Qantas has partnered with a coalition of airlines, aircraft manufacturers, and energy and finance companies to accelerate the global production of aviation biofuel.
This collective, known as the Sustainable Aviation Fuel Financing Alliance (SAFFA), aims to further the aviation industry’s efforts to reduce its carbon footprint.
The alliance boasts an impressive line-up of initial partners. Airbus takes the lead as the anchor investor, joined by Air France-KLM, Mitsubishi HC Capital Inc., and BNP Paribas, Associated Energy Group.
Burnham Sterling Asset Management will serve as the fund manager. Together, these industry leaders have committed approximately $US200 million to kickstart the initiative.
Qantas SAF Investment
Qantas has pledged US$50 million (AU$75 million) from its Climate Fund. This fund, established in 2023 in partnership with Airbus, focuses on Sustainable Aviation Fuel (SAF) projects and other environmental initiatives.
SAF has emerged as a critical tool in the airline industry’s arsenal to combat emissions. Low and zero-emission aircraft technology still decades away from widespread implementation.
In the interim, SAF offers a more immediate solution. However, the current global demand for SAF significantly outpaces its supply, creating a pressing need for increased production.
SAFFA’s investment strategy will target SAF technology development and production projects. The alliance will initially focus on opportunities that repurpose existing infrastructure, maximizing efficiency and reducing costs.
While investments will begin in the United States, SAFFA plans to diversify across various SAF production pathways and regions over time.
Securing Priority SAF Offtake
A key benefit for Qantas and other SAFFA partners is the opportunity to secure priority offtake contracts for SAF produced through supported projects.
This arrangement ensures a steady supply of sustainable fuel for participating airlines, helping them meet their emissions reduction targets.
The fund has already made its first investment, backing US-based technology company Crysalis Biosciences in April 2024.
Crysalis aims to revitalize chemical manufacturing infrastructure with innovative fuel and chemical production technologies.
In a promising start, the company has successfully acquired and renovated a previously closed ethanol plant in Illinois, which has now received approval to produce low carbon intensity SAF and biochemicals.
Qantas CEO Comments
Qantas Group CEO Vanessa Hudson emphasized the importance of SAFFA’s focus on commercially viable, technologically mature projects.
“Aviation is one of the hardest sectors to decarbonize,” Hudson stated. “Partnerships like this are essential to help bridge the gap between supply and demand.”
Hudson also highlighted the current price disparity between SAF and conventional jet fuel. She noted that industry investment is crucial to scaling production and ultimately driving down costs.
While Qantas maintains a strong focus on Australian projects through its Climate Fund and SAF partnership with Airbus, many domestic opportunities have long development lead times.
SAFFA provides a pathway for Qantas to access SAF sooner in key overseas markets while simultaneously supporting the growth of the global SAF industry.
Exploring Other Domestic Opportunities
In addition to its SAFFA investment, Qantas is actively exploring other domestic opportunities for its Climate Fund, with announcements expected in the coming months.
The airline has already invested in a Queensland biofuel production facility being developed by Jet Zero Australia in partnership with LanzaJet, a leading sustainable aviation fuel technology company.
Jet Zero Australia recently achieved a significant milestone by successfully raising A$29 million in its second round of funding.
Summary
Qantas has set ambitious targets for aviation biofuel adoption. It plans for 10% use in the Group’s fuel mix by 2030 and approximately 60% by 2050.
The airline has already made strides in SAF procurement. It has purchased around 10 million liters annually from London since 2022 and secured contracts for 20 million liters from California.
As the aviation industry continues to grapple with the challenges of decarbonization, initiatives like SAFFA and Qantas’ proactive approach to SAF adoption are key.
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