Southwest Airlines has made an offtake agreement for 680 million gallons of sustainable aviation fuel from USA BioEnergy.
As a part of the agreement, SAF will be purchased and delivered from USA BioEnergy’s facility in Texas as early as 2028, and Southwest may buy up to 180 million gallons of SAF in addition to the initial purchase.
Southwest explained that the offtake agreement will contribute to its goal of replacing 10% of jet fuel consumption with SAF by 2030. Over the course of the 20-year agreement, the use of SAF may avoid 30 million metric tons of carbon emissions.
Sustainable aviation fuel, made from non-fossil fuel sources such as oilseeds and other feedstocks, has been identified as a key player in decarbonizing aviation. To make its SAF product, USA BioEnergy uses wood waste, or woody biomass, from harvest residue that would otherwise decompose and release carbon into the atmosphere.
The fuel can be added to conventional jet fuel to lower emissions by up to 80%. SAF is being used already by some airlines but is not yet widely available, so many airlines have begun making offtake agreements in anticipation of increased production of SAF in the coming few years.
Hydrogen-based and electric flights are a long-term possibility for decarbonizing air travel, but in the meantime, SAF is a favored option used by airlines to meet net-zero targets.
"Our agreement with Southwest Airlines is a perfect fit because it aligns Southwest's goal of reaching net zero carbon emissions by 2050 and USA BioEnergy's goal of becoming the leading producer of carbon-negative fuel," said David Prom, board chairman and co-founder of USA BioEnergy. "USA BioEnergy is excited to work with Southwest on this initial project and, potentially, future sites we may add in our pipeline."
In response to increased demand for SAF, the SAF industry is expected to grow at 13.7% between 2022 and 2030 according to a recent MarketsandMarkets report.
A number of projects are underway to scale up SAF production and application in the years to come, including the first large-scale SAF hub in the U.S. and investigation of using SAF to completely fuel certain aircrafts. Virgin Airlines recently received a permit for the first 100% SAF-fueled transatlantic flight, which will take place later this month.
Southwest also recently said it will implement a system for tracking SAF data in order to allow for Scope 3 emissions reduction rights. This could help in reducing the cost of SAF, which currently costs two to four times more than conventional jet fuel.
