Qantas, Airbus to invest $288m towards Australian made biofuels

Australia's flagship airline Qantas (ASX: QAN) has put some extra thrust behind plans to use 10 per cent sustainable aviation fuel (SAF) in its overall mix by 2030 after reaching a development deal with French aircraft manufacturer Airbus.

The Australian Sustainable Aviation Fuel Partnership was signed by Qantas Group CEO Alan Joyce and Airbus CEO Guillaume Faury in Doha yesterday ahead of the International Air Transport Association (IATA) annual general meeting.

The new partnership will also seek to establish a new value-added Australian industry en route to Qantas' anticipated net zero emissions destination by 2050, harnessing feedstocks such as canola and animal tallow that are usually exported for SAF production abroad.

Due to the lack of a local commercial-scale SAF industry, Qantas currently sources this type of fuel from overseas even though the raw materials are grown at home.

The airline currently uses 15 per cent SAF in its fuel mix for its routes out of London, and is working towards 20 million litres each year for flights from Los Angeles and San Francisco to Australia from 2025.

Sustainable fuels cut greenhouse gas emissions by around 80 per cent compared to traditional kerosene and are the most significant tool airlines currently have to reduce their impact on the environment – particularly given they can be used in today’s engines with no modifications.

The Qantas and Airbus partnership will invest in locally developed and produced SAF and feedstock initiatives. Projects will have to be commercially viable and meet a strict set of criteria around environmental sustainability.

Qantas Group CEO Alan Joyce said the investment would accelerate the development of SAF in Australia, creating value for shareholders of both companies while also creating jobs and reducing the nation’s dependence on imported fossil fuels.

“Aviation is an irreplaceable industry, especially for a country the size of Australia, and one that’s located so far away from so much of the world. Future generations are relying on us to get this right so they too can benefit from air travel,” Joyce said.

“It makes a lot of sense for us to put equity into an industry that we will be the biggest customer of. We’re calling on other companies and producers to come forward with their biofuel projects. In many cases, this funding will be the difference between some of these projects getting off the ground.

“The aviation industry also needs the right policy settings in place to ensure the price of SAF comes down over time so that the cost of air travel doesn’t rise. We’ve had some encouraging discussions with the incoming Australian Government given their strong focus on emissions reduction and look forward to that progressing.”

The global airline industry is aiming to reach net zero emissions by 2050 and is relying on SAF usage to rise from roughly 100 million litres per annum in 2021 to at least 449 billion litres per annum within the next three decades.

“Ensuring a sustainable future for our industry has become the priority for Airbus and we are taking up this challenge with partners across the world and from across all sectors,” Airbus CEO Guillaume Faury said.

“The increased use of sustainable aviation fuels will be a key driver to achieve net zero emissions by 2050. But we can’t do this without viable industrial systems to produce and commercialise these energy sources at affordable rates and near to key hubs around the world.

“This is especially true for a country like Australia, which is geographically distant and highly reliant on aviation to remain connected both domestically and internationally.”

US-based aircraft engine manufacturer Pratt & Whitney, which had its engines recently selected by Qantas for the new A220 and A320neo family aircraft, has agreed to join the Australian Sustainable Aviation Fuel Partnership.

Qantas has also begun talks with its corporate customers to help design a program for sustainable fuel offset credits.