American Airlines, Alaska Air Lead New $150 Million Sustainable Aviation Fuel Tech Fund

Global airline alliance Oneworld and a group of airlines announced the launch of the Oneworld BEV Fund, a new sustainable aviation fuel (SAF)-focused venture fund aimed at scaling the availability and lowering the cost of jet fuels that can reduce the greenhouse gas emissions impact of aviation.

The new fund is being launched in partnership with Breakthrough Energy Ventures (BEV), founded by Bill Gates, which will serve as the fund’s investment manager, and with an initial $150 million in commitments, with Alaska Airlines and American Airlines as cornerstone investors.

Additional airlines backing the new fund include Oneworld members IAG, Cathay Pacific, and Japan Airlines, in addition to Singapore Airlines, which is not part of Oneworld.

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Robert Isom, CEO of American Airlines and Chairman of Oneworld, said:

“We believe reducing the emissions from our operation meets the demands of our customers, will make our business more competitive, and will enable us to continue to deliver the enormous economic benefits of commercial aviation for generations to come.”

Fuel accounts for the vast majority of the aviation sector’s emissions. Generally produced from sustainable resources, like waste oils and agricultural residues, SAF is seen as one of the key tools to help decarbonize the aviation industry in the near- to medium-term. SAF producers estimate the fuels can result in lifecycle GHG emissions reductions of as much as 85% relative to conventional fuels.

According to a recent report by the International Air Transport Association (IATA), however, while SAF production is anticipated to double in 2025, it will still account for just 0.7% of airlines’ total fuel consumption. Efforts to meaningfully increase the production of SAF face barriers including high initial costs and feedstock challenges.

In its announcement of the new fund, Oneworld highlighted some of the challenges facing the first generation of SAF, including insufficient investment to date to scale production at competitive prices in line with market needs, as well as concerns around lifecycle environmental impact, adding that the partners in the new fund will focus on supporting new technologies that can scale the availability of cost-competitive SAF, while minimizing other environmental impacts.

Eric Toone, Chief Technology Officer at Breakthrough Energy and Managing Partner at Breakthrough Energy Ventures, said:

“The oneworld BEV Fund is built to identify and scale breakthrough SAF technologies that can deliver real emissions reductions for jet fuel, compete with fossil-based fuels on cost, and integrate seamlessly with today’s aviation infrastructure. These are complex systems-level challenges that will take time to solve, and the fund is built with the long-term vision and staying power to help bring solutions to market.”