Lufthansa, Algae.Tec agree to collaborate on algae-to-aviation bio-fuels

Aviation major Lufthansa and Australia-based Algae.Tec have signed a collaborative agreement for the construction of a large-scale algae-to-aviation bio-fuels production facility.

To be funded entirely by Lufthansa the facility is expected to come up in Europe.

"Both parties will jointly develop a large-scale industrial algae oil production plant based on Algae.Tec’s technology and operating support, and Lufthansa’s offtake commitment for such algae oils," said the agreement between the two companies.

The companies also resolved to let Lufthansa purchase at least 50% of the crude oil produced by the facility, at a price that will be agreed later.

Algae.Tec in exchange will manage the facility and receive license fees and profits to accrue from the facility.

The agreement forms the base for a long-term cooperation between Algae.Tec and Lufthansa for the industrial production of crude algae suitable for conversion into aviation kerosene and conventional diesel fuels.

It is an extension of the memorandum of understanding signed between the two companies in January 2012 and remains subject to approval from the boards of the respective companies.

The final sign off for the algae oil conversion into aviation kerosene will be agreed upon at a later date while a final feasibility report will be complied once a site has been selected.