A group of major U.S. carriers are negotiating an agreement to purchase biofuel derived from recycled waste to use on flights out of San Francisco Bay Area airports.

The airlines have signed a letter of intent with Solena Fuels covering “the future supply of jet fuel derived exclusively from biomass,” which Solena will produce at a Northern California biomass-to-liquids facility. American Airlines and Continental Airlines took the lead in the Solena deal, and also signing the letter of intent were Alaska Airlines, FedEx, JetBlue Airways, Southwest Airlines, US Airways and Frontier Airlines, as well as non-U.S. carriers Air Canada and Lufthansa.

The agreement, announced by the Air Transport Association (ATA), represents a significant step in the development of aviation biofuel in the U.S. Solena is already working on similar projects with airlines in the United Kingdom and Australia.

Up to 16 million gallons of jet fuel per year will be produced by the Northern California plant, which will also produce 14 million gallons of “other energy products,” according to a statement by Solena and the airlines. It will be derived from 550,000 tons of recycled agricultural and urban waste.

The jet fuel will be used for operations at airports such as Oakland, San Francisco and San Jose by 2015.

Also involved in the project is the Commercial Aviation Alternative Fuels Initiative, of which ATA is a co-founder. ATA President Nicholas Calio says the Solena agreement highlights the steps that U.S. carriers are taking “to stimulate competition in jet fuel production, contribute to the creation of green jobs, and promote energy security through economically viable alternatives that also demonstrate global and local environmental benefits.”