunities for closing waste loops and repurposing materials. I hope that ultimately the consumer will feel it appropriate to reward businesses that are doing the right thing. The challenge at the start is you’re paying for it on your own.

We want to get biofuel up to a meaningful percentage. That’s a big push. We can’t command a premium in the market just because we use biofuel. No one is going to pay for that yet, even if they are sympathetic to the need.

That will change. I think consumers are getting more visibility, more transparency around products, and we’re beginning to see that shift to rewarding companies.

Do you have advice for other leaders?

Oftentimes the pure financial business case doesn’t stand up so you have to look at the broader impact, whether that’s societal, environmental, or on your employees. We know that by doing the right thing, we’re going to attract people who want to do the right thing.

You have got to have the total impact measured. There are plenty of methodologies such as Total Impact Measurement and Management (TIMM) that PwC introduced and Trucost, which was set up by Richard Mattison. Trucost allows a company to account accurately for its impact on the environment, for example on water sources, forests, and air.

At some point we’re going to start paying for these things. And industries will be called into account. Take carbon in aviation. We’re going to have to start paying for the carbon that we produce. That wouldn’t have appeared in a business case for investment in biofuel, but doing the right thing has led us to exactly the right spot.

Philippe Lacamp spoke about creating an all-encompassing strategy during a plenary session at the 2018 Environmental Leader & Energy Manager Conference in Denver.

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