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By Jeffrey Dastin
June 30 (Reuters) - United Airlines on Tuesday said it purchased a $30 million stake in alternative fuels developer Fulcrum BioEnergy Inc in a deal designed to meet some of its fuel needs and hedge against future oil price volatility and carbon regulations.
United Continental Holdings Inc said the agreement lets it purchase at least 90 million gallons of sustainable aviation fuel for a minimum of 10 years, subject to availability, at prices competitive with conventional jet fuel. The Chicago-based airline consumed 3.9 billion gallons of fuel last year, representing 32 percent of its total operating expense.
The move makes United the second U.S. carrier to take a major stake in an energy company after rival Delta Air Lines Inc bought a refinery in 2012 for $180 million. United is the first U.S. airline to invest particularly in a biofuel company and has taken several biofuel initiatives since 2009.
This month the U.S. Environmental Protection Agency said greenhouse gases from aircraft pose a risk to human health, paving the way for new regulations on emissions that could add to airlines’ costs. In a media release, United’s Executive Vice President and General Counsel Brett Hart called alternative fuels “vital to the future of aviation.”
Fulcrum’s technology converts household trash into renewable jet fuel and is expected to reduce lifecycle carbon emissions by more than 80 percent compared to conventional jet fuel, United said.
Fulcrum filed for an initial public offering of up to $115 million in 2011 but later withdrew. It was not immediately clear how much of the company United will control as a result of the deal. (Reporting By Jeffrey Dastin in New York; Editing by W Simon and Chizu Nomiyama)