Chilean airline company LAN hit a landmark on Wednesday, flying its first-ever commercial flight using biofuel. An Airbus 320 flew 170 passengers from the capital of Santiago to the southern city of Concepción, powered by a biofuel made from refined vegetable oil.
Ignacio Cueto, general manager of LAN, said the flight “represented a key step toward the future of the industry,” and that there is “high potential” for biofuel production in South America. As LAN expands its operations in Latin America—with the acquisition of Colombia’s Aires and the recent merger with Brazil’s TAM airlines—the company is looking to develop alternate and cleaner sources of fuel. This is consistent with the direction in which the global airline industry is headed; the International Air Transport Association has committed to increasing its use of renewable fuels to 1 percent by 2015 and 5 percent by 2020. At the same time, Cueto and others emphasize that “the strictest technical standards” will continue to be upheld, and that investment to expand the use of biofuels will not be prohibitively high.
Cueto did not specify the cost of a ticket for Wednesday’s Santiago–Concepción flight, saying only that the costs of biofuel-powered flights are not yet competitive. Yet he also affirmed LAN’s future willingness to use biofuel in all its flights, and to work with any supplier that can offer competitive costs. Wednesday’s flight was accomplished as a part of a joint initiative with biofuel and forestry conglomerate Copec, with biofuel imported from the United States. Yet Copec general manager Lorenzo Guzmari expressed confidence that Chile could develop its own renewable fuels.
Biofuels are commonly made from plants with high levels of sugar and some oils. The ones used for LAN’s flight can be made from plants such as algaes, jatropha and halophytes and organic wastes, which can then be processed into high-quality fuels. In its press release LAN clarified that none of the fuels used were destined for consumption as food. The release also noted that the amount of carbon dioxide emitted during combusion of these biofuels is about the same as the amount taken up by plants during their growth cycle, which means that it results in no net addition of carbon dioxide to the atmosphere.
Just recently, I came across an article in the Harvard Business Review written by renowned professors Michael E. Porter and Mark R. Kramer. The authors lament the increasingly negative views toward business and capitalism of recent years and argue that companies must lead the effort to bring business and society back together. In their view, those who use corporate social responsibility to enhance reputations, recognition and respect miss the point. Porter and Kramer claim that businesses will gain the most respect if they embrace the concept of shared value, in which the creation of economic value meets social progress. Furthermore, this concept has the greatest potential for launching the next era of growth and innovation.
Porter and Kramer acknowledge that adherence to shared value is far from the norm in business today. While they offer examples of companies moving in the direction of combining economic and societal progress in their business models, such as Wal-Mart, General Electric and Nestle, they argue there is still much to change with education in business schools.
Listening to the recent State of the Union speech by President Obama convinced me that preparing for—or as he says—“winning” the future will require more than short-term job stimulus and deficit/debt-reduction measures. It will require a new mindset very much in line with the Porter-Kramer vision.
Adding to Chile’s growing wind energy industry, this week Bosques de Chiloé filed paperwork with Chile’s Sistema de Evaluación Ambiental (Environmental Evaluation System) to move forward with a wind farm on Chiloé, an island off the southern coast of Chile. The San Pedro Wind Farm will consist of 22 generators—each 40 to 80 meters tall—and will be capable of producing 36 megawatts of renewable energy for the nation’s central electric grid, Central Interconnected System (SIC).
The decision to build the San Pedro wind farm arose from studies conducted in 2009 and 2010 that provided data on wind speed, direction, temperature, and pressure in the area and helped the firm gauge the potential for wind energy. The project, estimated to cost $100 million, will be financed in part by revenues from carbon bonds, in keeping with a mechanism established under the Kyoto protocol.
The San Pedro wind farm is only the latest in a series of wind energy projects being launched in Chile. Both the Spanish fishing company Transantartic and Ecopower, a Chilean-Swiss firm, recently announced their intentions to build wind farms on Chiloé, and in July, Denmark’s Vestas—the world’s largest wind turbine company—announced it would invest in the Talinay Oriente wind farm in northern Chile, which it expected to become Latin America’s largest wind farm.