Jan. 7 (Bloomberg) -- Continental Airlines Inc. conducted a demonstration flight today using biofuel, the first such test in the U.S. with a commercial jet, as the industry experiments with ways to curb pollution that leads to global warming.

A fuel blend made from algae and jatropha scrub plants powered the unmodified twin-engine Boeing Co. 737-800, Continental said. The flight, which took off without incident about 12:15 p.m. Houston time at George Bush Intercontinental Airport, lasted about 90 minutes.

“It all went according to plan,” said David Messing, a Continental spokesman. “The initial observations are that there’s no difference in terms of the performance of the airplane.”

The test by Houston-based Continental, the fourth-largest U.S. airline, is a step toward the International Air Transport Association’s goal of having member carriers use 10 percent alternative fuels by 2017 to reduce global warming. The European Union will cap airline carbon-dioxide emissions beginning in 2012.

“We’re watching as different countries set carbon-reduction targets,” Leah Raney, Continental’s managing director of global environmental affairs, said in an interview. “We have been working very diligently to reduce our carbon footprint over the last 10 years.”

Aviation accounts for about 2 percent of global CO2 emissions, IATA estimates. More-fuel-efficient planes have helped Continental trim its output of heat-trapping gases 35 percent, Raney said.

Fuel of Future

U.S. carriers are testing alternative fuels after prices for traditional jet kerosene, which is derived from crude oil, surged to a record $4.36 a gallon in July. Jet-fuel prices have since collapsed about 60 percent amid a deepening recession.

“This demonstration flight represents another step in Continental’s ongoing commitment to fuel efficiency and environmental responsibility,” Chief Executive Officer Larry Kellner said in a statement. “The technical knowledge we gain today will contribute to a wider understanding of the future for transportation fuels.”

Airline trials with biofuels began in February with a test by Virgin Atlantic Airways Ltd., the Crawley, England-based long- haul carrier controlled by billionaire Richard Branson.

Last month, Air New Zealand Ltd., the nation’s biggest airline, flew a Boeing 747-400 that used a 50-50 blend of jatropha oil and conventional fuel in one of the jumbo jet’s four engines.

Fuel Mix

Continental is the first to use the jatropha-algae mix. The plants are attractive as a fuel source because they don’t reduce stocks of food crops or contribute to deforestation, Raney said. The 737’s engines didn’t need modifications to burn biofuel in today’s test, Raney said.

“Algae has been identified as one of the most promising alternatives so we are eager to see how it performs in normal operating conditions,” Paul Steele, executive director of the Geneva-based Air Transport Action Group, said in a statement. The group represents airports, airlines, engine makers and pilots.

During the flight, two pilots put the aircraft through a series of normal and non-normal flight maneuvers, such as shutting down and restarting the engine in mid-flight and power accelerations and decelerations. An engineer was on board to record flight data.

The flight operated with a biofuel blend of 50 percent biologically derived fuel and 50 percent traditional jet fuel in one of the engines. The other engine ran on traditional jet fuel, allowing Continental to compare how the fuels perform.

‘Slight Difference’

“They did notice a slight difference in some of the readings indicating that the energy output of the biofuel was higher than the regular fuel,” Messing said. “ They were essentially getting more thrust from the biofuel-powered engine using a lower amount of fuel than from the regular engine.”

The EU greenhouse gas market, the world’s largest, sets emission limits for electricity, steel, paper and other industries. The bloc’s system requires companies that exceed their emission quotas to buy permits from businesses that emit less.

U.S. President-elect Barack Obama supports a similar cap- and-trade system to control the gases linked to global warming. House Speaker Nancy Pelosi, a California Democrat, has said that while there is enough support to pass U.S. climate-change legislation, she wouldn’t commit to holding a vote in 2009.

To contact the reporters on this story: Jim Efstathiou Jr. in New York at jefstathiou@bloomberg.netMary Jane Credeur in Atlanta at mcredeur@bloomberg.net

Last Updated: January 7, 2009 17:36 EST