Airlines won the backing of a U.S.- based technical-standards group to power their planes with a blend of traditional fuel and biofuel from inedible plants, the Air Transport Association said today.

Fuel processed from organic waste or non-food materials, such as algae or wood chips, may comprise as much as 50 percent of the total fuel burned to power passenger flights, ATA spokesman Steve Lott and a Boeing Co. (BA) official told Bloomberg.

“The real winners of this type of regulatory breakthrough will be technology companies involved in the production of aviation biofuels,” said Harry Boyle, an analyst at Bloomberg New Energy Finance in London. “The biotech-biofuels business models of Amyris Inc. (AMRS), Codexis Inc. (CDXS), Gevo Inc. and Solazyme Inc. are all making claims to these types of new markets.”

Other biofuels companies that may benefit from opening up the $139 billion-a-year aviation fuel market are Neste Oil Oyj (NES1V) of Finland, Spain’s Abengoa SA and Honeywell International Inc. (HON)’s UOP unit, which is developing a fuel-making technology.

Officials from Neste, Abengoa weren’t available for comment.

The decision to amend jet fuel specifications to include fuels from bio-derived sources “is a tremendous accomplishment for aviation and the result of tremendous collaboration across the entire industry,” Boeing Vice President of Environment and Aviation Policy Billy Glover told Bloomberg News in an e-mail.

“Developing a renewable fuel supply is a critical part of our industry’s strategy for achieving carbon-neutral growth beyond 2020 and creating a sustainable future for aviation and the global community it serves,” Glover said.

The preliminary approval was granted this week by the West Conshohocken, Pennsylvania-based ASTM International, and it may allow Airbus SAS and Deutsche Lufthansa AG (LHA) to undertake a six- month trial they plan to start in the coming weeks using one engine powered 50 percent by biofuel from jatropha, camelina and animal waste.

Final approval will happen on July 1 at the earliest, Barbara Schindler, communications director at ASTM, said today by phone. Airlines will then be able to begin using bio-derived fuel a week or so thereafter, she said.

Under their Burnfair project, Airbus and Lufthansa plan to fly using so-called hydrotreated renewable jet fuel every day, four times a day, from Hamburg to Frankfurt. Lufthansa is aiming to blend clean fuel with kerosene at up to 10 percent of the total by 2020. Airbus estimates airlines may consume 30 percent of their fuel from plant-derived sources by 2030.
General Electric

The 27-nation European Union is prodding airlines toward cleaner fuels by forcing them to cap emissions or buy permits for the excess beginning next year. Aviation accounts for about 2 percent of global carbon-dioxide emissions.

General Electric Co., the world’s biggest jet engine maker by sales last year, said at a 50 percent blend level it doesn’t expect to see any impact on engines or operability.

Airbus and Boeing, which together manufacture about 80 percent of the world’s passenger planes, are planning to set up biofuel production chains across the world. Airbus is working on a supply hub in India where it’s talking with government and airline officials. Its aim is to form joint ventures and partnerships with growers, transporters and refiners. Boeing is negotiating with companies across the supply chain in South America. Fuel from inedible plants or waste doesn´t put price pressure on crops as can fuel from corn, sugar cane or soy.
Honeywell, Indian Oil

Honeywell and Indian Oil Corp., the nation’s largest refiner, are planning to establish a pilot biofuel production plant in India next year, James Rekoske, vice president of renewable energy at Honeywell’s UOP, said. It would be Honeywell’s first pilot facility in Asia and the companies will examine the feasibility of using plants such as jatropha and pongamia to make renewable jet fuel.

“This will be a tens of millions of dollars investment made by the time we’re done,” Rekoske said. It’s more expensive to produce diesel from biomass than from crude oil, he said, estimating the difference at less than $2 a barrel.