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European airlines secure supplies of low-carbon jet fuel

(Reuters) - European airlines are ramping up investments and signing agreements to secure supply of sustainable aviation fuel (SAF) needed to meet targets set by the European Union aimed at curbing the aviation sector's carbon footprint.

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 route to help the sector reach its net zero emissions goal by 2050.

On Tuesday, Virgin Atlantic will aim to highlight the importance of the alternative fuel's use with a 100% SAF-powered flight from London to New York City.

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, but other versions made from green hydrogen can cost more.

Here are some deals signed by European airlines so far:

AIR FRANCE-KLM          

In November, 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 on Sept. 18 it had signed a memorandum of understanding (MoU) with Austrian energy company OMV 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.


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


In June 2022, the Finnish carrier signed a five-year deal worth $192 million with U.S.-based renewable fuel producer Gevo to buy 21,000 metric tons of SAF per year from 2027.


The owner of British Airways and Iberia in August signed an agreement to buy 14,700 metric tons of SAF in 2023 from U.S. energy firm Phillips 66.

Microsoft was also involved in the deal as part ofits efforts to cut carbon emissions of its business travel and air freight.

In November 2021, IAG and Southwest Airlines 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.


The Icelandic carrier in March 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.


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


Germany's flagship carrier in August 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.


The Norwegian carrier in April 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.


The Irish airline in October purchased 500 metric tons of SAF from OMV, 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 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 , set to supply up to 155,000 tons of SAF between 2025 and 2030, and Finland's Neste, which powers all Ryanair's flights at Amsterdam Airport Schiphol.

WIZZ AIR         

The budget carrier said in April 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.


The British airline partnered with Neste  in 2022 to acquire 2,000 metric tons of SAF.

In December last year, 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.

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