Gevo announced a new fuel sales agreement with American Airlines, Inc., which sets forth the terms for the sale of 100 million gallons per year of sustainable aviation fuel for a five-year term. Gevo’s future commercial operations are expected to fulfill the order and delivery is expected to begin in 2026. Gevo estimates that the agreements should generate approximately $2.75 billion of revenue over the five-year term, inclusive of the value of environmental benefits.
American Airlines is a member of oneworld® Alliance, and this agreement falls under the purview of memoranda of understanding (MoU) that the 14 oneworld member airlines and Gevo signed earlier in 2022 (at the time), laying the groundwork for the airlines to purchase 200 million gallons of SAF per year from Gevo’s future commercial operations.
The use of SAF is a cornerstone of American’s strategy to decarbonize air travel. The airline considers this a landmark investment and expects it will help drive progress at a scale and pace to encourage policy action in Washington and at the State level and lead the way in the shift to SAF and make progress toward the shared climate goals.
Gevo continues to push toward its Billion Gallon Initiative, an effort to deliver a billion gallons per year of sustainable aviation fuel and other renewable motor fuels per year by 2030. Decision-makers are taking notice, and airlines are signing sales agreements to purchase fuels to help their businesses meet unprecedented sustainability targets. Airlines are lining up to set purchase agreements to buy SAF in quantities to drive down their carbon intensity.
The airlines of the oneworld alliance have committed to a target of using 10 percent SAF by 2030. To achieve that goal, the alliance airlines collectively signed a memorandum of understanding outlining the intent to have member airlines purchase 200 million gallons of SAF per year from Gevo’s future commercial operations. The alliance includes 15 member airlines British Airways, American Airlines, Japan Airlines, Finnair, Alaska Airlines, and ten others. This commitment is expected to demonstrate the value of reduced carbon intensity when several airlines work together.
Another customer, Delta signed a fuel sales agreement in March 2022 to purchase 75 million gallons per year of sustainable aviation fuel for a term of seven years, an agreement that is expected to generate approximately $2.8 billion of revenue, inclusive of the value from environmental benefits, over the term of the agreement. Delta is a member of the SkyTeam airline alliance, and it considers SAF to be a critically important tool to help the aviation industry reduce the lifecycle carbon emissions from aviation fuel, and so the company is working to develop the market and a broader understanding of the effectiveness of SAF. Delta understands that SAF production creates good-paying jobs in manufacturing, and fosters rural economic opportunity for feedstock agriculture.
As part of the oneworld Alliance agreement, British Airways signed a fuel sales agreement in March 2022 to purchase for 30 million gallons of SAF per year for five years. As part of the BA Better World initiative, the airline puts sustainability at the heart of our business, reducing emissions and waste, while improving our operational efficiency, investing in more efficient aircraft, funding carbon offset and removal projects to mitigate emissions on UK domestic flights, and progressively introducing sustainable aviation fuels using waste feedstocks.
Another oneworld Alliance member, Japan Airlines, signed an agreement to purchase of 5.3 million gallons per year of sustainable aviation fuel (SAF) for five years with deliveries expected to begin in 2027. The airline set long-range goals of zero GHG emissions by 2050, and a major initiative to reduce its GHG includes developing and using sustainable aviation fuel.
Finnair is another oneworld Alliance airline that signed a fuel sales agreement in June, agreeing to purchase 7 million gallons of SAF per year over a five-year term beginning in 2027. Finnair uses an extensive toolkit to achieve emission reductions – using sustainable aviation fuels, reducing the weight of aircraft, developing fuel-efficient flight methods, offsetting, and engaging customers in reducing aviation emissions. Finnair is also actively exploring the possibilities of introducing new technologies into its operations.
Aer Lingus is part of International Airlines Group (IAG) and signed a fuel sales agreement to purchase 6.3 million gallons per year of SAF for a term of five years. has pledged to achieve net-zero carbon emissions by 2050 and has committed to powering 10 percent of its flights using sustainable aviation fuel (SAF) by 2030. The introduction of SAF as a renewable fuel source is instrumental for the Irish flag carrier to achieve its ambitious sustainability program, which also includes the modernization of its fleet, investing in new generation, more fuel-efficient aircraft such as Airbus A321neo.
Our Billion Gallon Initiative is an aggressive goal, to be sure, but we intend to achieve milestones by leveraging technology. Gevo’s use of renewable energy, sustainably grown feedstock, and adding efficiencies at every turn boost the effect of its Circular Economy model. The forefront of sustainable technology lies in the pathways we use to create energy-dense liquids: a combination of IBA and EtOH to hydrocarbons.
Another way we set ourselves apart is the Argonne GREET® model. This scientific model, established by Argonne National Laboratory with the support of the U.S. Department of Energy, measures greenhouse gas emissions of fuels and other products. Argonne GREET provides an accurate lifecycle inventory of carbon and leverages the decarbonizing impact of sustainable agriculture and fuel-production practices. Best of all, Argonne GREET can adapt to account for improvements and carbon reductions. Gevo’s Net-Zero business systems are expected to reduce greenhouse-gas emissions to net-zero over the entire lifecycle of each gallon of advanced renewable fuel produced, including its SAF, and that includes the emissions resulting from burning the fuel in engines to power transportation.
Still another way Gevo uses technology is through blockchain-based tracking, which employs distributed ledger technology to track the carbon intensity of a product throughout its entire lifecycle, including its feedstock supplies, manufacturing, distribution, and final disposition. To that end, Gevo started Verity Tracking, a company dedicated to developing the tracking system, codifying the principles of Argonne GREET in the platform to allow improvements. With verified tracking, Gevo shows it understands that sustainability has value, because producing net-zero fuels that provide renewable energy to reduce reliance on fossil fuels is the right thing to do, consumers are becoming educated and knowledgeable and have begun to demanding reduced carbon intensity, and, as companies begin to take action to fulfill their sustainability planning, their investors will add real value to the marketplace.