Virgin Atlantic to test low carbon product developed by NZ-founded company next year.

New Zealand-founded LanzaTech's quest to commercialise its biofuel has taken another step with one of the world's biggest banks throwing its weight behind Virgin Atlantic's plan to use it in its planes within a year.

At the weekend Virgin founder Sir Richard Branson said the HSBC had joined the partnership with the airline and LanzaTech in preparation for a world-first flight using a low carbon fuel.

Airlines and their technical partners had been racing to develop biofuel late last decade but progress in the field slowed when the global financial crisis hit.

LanzaTech - which started in New Zealand in 2005 but now has its headquarters in Chicago - is developing the fuel from waste gases from industrial steel production that are captured, fermented and then chemically converted for use as jet fuel.

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LanzaTech and Virgin Atlantic have been working together for three years on the fuel's development, but Virgin says the addition of HSBC's "vital support" to the partnership, along with Boeing and other technical partners, means a proving flight will take place next year.

The size of HSBC's investment was not disclosed because it is "commercially sensitive."

Through a unique process of gas fermentation LanzaTech is able to use waste carbon monoxide gas from steel mills and convert that to ethanol which after further processing can be "dropped in" to aviation fuel.

LanzaTech is working with the United States' departments of defence, transportation and energy to produce samples for fuel certification.

The alcohol to jet fuel "pathway" is undergoing the final stages of certification and the approval process is expected to be completed next year.

Branson, who is president of Virgin Atlantic, said the airline had demonstrated the potential of a biofuel flight in 2008 and was leading the way.

He said he was excited about the savings that could be achieved, especially when combined with the airline's growing fleet of fuel-efficient Boeing 787-9 Dreamliners.

LanzaTech estimates that its process is suitable to be applied in 65 per cent of the world's steel mills.

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Q&A
How does the LanzaTech technology work?
Waste gases from industrial steel production are captured, fermented and then chemically converted for use as jet fuel.
Through a unique process of gas fermentation LanzaTech's microbe is able to use waste carbon monoxide gas from a steel mill and convert that to ethanol for further processing.

Will the fuel be compatible with jet fuel?
LanzaTech says yes and this is important as it means plane engines, fuel tanks and aviation fuel infrastructure doesn't have to be modified. Trial flights will use a smaller proportion of LanzaTech biofuel blended with aviation kerosene.

How is LanzaTech funding its work?
Through taxpayers in New Zealand and the United States, angel investors, some industrial groups and now the HSBC.