Factbox: European airlines secure supplies of low-carbon jet fuel

Flughafen Wien AG

28/02/2024 12:40

(Adds new IAG deal)
       Feb 28 (Reuters) - European airlines are signing
sustainable aviation fuel (SAF) deals needed to meet
carbon-reduction targets set by the European Union.
    The adoption of alternative fuels made from bio-based
materials could cut carbon emissions by up to 80% compared to
conventional fuel, and is seen as a means of helping the sector
reach its net zero emissions goal by 2050. 
    In November 2023, a Virgin Atlantic plane made a 100%
SAF-powered flight from London to New York City to highlight the
importance of the alternative fuel's use. 
    SAF currently makes up less than 0.1% of aviation fuel used
globally and costs three times as much as regular jet fuel when
made from waste oils, with other versions made from green
hydrogen costing even more.
    Here are some deals signed so far:

    AIR FRANCE-KLM  AIRF.PA  
    In November 2023, the group invested $4.7 million in DG
Fuels' SAF production plant in the U.S. state of Louisiana, a
step towards its target to use SAF for 10% of its flights by
2030.
    It also said that in September 2023 it had signed a
memorandum of understanding (MoU) with Austrian energy company
OMV  OMVV.VI  to buy more than 300,000 metric tons (100 million
U.S. gallons) of SAF by 2030.
    The deal was followed by an offtake agreement for OMV to
supply the airline with 2,000 metric tons of SAF in 2023.

    EASYJET  EZJ.L  
    In September 2022, the airline signed a five-year SAF supply
agreement with Q8Aviation, the jet fuel unit of Kuwait Petroleum
International.

    FINNAIR  FIA1S.HE  
    In June 2022, the Finnish carrier signed a five-year deal
worth $192 million with U.S.-based renewable fuel producer Gevo
 GEVO.O  to buy 21,000 metric tons of SAF per year from 2027.
    
    IAG  ICAG.L 
    In February, the owner of British Airways and Iberia signed
a deal to buy 785,000 metric tons of e-SAF, which is considered
to be even cleaner but is more expensive than SAF made of
biofuel. E-SAF is made synthetically, extracted from renewable
electricity, water, and CO2 and converted into a fuel via a
power-to-liquid process. 
    In August 2023, it signed an agreement to buy 14,700 metric
tons of SAF in 2023 from U.S. energy firm Phillips 66  PSX.N .
    Microsoft  MSFT.O  was also involved in the deal as part of
its efforts to cut carbon emissions of its business travel and
air freight.
    In November 2021, IAG and Southwest Airlines  LUV.N  jointly
agreed to buy nearly 920,000 metric tons of SAF created from
woody biomass in Mississippi. 
    Under the deal, IAG will buy 220,000 metric tons of SAF over
10 years starting 2026, while Southwest will buy 670,000 tons
over 15 years starting from the same year.
    
  
    ICELANDAIR  ICEAIR.IC 
    The Icelandic carrier in March 2023 said it had signed an
MoU with green hydrogen developer IdunnH2 for the use of up to
45,000 metric tons of SAF from 2028 onwards.

    JET2  JET2.L  
    Britain's Jet2 said in April 2023 it was making a "major
investment" in a SAF production plant in northern England, with
production expected to start in 2027.

    LUFTHANSA  LHAG.DE  
    Germany's flagship carrier in August 2023 signed a letter of
intent on the production and supply of SAF with specialty
chemicals firm HCS Group. Production in Germany is set to start
in 2026 with a volume of 60,000 metric tons per year.
    The carrier in 2022 strengthened its SAF partnership with
OMV, which also supplies the biofuel to Austrian airlines at
Vienna International Airport.

    NORWEGIAN AIR  NAS.OL  
    The Norwegian carrier in April 2023 partnered with a local
producer of electrofuels, Norsk e-Fuel, to build a SAF
production plant in the country. The plant is scheduled to be
operational in 2026 and it should secure about 20% of
Norwegian's total SAF needs by 2030.

    RYANAIR  RYA.I  
    The Irish airline in October 2023 purchased 500 metric tons
of SAF from OMV  OMVV.VI , as part of an MoU to buy up to
160,000 tons of SAF over eight years starting from 2023.
    Ryanair also signed a supply agreement with Shell  SHEL.L 
in December 2022, to buy 360,000 metric tons of SAF from 2025 to
2030, a fifth of what it needs to meet its target to power 12.5%
of flights with the fuel by 2030.
    It has struck similar deals with Spain's Repsol  REP.MC ,
set to supply up to 155,000 tons of SAF between 2025 and 2030,
and Finland's Neste  NESTE.HE , which powers all Ryanair's
flights at Amsterdam Airport Schiphol. 
    
    VIRGIN ATLANTIC
    The British airline partnered with Neste  NESTE.HE  in 2022
to acquire 2,000 metric tons of SAF. 
    In December 2022, it agreed to buy 260,000 tons (85 million
U.S. gallons) of SAF from Gevo by 2030, via a joint venture with
U.S. airline Delta. 

    WIZZ AIR  WIZZ.L  
    The budget carrier said in April 2023 it would invest 5
million pounds ($6.1 million) in biofuel company Firefly,
expecting to supply up to 525,000 metric tons of SAF to its
British operations from 2028.
    ($1 = 0.8151 pounds)

 (Compiled by Anna Mackenzie, Stéphanie Hamel, Marta Frąckowiak,
and Andrey Sychev; editing by Milla Nissi, Tomasz Janowski and
Sharon Singleton)
 ((anna.mackenzie@thomsonreuters.com;))