Airline crisis boosts biofuel drive

By Sarah Marsh

FARNBOROUGH (Reuters) - Algae and nuts are among the alternative sources of fuel being considered by an increasingly skittish aviation industry as an alternative to petroleum, whose price rises threaten airlines with bankruptcy.

With oil prices poised to break through the $150 a barrel barrier, biofuels based on sources of energy like these no longer seem far-fetched -- but they will take years to develop and no-one will be flying in a farm-fuelled jet any time soon.

Discussion about potential alternatives to help airlines cope with high fuel prices and meet environmental requirements buzzed round the chalets at the Farnborough air show this week, as aerospace firms vied to show off their green credentials.

Environmentalists, however, said it was empty talk.

"At $70 a barrel, people were saying 'it is never going to happen'. At $150 a barrel, it starts to look interesting," said Ric Parker, Rolls-Royce's (RR.L) research and technology head.

The engine maker said this week it was starting a scientific test programme with British Airways (BAY.L) to investigate alternative aviation fuels.

"There is some realisation that the industry needs to be proactive .. and if they aren't then we'll be forced by governments to be proactive," said Paul Adams, senior vice president of engineering at U.S. rival Pratt & Whitney (UTX.N).

European Union lawmakers recently approved a deal to include aviation, which they say generates 3 percent of carbon dioxide emissions, from 2012 in the EU's Emission Trading Scheme. The airline industry has criticised the move as a costly burden.