International Airlines Group (IAG) has signed a Memorandum of Understanding with sustainable fuels technology firm Velocys, for the purchase of an expected 73 million gallons of sustainable aviation fuel (SAF).
The ten-year agreement will run from 2026, and covers the purchase of SAF for IAG’s member carriers including British Airways, Aer Lingus and Iberia.
The SAF will be produced at the Bayou Fuels project in Mississippi, and when blended with traditional fuel will provide 192 million gallons of net zero fuel.
The deal represents one third of the planned facility’s annual output, and sits alongside an agreement with Southwest Airlines for an expected 219 gallons of SAF.
Velocys said that its carbon mitigation technology “will enable the commercial-scale production of a deeply negative SAF at the Bayou Fuels plant through the combination of biogenic feedstock, renewable power and carbon capture and storage”.
The firm added that it is estimated that the agreement will result in 2.2 million tonnes of avoided CO2 over the term of the offtake.
British Airways first partnered with Velocys back in 2017, and parent company IAG recently announced a commitment to operate 10 per cent of its flights with SAF by 2030.
Luis Gallego, CEO of IAG, said that sustainable aviation fuel was “a critical element for the decarbonisation of the aviation industry”.
“Clear policy support is needed to attract investment to construct the necessary plants to deliver enough supply for the airline industry.,” continued Gallego.
“This project has benefitted from strong policy support from the US, creating highly valued green jobs and economic growth. We would encourage the UK and the EU to follow suit in supporting the development and deployment of green technologies including carbon capture.”
Meanwhile Henrik Wareborn, CEO of Velocys, commented:
“We are delighted that IAG, our partner for many years through our work with British Airways, intend to purchase a large volume of SAF from the Bayou Fuels project. This long dated offtake, encompassing support for environmental credits, will provide certainty of revenue for the Project which should enable construction capital financing.
“We have now secured long term offtake clients for 100 per cent of the expected SAF production and associated environmental credits f or the Bayou Fuels facility.
“Velocys’ focus is now on accelerating technology delivery with our partners to allow client facilities including Bayou Fuels to reach Final Investment Decision and then go into construction. Our capital light, technology licensing model will enable many more aviation clients to transition to Sustainable Aviation Fuel as required by the race to Net Zero.”