Sustainable aviation fuel producer Gevo has signed a
"take-or-pay" agreement with Delta Air Lines to supply 75 million
gallons of SAF per year for seven years, beginning approximately in mid-2026, the
companies announced Tuesday.
The agreement replaces an existing 2019 agreement whereby
Delta agreed to purchase 10 million gallons per year, according to Gevo, which
estimates the value of the new deal at $2.8 million, inclusive of environmental
benefits. The agreement is subject to certain conditions, including that Gevo
develop, finance and construct one or more production facilities to product the
SAF, according to the fuel producer.
The news comes one day after Oneworld Alliance announced
that members including Alaska Airlines, American Airlines, British Airways,
Finnair, Japan Airlines and Qatar Airways planned to purchase up to 200 million
gallons per year of SAF from Gevo, with the delivery expected to begin in 2027
for a five-year term. The SAF would be used for operations in California,
including Los Angeles, San Diego, San Francisco and San Jose international
airports, according to Gevo.
Gevo expects to use field corn products processed to create
ethanol that can be converted into SAF. The company estimated that the fuel
sales agreement with Oneworld could generate approximately $800 million of
revenue, inclusive of the value from environmental benefits, across the life of
the contract. Gevo expects to produce the SAF at one or more facilities under
development in the Midwest.
For Delta, in order to meet its 10 percent SAF procurement
commitment by 2030, the carrier would need to secure 400 million gallons of SAF
annually, and 4 billion gallons annually if it were to fly solely on SAF, which
is a challenge given the limited amounts of sustainable fuel currently
available.
Delta purchased more than 300,000 gallons of SAF in 2021
through its corporate partnerships, which include travel management company CTM,
as announced in June 2021. The carrier in November also joined the First
Movers Coalition, a public-private partnership and platform which aims to
accelerate and scale the development of technologies and fuels that reduce
greenhouse gas emissions. It is led by the U.S. State Department and the World
Economic Forum.