Westwood alternative energy company Rentech Inc. took a majority stake in a Hawaiian bio-fuel company last week as demand for synthetic airplane fuel appears poised to take off in Europe due to government regulation.

Rentech said last week it would exercise its option to purchase additional shares in ClearFuels Technology. ClearFuels will merge with a Rentech division and keep its name.

ClearFuels develops refineries that create fuel from wood waste and other natural products. The two companies began teaming up on alternative fuel production after Rentech purchased a 25 percent share in ClearFuels in 2009.

Rentech Chief Executive D. Hunt Ramsbottom said it will continue to team with ClearFuels to produce gas made from bio-mass sources such as fiber from sugarcane for use in diesel engines and airplanes.

“We’ve gotten to know them in the last two years and they’ve built a robust pipeline of projects,” Ramsbottom said.

Rentech is banking on being able to sell “syngas,” or fuel that has been converted from biomass, to airlines worldwide. Rentech has been working with ClearFuels since 2010 on a bio-refinery project, which is being funded in part by a $23 million grant from the U.S. Department of Energy. ClearFuels is based in Aiea, Hawaii, and the work on the project has been conducted at a Rentech site in Commerce City, Colo., using jointly developed technology.

Eric Darmstaedter, chief executive of ClearFuels, said the company is focused on converting what it calls “clean bio-mass” made from wood waste, sugar mill waste and grass into low-carbon synthetic gas that can be used for jet fuel. He said ClearFuel’s thermochemical conversion process can turn bio-mass feed stocks into ethanol, hydrogen and diesel.

ClearFuels and Rentech will market syngas to commercial airlines.

The roll-out of the syngas will be timed to take advantage of a requirement in Europe that commercial airlines and others comply with the European Union Emission Trading Scheme. The regulation calls for large emitters of carbon dioxide, such as airlines, to report their emissions and pay a fine if they exceed limits. The Trading Scheme was initiated in 2007 as part of the Kyoto Protocol.

ClearFuels’ synthetic fuel can be combined with regular jet fuel, Darmstaedter said, in a blend as high as 50 percent. ClearFuels is also producing renewable diesel to fuel power generators and hopes to ink a contract to sell the fuel to Hawaiian Electric Co. to fuel a power generator.

Ramsbottom said he’s optimistic about the potential for syngas for airlines due to the rising price of oil.

“Crude is at $109 today,” he said. “There is unlimited upside in demand for syngas jet fuel and for renewable diesel.”

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