Fuel-strapped airlines need a new approach, but technological fixes are hard to find.

For more than 80 years, the technology has existed to do just that. As Slate's Daniel Gross has written, a pair of German chemists in the 1920s developed the Fischer-Tropsch process, which turns coal or natural gas into a synthetic liquid fuel that's chemically identical to its petroleum-based counterpart. Germany used the technology to power its air force during World War II, and the oil-embargoed South African apartheid regime created a state company, Sasol, to provide the country with fuel.

Synthetic fuels have been tried in the United States as well. In 1944, Congress passed the Synthetic Liquid Fuels Act, aimed at producing fuel from coal, forestry products, or whatever else looked promising. The program ended after the war, but the government tried again in 1980, creating the Synthetic Fuels Corp. to build a market for alternative fuels. Within five years, the project was abandoned and the corporation shut down, with the blame going to a mixture of falling oil prices and inept government management.

Now, a combination of rising oil prices, unstable supply and concern over climate change has propelled Washington to try again, with a twist. Instead of creating another state-run corporation to produce synthetic fuel, the federal government is encouraging private companies to do it themselves by lifting the regulatory burdens standing in their way.

The Federal Aviation Administration has launched a partnership with industry groups called the Commercial Aviation Alternative Fuel Initiative  (PDF), which includes a goal of certifying a 50-50 blend of synthetic and petroleum jet fuel for commercial use by the end of 2008. The American Society for Testing and Materials, an international standards group that sets the specifications for commercial fuel, expects to vote on the use of synthetic fuel before the end of this month. And on July 10, the Department of Transportation announced an FAA grant for a new $10 million X-Prize for the first commercially viable alternative jet fuel.

The FAA is also cooperating with the Air Force, which aims to qualify all its planes to fly on 50 percent synthetic fuel by early 2011. The Air Force makes up some 10 percent of the U.S. jet fuel market, according to Tim Edwards, senior chemical engineer in the Air Force Research Laboratory's Propulsion Directorate. By certifying military jets to fly on synthetic fuel, he said, the Air Force hopes to create an incentive for U.S. companies to start producing it.

"The Air Force was paying 91 cents for jet fuel in 2004, and now we're paying $4.13 a gallon," said Edwards. "That just totally destroys any kind of budgetary planning. If we do have a domestic synthetic fuel industry, the prices would be lower, and the volatility would be lower."

Synthetic fuel can be greener fuel, depending on how it's produced. Boeing says that coal-based synthetic fuel is only a viable option if manufacturers can find a way to capture and store the CO₂ emissions created during the production process—technology that's still in the planning phase. Airlines like Lufthansa and JetBlue are looking at biomass, including algae, as a power source, but for the moment those plans seem more significant for their publicity value than their near-term utility.

Can money-losing airlines, facing an onslaught from environmental groups, take solace from any of this? Not in the short term. But if the government program can actually create a domestic market for synthetic fuel, and if companies like Bombardier and Boeing can think beyond "tubes with wings"—big ifs—then the battered domestic airline industry might be able to count on something even more important than profits: a future.

Correction, July 22, 2008: The unit of measurement for fuel efficiency, passenger-miles per gallon, was originally given as "miles per passenger per gallon." (Return to the corrected sentence.)