German airline group Deutsche Lufthansa and oil and gas firm Shell have signed a non-binding agreement to supply sustainable aviation fuel (SAF) starting in 2024.
The agreement calls for the supply of SAF for seven years at various airports across the globe. The parties plan to negotiate a purchase agreement of up to 594 million gallons of SAF. Shell would produce the fuel using four approved technology pathways (as opposed to just one) and a variety of sustainable feedstocks.
Sustainable aviation fuel is an umbrella term to describe all aviation fuels made without using fossil energy sources.
This is one of the largest-ever SAF deals in the industry and the largest for each company. Lufthansa is already the leading buyer of SAF in Europe.
“I am very happy to see the relationship between Shell and the Lufthansa Group moving towards reaching our respective sustainability goals,” said Jan Toschka, president of Shell Aviation, in a recent statement. “It is encouraging to see large flagship carriers coming to us to discuss SAF supply deals, knowing there will be a lot of things to be defined and determined at a later stage, including established price markers. SAF is the most significant way to decarbonize aviation over the decades to come.”
The Lufthansa Group aims to cut its net carbon emissions by 50% by 2030 compared to 2019 levels and to become net-zero by 2050. To achieve these goals, not only is it key to the transition to SAF, but the company also has plans to renew and optimize its fleet and increase operational efficiency. It is also involved in various fuel-saving projects such as weight reduction, flight route optimization and streamlining of performance.
“We are happy to enhance our long standing global business with Shell by signing this Memorandum of Understanding,” said Katja Kleffmann, head of fuel management supply at Lufthansa Group.
“As an industry we have to work jointly towards making flying more sustainable and to achieve net-zero carbon emissions by 2050. Shell is very experienced with the global handling of Jet fuel, and that is one key element for our trust for smooth operations of Sustainable Aviation Fuel, too.”
Shell’s goal is to become a net-zero emissions energy business by 2050. This includes having zero emissions from its operations (Scope 1), as well as from fuels and other energy products it sells (Scope 3). It also plans to eliminate Scope 2 emissions, which is the energy the company buys and uses to run its operations (which is about 10% of its total emissions). In addition, the company plans to capture and store remaining emissions or using offsets.
Part of its Scope 3 goal is to have SAF represent at least 10% of its global aviation fuel sales by 2030.
“The potential SAF purchase agreement contemplated under the MoU, by its anticipated volume size, term period, and geographic scope, is expected to be a milestone if concluded and shows the way forward for decarbonization in the aviation industry,” added Shell Aviation’s Toschka.