Qantas has joined an alliance of airlines, an aircraft manufacturer, and energy and financing companies to help accelerate global production of aviation biofuel.
The Sustainable Aviation Fuel Financing Alliance (SAFFA) fund has been formed with anchor-investor Airbus as well as Air France-KLM, Mitsubishi HC Capital Inc., BNP Paribas, Associated Energy Group, and Burnham Sterling Asset Management (as fund manager).
The initial partners have committed around $US200 million, with Qantas initially committing US$50 million (AU$75 million1) from its Climate Fund, which was established in 2023 and includes the Sustainable Aviation Fuel (SAF) partnership with Airbus.
SAF is one of the most effective tools that airlines currently have to reduce their emissions, with low and zero emissions aviation technology decades away, but local and global demand far outstrips supply.
Through SAFFA, the partners will invest in SAF technology development and production projects with an initial focus on opportunities that repurpose existing infrastructure. Investments will be initially focused in the United States, but in time are expected to be diversified across various SAF production pathways and regions.
Qantas and the SAFFA partners will also have opportunities to enter into priority offtake contracts for the supply of SAF produced through the supported projects.
The fund made its first investment in April 2024 in US-based technology company Crysalis Biosciences, which aims to renew chemical manufacturing infrastructure with innovative fuel and chemical production technologies.
The company has successfully acquired and renovated an ethanol plant in Illinois that was closed in 2019. The plant has now received approval to resume operations to produce low carbon intensity SAF and biochemicals.
Qantas Group CEO Vanessa Hudson said SAFFA would invest in projects that are technologically mature with a focus on commercial viability to help improve access to and drive down the cost of low-carbon fuels.
“Aviation is one of the hardest sectors to decarbonise and it’s going to take partnerships across industries like this to help close the gap between supply and demand,” Ms Hudson said.
“The current imbalance is one of the reasons SAF comes at a significant premium compared to jet kerosene, so it’s critical for the industry to invest now in scaling production.
“Through our Climate Fund and our SAF partnership with Airbus, we continue to have a strong focus on Australian projects to accelerate the establishment of a domestic industry, however most of the new SAF investment opportunities here have long development lead times.
“The SAFFA fund will enable us to get priority access to SAF sooner in key overseas markets while helping drive the development of the overall industry.”
Separate to its investment in SAFFA, Qantas is evaluating a number of additional domestic opportunities for investment from its Climate Fund which it expects to finalise in the coming months.
Qantas has invested in a Queensland biofuel production facility being developed by Jet Zero Australia in partnership with leading sustainable aviation fuel technology company LanzaJet.
Earlier this year Jet Zero Australia achieved a significant milestone by successfully raising A$29 million in its second round of funding.