Deep-fat flyer: Qantas turns to cooking oil to cut fuel bill

AIRLINES scrambling to find savings may soon have biofuels to thank for keeping a lid on fuel bills.

Qantas, which spent $2.82 billion on fuel in the December half alone, achieved a better fuel economy of between 1 per cent and 2 per cent last year, with the first flights in Australia to use a fuel mix with cooking oil.

The carrier, which burns about 33 million barrels of fuel a year, also estimated the biofuel mix produced 60 per cent less carbon dioxide emissions than conventional fuel.

In a 2011 report, the CSIRO estimated that biomass - which is sourced from the non-food parts of crops, plants, algae, waste and other organic matter - could supply 46 per cent of the aviation fuel needs of Australia and New Zealand by 2020 and more than their total needs by 2050.

"The momentum is building to meet those goals," the chairwoman of the Australian Initiative for Sustainable Aviation Fuels, Susan Pond, said.

One obstacle was that biodiesel benefited from a 38¢-a-litre excise relief, which gave suppliers an incentive to divert output to road rather than air transport, Dr Pond said.

Qantas's head of environment programs, John Valastro, said local supplies of biofuels cost three to five times the price of regular fuel, largely because of a lack of scale.

Qantas's competitor Virgin Australia has an "aspirational target" of buying 5 per cent of its jet fuel from sustainable sources from 2020.

Its partners include Licella, which uses biotechnology to produce high-quality biocrude oil from plant and other farm waste; food crops are not used. The company plans to open a pre-commercial plant, with an annual capacity of 50,000 barrels of sustainable biofuel, in 2015.

A pilot plant produces "drop-in" fuels that can be blended with fossil fuels without lowering performance. The biomass feedstock includes pine sawdust and sugar cane waste.

Licella has spent "tens of millions" of dollars developing its technology and is planning to raise $10 million to fund the project for the next two years.