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Sustainable Aviation Fuel

VARO and Lufthansa to explore SAF production

VARO and Lufthansa to explore SAF production
VARO Energy Marketing AG (VARO) and Deutsche Lufthansa AG (Lufthansa Group) to explore the production and supply of sustainable aviation fuel (image courtesy VARO).

Switzerland-headed VARO Energy Marketing AG (VARO) and Germany's national air carrier Deutsche Lufthansa AG (Lufthansa Group) have signed a Memorandum of Understanding (MoU) to explore the production and supply of sustainable aviation fuel (SAF). The MoU will deepen an existing partnership through a potential agreement for VARO to sell SAF volumes to Lufthansa Group from as early as 2026.

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According to a statement, SAF is a key element in the ONE VARO Transformation strategy, helping customers in hard-to-abate sectors like aviation decarbonize.

In July 2022 VARO announced its new strategy centred on two engines.

Engine 1 is focused on VARO’s Conventional Energies business, generating high levels of cash flow to reinvest into Engine 2, which focused on Sustainable Energies.

Engine 2 consists of five strategic growth pillars targeting the most attractive low-carbon growth markets in Europe: biofuels; biomethane (aka renewable natural gas – RNG) and bioLNG; hydrogen; e-mobility; and carbon removals.

The announcement on February 2, 2023, of an MoU with the Lufthansa Group for the production and supply of SAF marks an important step in meeting these customer needs and is a core element in VARO’s Biofuels strategic growth pillar.

VARO is targeting biofuel production of more than 260 000 tonnes per year by 2026 with a long-term target of more than 500 000 tonnes per year.

The MoU will see VARO and Lufthansa leverage their long-standing partnership to drive forward the market and grow the use of SAF.

Our ONE VARO Transformation strategy is centred on meeting the need of our customers to decarbonize as they progress in the Energy Transition while ensuring the reliability of supply. This MoU builds on our long-standing partnership with the Lufthansa Group, one of the world’s largest airline Groups, and I am excited to be working with them to accelerate the development and use of Sustainable Aviation Fuels – a key element of our Biofuels strategic growth pillar, said Dev Sanyal, CEO of VARO Energy,

Offtake as early as 2026

Under the MoU, Lufthansa could offtake large volumes of SAF from VARO as early as 2026.

Both companies intend to scale innovative processes such as the production of hydrogen from biogenic feedstock, such as sewage sludge, and to classify it as green hydrogen in Germany.

This green hydrogen could then be used to produce electro-fuels (eFuels) including e-SAF.

The MoU also builds on the Lufthansa Group’s ambition to drive the availability, market ramp-up, and use of SAF as a core element of its sustainability strategy.

The Lufthansa Group is already one of the largest customers of SAF in Europe and is enabling its corporate customers to report its carbon dioxide (CO2) emission reductions by an audited certificate.

We believe in SAF being a powerful tool to make aviation more climate-friendly. Therefore, we are engaged in the development of SAF markets and making SAF logistically available at airports. We are looking forward to our continued cooperation with VARO, which supports our sustainability strategy, commented Katja Kleffmann, Head of Fuel Management Supply Lufthansa Group.

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