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    Home Indian Oil & US-based LanzaJet to set up India’s first green aviation fuel firm
    English International

    Indian Oil & US-based LanzaJet to set up India’s first green aviation fuel firm

    Arif ArifArmanApril 14, 20234 Mins Read
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    INTERNATIONAL DESK: Indian Oil Corporation is planning to set up a joint venture with US-based clean energy technology company LanzaJet Inc and multiple domestic airlines for production of sustainable aviation fuel (SAF), people aware of the development said.

    The proposed venture will set up a plant to make SAF with alcohol-to-jet technology at the state-run company’s Panipat refinery in Haryana at a cost of Rs 3,000 crore, they said.

    As per the devised structure of the new company, IOCL will hold 50% stake while LanzaJet Inc will hold 25%. The remaining 25% stake would be offered to a bunch of airline companies.

    “Domestic airline companies have expressed interest in being part of this venture. IOCL would be reserving 25% for airline companies wherein multiple airline companies could be offered between 2-5% stake,” said a senior industry official aware of the development. The airlines are being roped in to ensure fuel offtake, the official said.

    IOCL and LanzaJet will invest Rs 1,500 crore and Rs 750 crore, respectively, on the proposed plant. The rest would be invested by airlines that opt to be part of the new company.

    Tata Group that operates Air India and Vistara, IndiGo, GoFirst and Blue Dart have been approached so far to invest in the venture, the industry official said. They may fork out Rs 100-150 crore each for minority stake in the company.

    SAF is a biofuel with properties similar to conventional jet fuel, but with a smaller carbon footprint.

    The proposed plant will use technology to convert corn-based, cellulosic, or sugar-based ethanol into SAF. It would produce 85,000 metric tonnes of fuel a year initially.

    IndiGo, the country’s largest airline, said it is evaluating the proposal. “There has been recent discussion on this topic organised by the ministry along with oil marketing companies (OMCs) and airlines. We are evaluating the proposal,” an IndiGo spokesperson said.

    IOCL and LanzaJet didn’t respond to queries on the topic.

    Airline executives in their discussion with OMC and government had said that rather than asking airlines to acquire equity stake, the use of SAF should be pushed by a government policy.

    “It will be counter-productive for an airline to make an equity investment in a non-core area as airlines primarily invest a lot to increase capacity or maintain liquidity,” said a senior airline executive. “Emission control must be government-led, which should push the usage of SAF and if investments need to be made then the OMCs should do so.”

    Airlines in an industry representation given to the government pointed out that production cost of SAF is too high. If 5% of SAF is blended with conventional jet fuel, the ticket price for an average two-hour flight will increase by around Rs 180, they said in the representation that ET has reviewed.

    “At current production price and rate, this doesn’t look sustainable unless the government gives policy support,” said the executive cited above.

    The Indian government has identified aviation as one of the primary sectors to reduce emission, and is nudging airlines, airports and ground handlers to take initiatives towards that.

    People aware of the development said policy think tank Niti Aayog has proposed multiple steps to increase local production of sustainable aviation fuel. The Aayog has suggested GST at 5% on SAF and said the government could waive charges like passenger fees and user development fees (charged by airports) for flights which are operated with SAF.

    Aviation turbine fuel (ATF) is not under GST yet, and is heavily taxed in many states. It attracts 11% central excise duty plus value added tax (VAT) at state level.

    To reduce emission in ground-handling operations, the Ministry of Civil Aviation has asked airports to convert all vehicles and equipment used to electric. The ministry is finalising a ground-handling equipment policy that will define the standards of equipment and maximum age to deploy those at airports.

    India has a target to get 50% of its energy from renewable resources and reduce total projected carbon emissions by one billion tonnes by 2030. (TET)

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    aviation english firm first fuel, green india’s indian international lanzajet oil, set to up us-based প্রভা
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