• Biofuel maker Euglena aims to commercialize output in 2020s
  • Euglena to set up demonstration plant in Japan by 2018

Euglena Co. climbed the most in more than nine months in Tokyo trading after saying it would supply Japan’s largest airline with fuel made from algae and would begin commercial production in the 2020s.

The shares surged as much as 17 percent, the most since Feb. 23, as of 9:41 a.m. local time.

“Investors are very keen on environmental businesses,” said Minoru Matsuno, president of Value Search Asset Management Co., a Tokyo-based investment advisory firm. He cited the environmental summit in Paris as a reason.

ANA Holdings Inc. will use a mix of about 10 percent of the algae-based fuel, Kiyoshi Tonomoto, an executive vice president at the airline, told reporters in Tokyo on Tuesday. Euglena is spending about 3 billion yen ($24 million) on a demonstration plant to produce about 125 kiloliters (33,000 gallons) of the fuel a year in Yokohama, Japan, by 2018, and will begin commercial production in the 2020s, the Tokyo-based company said.

Biofuels made from plant oils and waste animal fats, farnesane, which is made from plant sugar, and Fischer-Tropsch fuel, made from gas, coal or biomass have been approved by ASTM International, the fuel standards organization, according to Boeing Co.

Broader adoption of the fuel still faces hurdles, which may eventually push Euglena shares back down, said Matsuno.

“I’m skeptical about whether the price of Euglena’s fuel can be lowered enough, whether supplies will be adequate and what rival biofuel makers will do,” he said.

ANA’s flights using biofuel will add to those by other airlines including Virgin Atlantic Airways Ltd. and Japan Airlines Co.

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