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Neste Oil Joins Aviation Initiative for Renewable Energy In Germany

April 4, 2012

Reducing the amount of CO2 produced from Germany’s aviation industry  took a major step forward today as Finland-based Neste Oil announced they were joining the Aviation Initiative for Renewable Energy In Germany (aireg).  Current members of aireg include Total, Lufthansa, Boeing, Rolls-Royce, Technical University Munich (TUM), and Karlsruhe Institute of Technology (KIT).

The announcement is a big deal for aireg as back in the Summer of 2011 Neste Oil began producing premium jet fuel derived from renewable raw materials. And they can produce this jet fuel on a commercial scale.

Neste Oil recently completed a 6-month test with Lufthansa where NExBTL renewable aviation fuel was used on over 1,100 flights between Frankfurt and Hamburg and one international flight between Frankfurt and Washington D.C. During the tests Neste Oil found that the planes used 1 percent less fuel when flying with NExBTL.

But today’s announcement will not send shares of Bay Area’s Solazyme (SZYM :NASDAQ) flying higher. Solazyme has developed Solajet, a renewable biofuel for jets that has been tested, and approved, by the U.S. Navy. But despite the approval, the Navy only committed to spending $12 million in December 2011 for 450,000 of advanced biofuels. Solazyme and Dynamic Fuels will be the suppliers.

Part of the Navy’s hesitancy might be the $26 per gallon price tag (currently fossil jet fuel is about $3.26 per gallon) as both Solazyme and Dynamic are still heavily involved in research and development. Under this deal Solazyme will be supplying 100,000 gallons of algae oil which Dymanic will process with used cooking oil to create 100,000 gallons of jet fuel and 350,000 gallons of marine distillate fuel.

Shares of Solazyme were down 4.12 percent in afternoon trading. 

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