Air New Zealand is partnering with a Government agency to find an operator for a commercial sustainable aviation fuel (Saf) plant in this country.
The airline has this year lobbied the Government to back the development of a Saf industry, critical for the long-term aim of drastically cutting emissions from aviation by 2050.
When mass travel resumes airlines' and governments' green credentials will be under increased scrutiny from those worried about pollution from planes such as climate activist Greta Thunberg who at the weekend gave Prime Minister Jacinda Ardern another swipe on this country's environmental record.
Air New Zealand has agreed with the Ministry of Business Innovation and Employment to run a closed request for proposal (RFP) process that invites leaders in innovation to demonstrate the feasibility of operating a commercial-scale operation in New Zealand.
The airline's chief operational integrity and safety officer David Morgan said the partnership with MBIE was an "incredibly positive and important step" in addressing the challenges and opportunities of producing Saf in New Zealand.
"Sustainable aviation fuel is critical to aviation decarbonisation and can reduce aviation emissions by more than 80 per cent. But we can't do it alone.
Air New Zealand and MBIE have a shared interest in developing a Saf supply chain in New Zealand and we are confident this process will bring us one step closer to it being a reality."
The airline is working with Airbus to develop hybrid hydrogen planes for domestic regional flights but Safs are seen as the best hope for powering long-haul aircraft.
Morgan said Air New Zealand does not intend to become an owner, operator or direct investor of a plant but the airline's investment is in the form of a long-term offtake agreement from the plant.
This was critical for the plant as it would provide certainty for the producer and their investors.
While airlines, plane makers and the energy sector have been trialling Saf for more than a decade, it has not been used much beyond demonstration flights or blended with high proportions of traditional jet fuel. International Air Transport Association figures show that while the amount used in aircraft increased between 2019 and 2020, it still represented 0.1 per cent of fuel used.
The association says without critical production mass, alternative fuels are two to four times more expensive than traditional fuel.
Morgan said his airline would like to see Saf production come online as soon as possible but it could take five to seven years for a plant to be commissioned and become operational.
The RFP would be launched over the next month or two.
The first stage of the RFP seeks responses from a selection of world leaders in Saf production to conduct an initial pre-feasibility study into the applicability of their production methods in this country.
Upon completion of the first stage, Air NZ, MBIE, other govt agencies and third-party technical specialists will then select the most promising proposals to conduct a deeper dive into their feasibility.
''We anticipate that once feasibility has been established through the two stages, the evaluation team plans to select a partner to proceed through to engineering design with the aim of formalising key supplier, customer, and investor agreements, which will then lead to the construction of the plant.''
Research to date New Zealand was best placed to use forestry residue (waste) as a feedstock with municipal solid waste also a potential source.
It was important to have a New Zealand-based Saf industry, said Morgan.
From discussions with suppliers, domestically-produced Saf is likely to be more cost effective than importing it.
''Domestic production has other important co-benefits. As well as reducing aviation emissions, investment in the development of a Saf sector would come with strong associated economic and social benefits to NZ, including by creating skilled jobs benefiting regional NZ in the construction and operational phases.''
It would enable more resilient fuel supply chains (rather than relying solely on imported fuels), and utilise waste materials
''In addition, domestic supply is important given the current scarcity of global Saf supply which is particularly acute in the Asia-Pacific region. ''Although Saf production is expected to grow, so too will Saf demand, as more airlines look to Saf to decarbonise.
''Ultimately, we believe Saf supply over time will need to include both local production and imported supply to improve supply chain security and improve ability to manage peaks and troughs in demand over time.''
It was important to develop a "drop in'' Saf to fit within existing infrastructure.
''It is critical to the business case for Saf that expensive upgrades or replacements of pipeline, storage, and on-airport infrastructure can largely be avoided,'' said Morgan.