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Sustainable Aviation Fuel

American Airlines signs SAF deal with Gevo

American Airlines signs SAF deal with Gevo
Gevo Inc., has secured a new sustainable aviation fuel (SAF) sales agreement with oneworld Alliance member, American Airlines, Inc (photo courtesy American Airlines).

US-headed biofuels- and biochemicals producer and process developer Gevo Inc., has announced a new sustainable aviation fuel (SAF) sales agreement with oneworld Alliance member, American Airlines, Inc. (AA) The agreement sets forth the terms for the sale of 100 million (US) gallons (≈ 3.8 million litres) per year of SAF for five years from Gevo’s future commercial operations.

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Gevo’s delivery of SAF under this agreement is expected to begin in 2026. Gevo estimates that the agreement should generate approximately US$2.75 billion of revenue over the five-year term, inclusive of the value of environmental benefits.

The Agreement with American Airlines is the single, largest fuel sales agreement ever entered into by Gevo with a customer.

American Airlines is a member of oneworld Alliance, and this agreement falls under the purview of Memoranda of understanding (MoU) that oneworld members and Gevo signed earlier in 2022, laying the groundwork for the 14 world-class airlines in the alliance to purchase 200 million gallons (≈ 757 million litres) of SAF per year, from Gevo’s future commercial operations.

The expansion of the global development of the SAF marketplace has reached an exciting point, said Dr Patrick R. Gruber, CEO of Gevo.

This SAF purchase agreement expands the list of committed airline partners and supports Gevo’s pursuit of its stated goal of producing and commercializing a billion gallons of SAF by 2030.

While there is a tremendous amount of work to complete to bring all the critical elements of net-zero carbon SAF to the marketplace, our Memoranda of Understanding with oneworld alliance members and this subsequent commitment from American Airlines demonstrate the important momentum that is building for these types of products. I’m thrilled that Gevo is poised to continue to provide leadership for this product development, Dr Patrick R. Gruber said.

In September 2020, oneworld became the first global airline alliance to announce a target of carbon neutrality by 2050, establishing its commitment to long-term sustainability for the industry.

The alliance followed up that commitment with an intermediate goal to achieve 10 percent SAF use across the member airlines by 2030.

Today’s announcement is a historic step forward for American and our industry as we work to reduce our carbon footprint, said Jill Blickstein, VP of Sustainability at American Airlines.

The use of SAF is a cornerstone of our strategy to decarbonize air travel. While this landmark investment represents meaningful action by American Airlines, driving progress at the scale and pace we need requires critical policy action in Washington and at the State level. Alongside our oneworld partners, we’re proud to lead the way in the shift to SAF and make progress toward our shared climate goals, Jill Blickstein said.

Further commenting on the agreement, Dr Patrick R. Gruber said that Gevo is on a mission to drive greenhouse gasses (GHGs) out of the fuel supply chain with practical technologies that can be scaled.

In order to drive the GHG gasses out, we need renewable carbon and de-fossilized energy to power our production facilities. We know how to produce SAF. We know that by replacing fossil-based grid electricity with green electricity, replacing fossil-based natural gas with biogas, producing and using green hydrogen, and by working with farmers to improve the production of food while generating raw materials for SAF, we have a business system where incentives are aligned to improve sustainability and drive change, Dr Patrick R. Gruber said.

The agreement with American Airlines is subject to certain conditions precedent, including Gevo developing, financing, constructing, and operating one or more production facilities to produce the SAF contemplated by the agreement.

These take-or-pay SAF contracts help us show investors and lenders that this market is real, and merits investment to build plants for SAF. We are creating a new business system, one that can generate revenue for Gevo and attractive investment returns while also solving problems that impact all of us. By working together, we really can change the world. With these contracts in place, we hope to accelerate the journey, ended Dr Patrick R. Gruber.

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