IAG, Microsoft To Purchase SAF; SMBC Plans SAF Research Facility

International Airlines Group (IAG) and Microsoft have signed a co-funded purchase agreement for 14,700 metric tons of sustainable aviation fuel (SAF), while lessor SMBC Aviation Capital has submitted plans to create a SAF research facility in Dublin. 

Planning application documents available on the Dublin City Council’s website show that SMBC has applied to convert part of an existing office building into a SAF research facility. 

“SMBC is committed to playing its part in decarbonizing the aviation industry, and thus continues to seek opportunities for concrete action in the sustainable aviation fuels challenge,” the application documents state.   

SMBC is set to work with Trinity College Dublin if the application is accepted. “Noting that Trinity College Dublin has significant capability in the field of sustainable aviation fuel research, this collaboration is considered to be a unique opportunity to help progress the study of sustainable aviation fuels,” the application says. 

SMBC and Trinity College declined to comment.  

The lessor has previously said it is working with shareholder Sumitomo Corporation to investigate ways in which it might increase the supply of SAF to the industry and is also working with Aircraft Leasing Ireland on a feasibility study regarding SAF production in Ireland. “Significant scaling up of SAF is required,” SMBC states on its website. 

In a separate announcement, Microsoft said it will co-fund 14,700 metric tons of IAG’s SAF purchasing in 2023, which IAG says is enough to fully fuel approximately 300 British Airways Boeing 787 flights between London and Seattle.  

SAF produced from used cooking oil and food waste, which will be certified by International Sustainability and Carbon Certification (ISCC), will be supplied to Aer Lingus, British Airways (BA), Iberia, and Vueling aircraft operating from London’s Heathrow and Gatwick airports in 2023. The SAF will be provided by Phillips 66 Limited’s Humber Refinery, the UK’s only industrial scale producer of SAF. British Airways has had a multi-year agreement for SAF supply from Phillips 66 Limited in place since 2021. 

For Microsoft, the agreement will reduce Scope 3* emissions and make progress toward its goal of being carbon negative by 2030. 

SAF is seen as the most realistic short-term solution to decarbonizing aviation, but availability is scarce and prices high. Airlines say governments need to better incentivize SAF production to encourage greater volumes that will contribute to the industry’s long-term net zero goal.  

IAG—the parent company of Aer Lingus, BA, Iberia, Vueling and Level—said it had already committed to $865 million in future SAF purchases and investments as of the end of 2022 as part of its broader sustainability drive. It has a target to meet 10% of its fuel needs from SAF by 2030.  

IAG is funding supply agreements as well as investments to accelerate SAF production, including in Nova Pangaea’s waste-to-fuel production facility in the UK. 

“Reducing emissions from aviation through decarbonization efforts such as this, whilst recognizing the societal and economic benefits of flying, requires increased commitment from all stakeholders,” said Julia Fidler, Environmental Sustainability Fuel and Materials Decarbonization Lead at Microsoft. “This agreement represents a new milestone in SAF purchasing that will allow Microsoft to address emissions from both our business travel and freight for our cloud supply chain, while helping to fund future SAF development and scale the market as a whole.” 

The SAF used as part of this agreement is expected to reduce lifecycle carbon emissions by at least 80% compared to the conventional jet fuel it replaces.  

“The development of SAF is critical for the long-term decarbonization of our industry,” IAG head of sustainability Jonathon Counsell said. “Strong commercial partnerships like this will help stimulate the global investment needed to build and sustain a commercially viable SAF market.” 

In recent days, American Express Global Business Travel (Amex GBT) and Shell Aviation also announced that Google had joined their SAF program.