Aer Lingus owner signs deal for sustainable fuel

Aer Lingus owner International Airlines Group (IAG) will buy 220,000 tonnes of green fuel from US manufacturer Velocys as part of a €350 million bid to cut carbon emissions.

IAG said on Wednesday that it has signed a memo of understanding with Velocys to buy 220,000 tonnes of sustainable aviation fuel (SAF), which the US company plans producing at a plant in Mississippi from 2026.

The airline group said its carriers, including Aer Lingus, British Airways and Iberia, would use the fuel, which Velocys will make from waste vegetation.

IAG intends cutting yearly greenhouse gas emissions by two million tonnes by 2030 through buying a total of one million tonnes of sustainable fuel annually.

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The fuel is blended with kerosene normally used to power jet engines to help cut emissions.

Luis Gallego, IAG chief executive, said the group would invest $400 million (€350 million) in developing sustainable fuel.

He argued that clear policy support was needed to lure investment into building the plants needed to supply the fuel to airlines.

Mr Gallego pointed out that US policy supported Velocys’s plant. “We would encourage the UK and the EU to follow suit in supporting the development and deployment of green technologies including carbon capture,” he said.

As part of its effort to combat climate change, the EU plans to begin taxing aviation fuel, which has escaped many levies up to now.

Cop26

IAG is among a number of airlines who have rolled out a slew of sustainable fuel initiatives as Cop26 takes place, aiming to prove they’re serious about the fight against global warming.

SAF, a substitute for the fossil-based kerosene powering today's jet turbines, is derived from a variety of ingredients, from waste oils and fats to sugar crops and some trees and grasses. British Airways operated a "carbon neutral" flight to Glasgow, while EasyJet will use a SAF blend on 42 flights out of London Gatwick airport. United Airlines Holdings committed to buying 1.5 billion gallons of SAF made from forest and crop waste.

The sudden embrace of kerosene alternatives makes sense for an airline industry desperate to avoid another shock after the decimation caused by the Covid-19 pandemic. If scaled quickly, SAF could help airlines fend off calls for emissions-related restrictions on flying, and clear the way for a return to growth.

Some industry participants are concerned that the publicity is outpacing palpable progress.

“It feels a little frothy right now,” said Gene Gebolys, chief executive officer of World Energy, one of two companies supplying commercial quantities of SAF in the US. “It can’t be just a press release battle. There’s got to be authenticity here.”

Fuel usage

Meanwhile, figures from aviation information business Cirium show that airlines have used 40 per cent less fuel so far this year than in 2019, the year before Covid-19 hit travel.

The company says flights tracked for the year to date are 29 per cent down on the same period in 2019.

Fuel burn increased as domestic and international flights began taking off again this year, but not as much as expected compared to 2019.

"Airlines have been flying their aircraft far fewer hours and prioritising the most efficient," says Cirium.– Additional reporting: Bloomberg