International Airlines Group PLC’s (LON:IAG) British Airways has partnered with sustainable aviation fuel (SAF) producer LanzaJet to partially power transatlantic flights from 2022.
The airline will invest in a new plant, to be built in Georgia, which will turn ethanol derived from agricultural and other waste into fuel that will cut carbon emissions by 70%.
READ: IAG says British Airways receives commitments for a 5-year term-loan Export Development Guarantee Facility of £2.0bn
SAF can replace up to half of conventional jet fuel but so far it made up for only 5% of total needs in demonstration flights, the Guardian reported.
The FTSE 100 firm previously pledged to invest £300mln in SAF as part of decarbonisation goals and is also mulling over a UK refinery with LanzaTech and a waste-to-fuel plant with Velocys Plc (LON:VLS).
According to house broker Shore Capital, the Altalto plant in Immingham planned with Velocys is the most advanced commercial-scale SAF project in development in the UK.
“The direction of travel is clear with regards to the much-needed requirement to produce SAF on a global scale in order to decarbonise the aviation industry,” analysts commented.
“We believe this announcement provides the entire SAF industry with significant endorsement and a solid foundation to further accelerate commercial SAF production plants globally given the momentous projected increase in global SAF demand by 2035, whilst also driving down operating costs.”
“This can only be achieved with government support encouraging the commercial-scale production of SAF via funding and mandating as well as leading airlines committing significant investment in sustainable initiatives.”
Velocys rose 3% to 8.06p while IAG dipped 1% to 157.3p on Tuesday morning.